Exhibit 99.1
FLOW SALE AND SERVICING AGREEMENT
(Residential Mortgage Loans)
Dated as of [__________]
by and between
LUMINENT MORTGAGE CAPITAL, INC.,
MERCURY MORTGAGE FINANCE STATUTORY TRUST
and
MAIA MORTGAGE FINANCE STATUTORY TRUST,
as Purchasers
and
[____________________],
as Company
TABLE OF CONTENTS
ARTICLE I DEFINITIONS...................................................... 1
ARTICLE II AGREEMENT TO PURCHASE; PURCHASE PRICE; POSSESSION OF MORTGAGE
FILES; MAINTENANCE OF SERVICING FILES; BOOKS AND RECORDS;
CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS; CLOSING CONDITIONS.. 16
Section 2.01 Agreement to Purchase; Purchase Price; Mortgage and
Servicing Files........................................... 16
Section 2.02 Books and Records; Transfers of Mortgage Loans............ 17
Section 2.03 Custodial Agreement; Delivery of Documents................ 18
Section 2.04 Quality Control Procedures................................ 20
Section 2.05 Closing Conditions........................................ 20
ARTICLE III REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH............. 21
Section 3.01 Company Representations and Warranties.................... 21
Section 3.02 Representations and Warranties Regarding Individual
Mortgage Loans............................................ 25
Section 3.03 Repurchase................................................ 26
Section 3.04 Repurchase of Mortgage Loans With First Payment Defaults.. 28
Section 3.05 Purchase Price Protection................................. 28
Section 3.06 Review of Mortgage Loans.................................. 29
ARTICLE IV ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.................. 29
Section 4.01 Company to Act as Servicer................................ 29
Section 4.02 Liquidation of Mortgage Loans............................. 30
Section 4.03 Collection of Mortgage Loan Payments...................... 32
Section 4.04 Establishment of and Deposits to Custodial Account........ 32
Section 4.05 Permitted Withdrawals From Custodial Account.............. 34
Section 4.06 Establishment of and Deposits to Escrow Account........... 35
Section 4.07 Permitted Withdrawals From Escrow Account................. 35
Section 4.08 Payment of Taxes, Insurance and Other Charges............. 36
Section 4.09 Transfer of Accounts...................................... 37
Section 4.10 Maintenance of Hazard Insurance........................... 37
Section 4.11 Maintenance of Mortgage Impairment Insurance.............. 38
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions
Insurance................................................. 39
Section 4.13 Inspections............................................... 39
Section 4.14 Restoration of Mortgaged Property......................... 39
Section 4.15 Maintenance of PMI Policy; Claims......................... 40
Section 4.16 Title, Management and Disposition of REO Property......... 41
Section 4.17 Real Estate Owned Reports................................. 42
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Section 4.18 Liquidation Reports....................................... 42
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged
Property.................................................. 42
Section 4.20 Application of Buydown Funds.............................. 43
Section 4.21 Notification of Adjustments............................... 43
Section 4.22 Modifications, Waivers, Amendments and Consents........... 44
Section 4.23 Specially Serviced Mortgage Loans......................... 45
Section 4.24 Disaster Recovery/Business Continuity Plan................ 46
Section 4.25 Fair Credit Reporting Act................................. 46
ARTICLE V PAYMENTS TO PURCHASER............................................ 46
Section 5.01 Remittances............................................... 46
Section 5.02 Automated Servicing Systems and Statements to Purchaser... 47
Section 5.03 Monthly Advances by Company............................... 48
ARTICLE VI GENERAL SERVICING PROCEDURES.................................... 48
Section 6.01 Due-on-Sale Provision and Assumptions..................... 48
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files... 49
Section 6.03 Servicing Compensation.................................... 50
Section 6.04 [Reserved]................................................ 50
Section 6.05 [Reserved]................................................ 50
Section 6.06 Right to Examine Company Records.......................... 50
Section 6.07 Compliance with REMIC Provisions.......................... 50
ARTICLE VII COMPANY TO COOPERATE........................................... 51
Section 7.01 Provision of Information.................................. 51
Section 7.02 Financial Statements; Servicing Facility.................. 51
Section 7.03 Cooperation with Third-party Service Providers............ 52
ARTICLE VIII THE COMPANY................................................... 52
Section 8.01 Indemnification; Third Party Claims....................... 52
Section 8.02 Merger or Consolidation of the Company.................... 52
Section 8.03 Limitation on Liability of Company and Others............. 53
Section 8.04 Limitation on Resignation and Assignment by Company....... 53
ARTICLE IX WHOLE LOAN TRANSFERS AND Securitization Transactions............ 54
Section 9.01 Removal of Mortgage Loans from Inclusion Under this
Agreement................................................. 54
ARTICLE X DEFAULT.......................................................... 57
Section 10.01 Events of Default......................................... 57
Section 10.02 Waiver of Defaults........................................ 58
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ARTICLE XI TERMINATION..................................................... 58
Section 11.01 Termination............................................... 58
Section 11.02 Termination Without Cause................................. 59
ARTICLE XII MISCELLANEOUS PROVISIONS....................................... 59
Section 12.01 Successor to Company...................................... 59
Section 12.02 Amendment................................................. 60
Section 12.03 Governing Law............................................. 60
Section 12.04 Arbitration............................................... 61
Section 12.05 Duration of Agreement..................................... 61
Section 12.06 Notices................................................... 61
Section 12.07 Severability of Provisions................................ 62
Section 12.08 Relationship of Parties................................... 62
Section 12.09 Execution; Successors and Assigns......................... 62
Section 12.10 Recordation of Assignments of Mortgage.................... 62
Section 12.11 Assignment by Purchaser................................... 63
Section 12.12 Solicitation of Mortgagor................................. 63
Section 12.13 Further Agreements........................................ 63
Section 12.14 Confidential Information.................................. 63
Section 12.15 Equal Opportunity......................................... 64
Section 12.16 Counterparts.............................................. 64
Section 12.17 Exhibits.................................................. 64
Section 12.18 General Interpretive Principles........................... 64
Section 12.19 Reproduction of Documents................................. 65
Section 12.20 Purchase Price and Terms Letter........................... 65
EXHIBITS
Exhibit A Form of Mortgage Loan Schedule
Exhibit B Contents of Each Mortgage File
Exhibit C Form of Custodial Agreement
Exhibit D Form of Assignment, Assumption and Recognition Agreement
Exhibit E Underwriting Guidelines
Exhibit F Representations and Warranties Regarding Individual Mortgage Loans
Exhibit G Form of Opinion of Counsel
Exhibit H Form of SEC Certification
Exhibit I Form of Memorandum of Sale
Exhibit J Servicer Requirements
Exhibit K Regulation AB Compliance Addendum
Exhibit L Form of Special Foreclosure Rights Section
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FLOW SALE AND SERVICING AGREEMENT, dated as of [_________] (as amended,
restated, supplemented or otherwise modified and in effect from time to time,
this "Agreement"), is made by and between LUMINENT MORTGAGE CAPITAL, INC.,
MERCURY MORTGAGE FINANCE STATUTORY TRUST, MAIA MORTGAGE FINANCE STATUTORY TRUST,
as purchasers (collectively, the "Purchasers", and individually, as the
purchaser of any Mortgage Loan (defined below) hereunder, the "Purchaser"), and
[_____________], as seller and servicer (the "Company").
WITNESSETH
WHEREAS, each Purchaser has agreed to purchase from time to time from the
Company and the Company has agreed to sell from time to time to any Purchaser
first lien jumbo, alternate 'A' and conforming fixed and adjustable rate
mortgage loans; and
WHEREAS, the Mortgage Loans will be sold by the Company and purchased by
the Purchaser as pools or groups of whole loans, servicing retained (each, a
"Mortgage Loan Package") on the various Closing Dates as provided herein; and
WHEREAS, each of the Mortgage Loans will be secured by a mortgage, deed of
trust or other security instrument creating a first lien on a residential
dwelling located in the jurisdiction indicated on the related Mortgage Loan
Schedule for the related Mortgage Loan Package, which will be annexed to a
Memorandum of Sale (as defined herein) on the related Closing Date; and
WHEREAS, each of the Purchasers and the Company wish to prescribe the
manner of purchase of the Mortgage Loans and the conveyance, servicing and
control of the Mortgage Loans; and
WHEREAS, following any purchase of the Mortgage Loans from the Company, the
Purchaser may desire to sell some or all of the Mortgage Loans to one or more
purchasers as a whole loan transfer, agency transfer or a public or private,
rated or unrated mortgage securitization transaction.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, each of the Purchasers and the Company agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the content
otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, procedures
(including collection procedures) that comply with applicable federal, state and
local law and that the Company customarily employs and exercises in servicing
and administering mortgage loans for its own account and that are in accordance
with the ▇▇▇▇▇▇ ▇▇▇ Single Family Servicing Guide and the accepted mortgage
servicing practices of prudent mortgage lending
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institutions which service mortgage loans of the same type as the Mortgage Loans
in the jurisdiction where the related Mortgaged Property is located.
Adjustable Rate Mortgage Loan: A Mortgage Loan that contains a provision
pursuant to which the Mortgage Interest Rate is adjusted periodically.
Adjustment Date: As to each Adjustable Rate Mortgage Loan, the date on
which the Mortgage Interest Rate is adjusted in accordance with the terms of the
related Mortgage Note and Mortgage.
Agreement: As defined in the introductory paragraph hereof.
ALTA: The American Land Title Association or any successor thereto.
Anti-Money Laundering Laws: As defined in Section 3.01(n).
Appraisal: A written appraisal of a Mortgaged Property made by a Qualified
Appraiser, which appraisal must be written, in form and substance, to ▇▇▇▇▇▇ ▇▇▇
and ▇▇▇▇▇▇▇ Mac standards, and satisfy the requirements of Title XI of the
Financial Institution, Reform, Recovery and Enforcement Act of 1989 and the
regulations promulgated thereunder, in effect as of the date of the appraisal.
Appraised Value: With respect to any Mortgage Loan, the lesser of (i) the
value set forth on the Appraisal made in connection with the origination of the
related Mortgage Loan as the value of the related Mortgaged Property, or (ii)
the purchase price paid for the Mortgaged Property, provided, however, that in
the case of a refinanced Mortgage Loan, such value shall be based solely on the
Appraisal made in connection with the origination of such Mortgage Loan.
Approved Flood Policy Insurer: An insurer that meets the guidelines of the
Federal Insurance Administration.
Assignment, Assumption and Recognition Agreement: The agreement
substantially in the form of Exhibit D attached hereto.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Purchaser.
BIF: The Bank Insurance Fund, or any successor thereto.
BPO: A broker's price opinion with respect to a Mortgaged Property.
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 State of New York or the
state in which the Company's servicing operations are located are authorized or
obligated by law or executive order to be closed.
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Buydown Agreement: An agreement between the Company and a Mortgagor, or an
agreement among the Company, a Mortgagor and a seller of a Mortgaged Property or
a third party with respect to a Mortgage Loan which provides for the application
of Buydown Funds.
Buydown Funds: In respect of any Buydown Mortgage Loan, any amount
contributed by the seller of a Mortgaged Property subject to a Buydown Mortgage
Loan, the buyer of such property, the Company or any other source, plus interest
earned thereon, in order to enable the Mortgagor to reduce the payments required
to be made from the Mortgagor's funds in the early years of a Mortgage Loan.
Buydown Mortgage Loan: Any Mortgage Loan in respect of which, pursuant to a
Buydown Agreement, (i) the Mortgagor pays less than the full monthly payments
specified in the Mortgage Note for a specified period, and (ii) the difference
between the payments required under such Buydown Agreement and the Mortgage Note
is provided from Buydown Funds.
Buydown Period: The period of time when a Buydown Agreement is in effect
with respect to a related Buydown Mortgage Loan.
Closing Date: With respect to a Mortgage Loan Package, the date or dates,
set forth in the related Memorandum of Sale, on which the Purchaser will
purchase and the Company will sell the Mortgage Loans identified therein.
Code: The Internal Revenue Code of 1986, as it may be amended from time to
time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
Company: As defined in the introductory paragraph hereof.
Company Employees: As defined in Section 4.12.
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.
Consumer Information: Any personally identifiable information in any form
(written electronic or otherwise) relating to a Mortgagor, including, but not
limited to: a Mortgagor's name, address, telephone number, Mortgage Loan number,
Mortgage Loan payment history, delinquency status, insurance carrier or payment
information, tax amount or payment information; the fact that the Mortgagor has
a relationship with the Company or the originator of the related Mortgage Loan;
and any other non-public personally identifiable information.
Co-op Shares: Shares issued by private non-profit housing corporations.
Custodial Account: The separate account or accounts created and maintained
pursuant to Section 4.04.
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Custodial Agreement: The agreement governing the retention of the originals
of each Mortgage Note, Mortgage, Assignment of Mortgage and other Mortgage Loan
Documents, a form of which is annexed hereto as Exhibit C.
Custodian: The custodian under the Custodial Agreement, or its successor in
interest or assigns, or any successor to the Custodian under the Custodial
Agreement as provided therein.
Cut-off Date: With respect to each Mortgage Loan, the first day of the
month of the related Closing Date as set forth in the related Purchase Price and
Terms Letter.
Defective Document: As defined in Section 3.03.
Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the Company
in accordance with the terms of this Agreement and which is, in the case of a
substitution pursuant to Section 3.03, replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
Determination Date: The fifteenth calendar day of each month (or if such
fifteenth day is not a Business Day, the next immediately preceding Business
Day).
Due Date: The first day of the month on which the Monthly Payment is due on
a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period commencing on
the second day of the month preceding the month of the Remittance Date and
ending on the first day of the month of the Remittance Date.
Errors and Omissions Insurance Policy: An errors and omissions insurance
policy to be maintained by the Company pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 4.06.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other related
document.
Event of Default: Any one of the conditions or circumstances enumerated in
Section 10.01.
FACT Act: As defined in Section 3.01.
▇▇▇▇▇▇ ▇▇▇: The entity formerly known as Federal National Mortgage
Association (FNMA), or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
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Fidelity Bond: A fidelity bond to be maintained by the Company pursuant to
Section 4.12.
First Remittance Date: [__________].
▇▇▇▇▇▇▇ Mac: The entity formerly known as the Federal Home Loan Mortgage
Corporation (FHLMC), or any successor thereto.
GAAP: Generally accepted accounting procedures, consistently applied.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan, the fixed
percentage amount set forth in the related Mortgage Note which is added to the
Index in order to determine the related Mortgage Interest Rate, as set forth in
the Mortgage Loan Schedule.
Holding Period: As to each Mortgage Loan, the period beginning on the
Closing Date and ending on the last day of the second calendar month thereafter.
Index: With respect to any Adjustable Rate Mortgage Loan, the index
identified on the Mortgage Loan Schedule and set forth in the related Mortgage
Note for the purpose of calculating interest therein.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Interim Funder: With respect to each MERS Designated Mortgage Loan, the
Person named on the MERS System as the interim funder pursuant to the MERS
Procedures Manual.
Investor: With respect to each MERS Designated Mortgage Loan, the Person
named on the MERS System as the investor pursuant to the MERS Procedures Manual.
Liquidation Proceeds: Cash received in connection with the liquidation of a
defaulted Mortgage Loan, whether through the sale or assignment of such Mortgage
Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the related
Mortgaged Property if the Mortgaged Property is acquired in satisfaction of the
Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the ratio of
the original loan amount of the Mortgage Loan at its origination (unless
otherwise indicated) to the Appraised Value of the Mortgaged Property.
Market Change Event: (a) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or on NASDAQ; (b) a general
moratorium on commercial banking activities declared by either Federal or New
York State authorities or a material disruption in commercial banking or
securities settlement or clearance services in the United States; or (c) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the effect
of any such event specified in clause (c) in the judgment of any Purchaser makes
it impracticable or inadvisable to proceed with the transactions as contemplated
in this Agreement on the terms and in the manner contemplated in this Agreement.
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Material Adverse Change: (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) or prospects of the Company; (b) a material impairment of the
ability of the Company to perform under this Agreement or any related
agreements; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability of this Agreement against the Company (unless
such material adverse effect is directly caused by an action of any Purchaser
which can be remedied by such Purchaser).
Memorandum of Sale: With respect to each Mortgage Loan and the Mortgage
Loan Package, the memorandum of sale, substantially in the form of Exhibit I
attached hereto, confirming the sale by Company and the purchase by Purchaser of
the Mortgage Loan Package on the related Closing Date.
MERS: MERSCORP, Inc., its successors and assigns.
MERS Designated Mortgage Loan: A Mortgage Loan for which (a) the Company
has designated or will designate MERS as, and has taken or will take such action
as is necessary to cause MERS to be, the mortgagee of record, as nominee for the
Company, in accordance with MERS Procedures Manual and (b) the Company has
designated or will designate the Custodian as the Investor on the MERS System.
MERS Procedures Manual: The MERS Procedures Manual, as it may be amended,
supplemented or otherwise modified from time to time.
MERS Report: The report from the MERS System listing MERS Designated
Mortgage Loans and other information.
MERS System: MERS mortgage electronic registry system, as more particularly
described in the MERS Procedures Manual.
Monthly Advance: The portion of each Monthly Payment that is delinquent
with respect to each Mortgage Loan at the close of business on the Determination
Date required to be advanced by the Company pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
Monthly Payment: With respect to any Mortgage Loan (other than an Option
ARM Mortgage Loan), the scheduled payment of principal and interest payable by a
Mortgagor under the related Mortgage Note on each Due Date, which payment may
change on any Adjustment Date as provided in the related Mortgage Note and
Mortgage for any Adjustable Rate Mortgage Loan. With respect to any Option ARM
Mortgage Loan, the payment of interest and/or principal elected to be paid by a
Mortgagor pursuant to the payment options under the related Mortgage Note on
each Due Date, which payment may change on any Due Date as provided in the
related Mortgage Note.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc.
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Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple or leasehold estate in real property securing the Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan referred
to in Exhibit B annexed hereto, and any additional documents required to be
added to the Mortgage File pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note in accordance with the provisions of the Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule annexed to the related Memorandum
of Sale, which Mortgage Loan includes without limitation the Mortgage File, the
Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds and all other rights,
benefits, proceeds and obligations arising from or in connection with such
Mortgage Loan.
Mortgage Loan Documents: The documents referred to in Exhibit B as items 1
through 11.
Mortgage Loan Package: The pool or group of whole loans purchased on a
Closing Date, as described in the Mortgage Loan Schedule annexed to the related
Memorandum of Sale.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
related Mortgage Interest Rate minus the Servicing Fee Rate.
Mortgage Loan Schedule: With respect to each Mortgage Loan Package, the
schedule of Mortgage Loans substantially in the form attached as Exhibit A
hereto and annexed to the related Memorandum of Sale (and delivered in
electronic format to the Purchaser), such schedule setting forth the following
information with respect to each Mortgage Loan in the related Mortgage Loan
Package:
(1) the Company's Mortgage Loan number;
(2) Mortgagor's name (including any co-mortgagors);
(3) the full ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ and zip code of the
Mortgaged Property;
(4) the Mortgagor's and co-mortgagor's FICO score;
(5) a code indicating whether the loan was originated through a
correspondent, retail, or wholesale channel;
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(6) the number of units for all Mortgaged Properties;
(7) the number of bedrooms and eligible rents;
(8) a code indicating whether the Mortgaged Property is a single
family residence, two-family residence, three-family residence,
four-family residence, PUD, townhouse or condominium or secured
by Co-op Shares;
(9) the Mortgage Interest Rate as of the Cut-off Date;
(10) the Mortgage Interest Rate as of the date of origination;
(11) the current Mortgage Loan Remittance Rate;
(12) the Monthly Payment as of the date of origination;
(13) the Monthly Payment as of the Cut-off Date;
(14) the date of the Mortgage Note;
(15) the principal balance of the Mortgage Loan as of the Cut-off Date
after deduction of payments of principal due on or before the
Cut-off Date whether or not collected;
(16) the date on which the first Monthly Payment was due;
(17) the last payment date on which a payment was applied;
(18) the original term to maturity or the remaining months to maturity
from the related Cut-off Date, in any case based on the original
amortization schedule, and if different, the maturity expressed
in the same manner but based on the actual amortization schedule;
(19) the scheduled maturity date;
(20) the Loan-to-Value Ratio;
(21) a code indicating the type of Adjustable Rate Mortgage Loan (i.e.
3/1, 5/1, 7/1, etc.);
(22) the Gross Margin;
(23) the Index;
(24) Adjustment Dates and the next Adjustment Date;
(25) the lifetime Mortgage Interest Rate cap and Periodic Caps;
(26) a code indicating whether the Mortgage Loan is convertible or
not;
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(27) a code indicating the name of the issuer of the PMI Policy, if
any;
(28) a code indicating the lien status of the Mortgage Loan;
(29) a code indicating whether the Mortgage Loan is a Buydown Mortgage
Loan;
(30) a code indicating whether such Mortgage Loan provides for a
Prepayment Penalty and, if applicable, the Prepayment Penalty
period for such loan;
(31) a code indicating whether the Mortgaged Property is
owner-occupied or investor property;
(32) the documentation level (full, alternative, limited);
(33) loan purpose;
(34) the Appraised Value;
(35) the applicable Servicing Fee Rate;
(36) a code indicating whether the Mortgage Loan is a "high cost" (or
similarly classified) loan under applicable federal, state and
local laws; and
(37) a code indicating whether the Mortgage Loan is an Option ARM
Mortgage Loan.
With respect to the Mortgage Loans in the aggregate in the related
Mortgage Loan Package, the respective Mortgage Loan Schedule shall set
forth the following information, as of the Cut-Off Date:
(i) the number of Mortgage Loans;
(ii) the current aggregate outstanding principal balance of the
Mortgage Loans;
(iii) the weighted average Mortgage Interest Rate of the Mortgage
Loans;
(iv) the weighted average months to maturity of the Mortgage Loans.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property, including any improvements, securing
repayment of the debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
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Negative Amortization: An increase in the mortgage debt that occurs when
the Monthly Payment is not sufficient for full application to both principal and
interest. The interest shortage is added to the unpaid principal balance to
create "negative" amortization.
OCC: The Office of the Comptroller of the Currency.
Officer's Certificate: A certificate signed by the Chairman of the Board or
the Vice Chairman of the Board or the President, a Senior Vice President, a
First Vice President, a Vice President or an Assistant Vice President and by the
Treasurer or the Secretary or one of the Assistant Treasurers or Assistant
Secretaries of the Company, and delivered to the Purchaser as required by this
Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an employee of
the Company, reasonably acceptable to the Purchaser.
Option ARM Mortgage Loan: An Adjustable Rate Mortgage Loan with an original
term to maturity of not more than forty years and with respect to which the
related borrower may choose a flexible payment option each month pursuant to the
terms of the related Mortgage Note.
Periodic Interest Rate Cap: As to each Adjustable Rate Mortgage Loan, the
maximum increase or decrease in the Mortgage Interest Rate on any Adjustment
Date pursuant to the terms of the Mortgage Note.
Person: Any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
PMI Policy: A policy of primary mortgage guaranty insurance issued by a
Qualified Insurer, as required by this Agreement with respect to certain
Mortgage Loans.
Prepayment Interest Shortfall: As to any Remittance Date and each Mortgage
Loan subject to a Principal Prepayment received during the calendar month
preceding such Remittance Date, the amount, if any, by which one month's
interest at the related Mortgage Loan Remittance Rate on such Principal
Prepayment exceeds the amount of interest paid in connection with such Principal
Prepayment.
Prepayment Premium: Payments received on a Mortgage Loan as a result of a
Principal Prepayment hereon, not otherwise due thereon in respect of principal
or interest, which are intended to be a disincentive to prepayment.
Prepayment Premium Loan: A Mortgage Loan with respect to which the
Mortgagor must pay a Prepayment Premium in connection with a Principal
Prepayment.
Prime Rate: The prime rate announced to be in effect from time to time, as
published as the average rate in The Wall Street Journal.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any Prepayment Premium
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thereon and which is not accompanied by an amount of interest representing
scheduled interest due on any date or dates in any month or months subsequent to
the month of prepayment.
Principal Prepayment Period: The month preceding the month in which the
related Remittance Date occurs.
Purchase Price: The price paid on the Closing Date by the Purchaser to the
Company for the Mortgage Loans, as calculated as set forth in the related
Purchase Price and Terms Letter.
Purchase Price and Terms Letter: The letter agreement between the Company
and the Purchaser entered into prior to the related Closing Date relating to the
sale of one or more Mortgage Loan Packages.
Purchaser(s): As defined in the introductory paragraph hereof.
Qualified Appraiser: An appraiser, duly appointed by the Company, who had
no interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation was not affected by the approval or
disapproval of the Mortgage Loan, and such appraiser and the appraisal made by
such appraiser both satisfied the requirements of Title XI of the Financial
Institution Reform, Recovery, and Enforcement Act and the regulations
promulgated thereunder, all as in effect on the date the Mortgage Loan was
originated.
Qualified Depository: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) a trust account or accounts maintained with the trust
department of a federal or state chartered depository institution or trust
company, acting in its fiduciary capacity.
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.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Company for a Deleted Mortgage Loan which must, on the date
of such substitution be approved by the Purchaser and (i) have an outstanding
principal balance, after deduction of all scheduled payments due in the month of
substitution (or in the case of a substitution of more than one mortgage loan
for a Deleted Mortgage Loan, an aggregate principal balance), not in excess of
the Stated Principal Balance of the Deleted Mortgage Loan; (ii) have a Mortgage
Loan Remittance Rate not less than, and not more than 2% greater than, the
Mortgage Loan Remittance Rate of the Deleted Mortgage Loan; (iii) have a
remaining term to maturity not greater than and not more than one year less than
that of the Deleted Mortgage Loan; (iv) comply with each representation and
warranty set forth in Sections 3.01 and 3.02; (v) be of the same type as the
Deleted Mortgage Loan; (vi) have a Gross Margin not less than that of the
Deleted Mortgage Loan; (vii) have the same Index as the Deleted Mortgage Loan;
(viii) will have a FICO score not less than that of the Deleted Mortgage Loan;
(ix) have an LTV not greater than that of the Deleted Mortgage Loan; (x) have a
Prepayment Premium with a term and an amount at least equal to the Prepayment
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Premium of the Deleted Mortgage Loan; and (xi) have a Company credit grade not
lower in quality than that of the Deleted Mortgage Loan.
Rating Agency: Each of Fitch Ratings, Inc., ▇▇▇▇▇'▇ and S&P, or any
successor thereto.
Reconstitution Agreement: As defined in Section 9.01.
Reconstitution Date: The date on which any or all of the Mortgage Loans
serviced under this Agreement shall be removed from this Agreement and
reconstituted as part of a Securitization Transaction or Whole Loan Transfer
pursuant to Section 9.01 hereof. The Reconstitution Date shall be such date
which the Purchaser and the subsequent purchaser or transferee of the related
Mortgage Loans shall designate. On such date, except as provided in this
Agreement, the Mortgage Loans transferred shall cease to be covered by this
Agreement and the Company's servicing responsibilities shall cease under this
Agreement with respect to the related transferred Mortgage Loans.
Record Date: The close of business of the last Business Day of the month
preceding the month of the related Remittance Date.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to a
REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The 18th day (or if such 18th day is not a Business Day,
the first Business Day immediately preceding such 18th day) of any month,
beginning with the First Remittance Date.
REO Disposition: The final sale by the Company of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 4.16.
REO Property: A Mortgaged Property acquired by the Company on behalf of the
Purchaser through foreclosure or by deed in lieu of foreclosure, as described in
Section 4.16.
Repurchase Price: With respect to any Mortgage Loan, a price equal to (i)
(A) prior to the date which is twelve months following the Closing Date, the
product of the Stated Principal Balance of such Mortgage Loan times the greater
of (x) the Purchase Price Percentage, or (y) 100%, and (B) thereafter, the
Stated Principal Balance of the Mortgage Loan plus (ii) interest on such Stated
Principal Balance at the Mortgage Loan Interest Rate from the date on which
interest has last been paid and distributed to the Purchaser to the last day of
the month in which such repurchase occurs, less amounts received or advanced in
respect of such repurchased Mortgage Loan which are being held in the Custodial
Account for distribution in the month of repurchase plus the amount of any
advances owed to any servicer, plus all costs and expenses incurred by
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the Purchaser or any servicer arising out of or based upon such breach,
including without limitation, costs and expenses incurred in the enforcement of
the Company's repurchase obligation hereunder plus (iii) with respect to any
Mortgage Loan subject to a Securitization Transaction, any costs and damages
incurred by the related trust in connection with any violation by such Mortgage
Loan of any predatory or abusive lending law.
RESPA: The Real Estate Settlement Procedures Act, as amended.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
S&P: Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies., Inc.
SEC: As defined in Section 9.01(f).
SEC Certification: As defined in Section 9.01(f).
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933, as
amended.
Securitization Transaction: Any transaction involving either (1) a sale or
other transfer of some or all of the Mortgage Loans directly or indirectly to an
issuing entity in connection with an issuance of publicly offered or privately
placed, rated or unrated mortgage-backed securities or (2) an issuance of
publicly offered or privately placed, rated or unrated securities, the payments
on which are determined primarily by reference to one or more portfolios of
residential mortgage loans consisting, in whole or in part, of some or all of
the Mortgage Loans.
Servicer Requirements: As defined in Section 5.02.
Servicing Advances: All customary, reasonable and necessary "out of pocket"
costs and expenses (including reasonable attorneys' fees and disbursements)
other than Monthly Advances incurred in the performance by the Company of its
servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the management
and liquidation of any REO Property and (d) compliance with the obligations
under Section 4.08.
Servicing Fee: With respect to each Mortgage Loan, the amount of the annual
fee the Purchaser shall pay to the Company, which shall, for a period of one
full month, be equal to one-twelfth of the product of (a) the applicable
Servicing Fee Rate and (b) the outstanding principal balance of such Mortgage
Loan. Such fee shall be payable monthly, computed on the basis of the same
principal amount and period respecting which any related interest payment on a
Mortgage Loan is computed. The obligation of the Purchaser to pay the Servicing
Fee is limited to, and the Servicing Fee is payable solely from, the interest
portion (including recoveries with respect to interest from Liquidation
Proceeds, Condemnation Proceeds and Insurance Proceeds to the extent permitted
by Section 4.05) of such Monthly Payment collected by the Company, or as
otherwise provided under Section 4.05.
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Servicing Fee Rate: With respect to each Mortgage Loan, the per annum rate
specified for such Mortgage Loan set forth on the Mortgage Loan Schedule or if
not specified thereon, in the Purchase Price and Terms Letter.
Servicing File: With respect to each Mortgage Loan, the file retained by
the Company consisting of originals or copies, which may be imaged copies, of
all documents in the Mortgage File which are not delivered to the Custodian and
copies of the Mortgage Loan Documents listed in the Custodial Agreement the
originals of which are delivered to the Custodian pursuant to Section 2.03.
Servicing Officer: Any officer of the Company involved in or responsible
for the administration and servicing of the Mortgage Loans whose name appears on
a list of servicing officers furnished by the Company to the Purchaser upon
request, as such list may from time to time be amended.
Servicing Systems: As defined in Section 5.02.
Servicing Transfer Event: With respect to any Mortgage Loan, the occurrence
of any of the following events:
(i) a payment default shall have occurred on such Mortgage Loan at
its original maturity date, or if the original maturity date of
such Mortgage Loan has been extended, a payment default occurs
on such Mortgage Loan at its extended maturity date; or
(ii) any Monthly Payment is 90 days or more delinquent; or
(iii) the date upon which the Company determines that a payment
default is imminent and is not likely to be cured by the
related Mortgagor within 90 days; or
(iv) the date upon which a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in an
involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law, or the appointment of a
conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of
its affairs, and being entered against the related Mortgagor;
and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days; or
(v) the related Mortgagor shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to such Mortgagor or of or
relating to all or substantially all of its property; or
(vi) the related Mortgagor shall admit in writing its inability to
pay its debts generally as they become due, file a petition to
take advantage of any
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applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily
suspend payment of its obligations; or
(vii) a default of which the Company has notice (other than a failure
by such Mortgagor to pay principal or interest) and which in
the opinion of the Company materially and adversely affects the
interests of the Purchaser has occurred and remained unremedied
for the applicable grace period specified in such Mortgage Loan
(or if no grace period is specified for those defaults which
are capable of cure, 30 days); or
(viii) the Company has received notice of the foreclosure or proposed
foreclosure of any lien on the related Mortgaged Property.
Special Servicer: A special servicer appointed by the Purchaser to service
Mortgage Loans after the occurrence of a Servicing Transfer Event.
Stated Principal Balance: As to each Mortgage Loan as to any date of
determination, (i) the principal balance of the Mortgage Loan at the related
Cut-off Date after giving effect to the principal portion of any Monthly
Payments due on or before such date, whether or not received (except with
respect to Option ARM Mortgage Loans, in which case, to the extent received), as
well as any Principal Prepayments received before such date, minus (ii) all
amounts previously distributed to the Purchaser with respect to the Mortgage
Loan representing payments or recoveries of principal, or advances in lieu
thereof.
Subservicer: Any Person with which the Company has entered into a
Subservicing Agreement, provided that such Person is a ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac
approved seller/servicer in good standing and no event has occurred, including
but not limited to a change in insurance coverage, that would make it unable to
comply with the eligibility for seller/servicers imposed by ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac.
Subservicing Agreement: Any subservicing agreement (which, in the event the
Subservicer is an affiliate of the Company, need not be in writing) between the
Company and any Subservicer relating to servicing and/or administration of
certain Mortgage Loans as provided in Section 3.01(b).
Substitution Adjustment Amount: As defined in Section 3.03.
Underwriting Guidelines: The underwriting guidelines of the Company with
respect to jumbo and alternate 'A' Mortgage Loans, attached as Exhibit E hereto,
as the same shall be updated from time to time; provided, that no updated
underwriting guidelines of the Company shall constitute "Underwriting
Guidelines" hereunder until such updates have been received by the Purchasers.
The exception policies of the Company shall be incorporated into and considered
a part of the Underwriting Guidelines.
Whole Loan Transfer: Any sale or transfer of some or all of the Mortgage
Loans, other than a Securitization Transaction.
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ARTICLE II
AGREEMENT TO PURCHASE; PURCHASE PRICE; POSSESSION OF MORTGAGE
FILES; MAINTENANCE OF SERVICING FILES; BOOKS AND RECORDS;
CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS; CLOSING CONDITIONS
Section 2.01 Agreement to Purchase; Purchase Price; Mortgage and Servicing
Files.
(a) Agreement to Purchase.
In exchange for the payment of the Purchase Price to the Company on the
related Closing Date, the Company agrees to sell and the Purchaser agrees to
purchase, without recourse but subject to the terms of this Agreement, on a
servicing retained basis, all the right, title and interest of the Company in
and to the Mortgage Loans included in a Mortgage Loan Package, which have an
aggregate Stated Principal Balance on the related Cut-off Date in an amount as
set forth in the related Purchase Price and Terms Letter, or in such other
amount as agreed by the Purchaser and the Company as evidenced by the aggregate
Stated Principal Balance of the Mortgage Loan Package accepted by the Purchaser
on the related Closing Date. The Company shall deliver the Mortgage Loan
Schedule for the Mortgage Loan Package to be purchased on the related Closing
Date to the Purchaser at least five Business Days prior to such Closing Date.
(b) Purchase Price.
The Purchase Price for each Mortgage Loan Package shall be the percentage
of par as stated in or as otherwise calculated pursuant to the related Purchase
Price and Terms Letter (subject to adjustment as provided therein), plus accrued
interest on the aggregate Stated Principal Balance of the Mortgage Loan Package
at the weighted average Mortgage Loan Remittance Rate from the related Cut-off
Date through the day prior to the related Closing Date, inclusive. The initial
principal amount of the Mortgage Loans shall be the aggregate Stated Principal
Balance of the Mortgage Loans, so computed as of the related Cut-off Date, after
application of scheduled payments of principal due on or before the related
Cut-off Date, whether or not collected (except with respect to Option ARM
Mortgage Loans, in which case, to the extent received). Such payments shall be
made to the account designated by the Company by wire transfer to immediately
available funds by 3:00 p.m., Charlotte, North Carolina time, on the related
Closing Date.
The Purchaser shall be entitled to (1) all scheduled principal due (except
with respect to Option ARM Mortgage Loans, in which case, to the extent
received) after the related Cut-off Date, (2) all other recoveries of principal
collected on or after the related Cut-off Date (provided, however, that, except
with respect to Option ARM Mortgage Loans, all scheduled payments of principal
due on or before the related Cut-off Date and collected by the Company or any
successor servicer after the related Cut-off Date shall belong to the Company)
and (3) all payments of interest on the Mortgage Loans at the Mortgage Loan
Remittance Rate (minus that portion of any such payment that is allocable to the
period prior to the related Cut-off Date). The Stated Principal Balance of each
Mortgage Loan as of the related Cut-off Date is determined after application of
payments of principal due on or before the related Cut-off Date whether or not
collected together with any unscheduled principal prepayments collected prior to
the related
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Cut-off Date, provided, however, that payments of scheduled principal and
interest prepaid for a Due Date beyond the Cut-off Date shall not be applied to
the principal balance as of the Cut-off Date. Such prepaid amounts (minus
interest at the Servicing Fee Rate) shall be the property of the Purchaser. The
Company shall deposit any such prepaid amounts into the Custodial Account for
the benefit of the Purchaser.
(c) Possession of Mortgage Files; Maintenance of Servicing Files.
The contents of each Servicing File are and shall be held in trust by the
Company for the benefit of the Purchaser as the owner thereof. Possession of
each Servicing File by the Company is at the will of the Purchaser for the sole
purpose of servicing the related Mortgage Loan, and such retention and
possession by the Company is in a custodial capacity only. Upon the sale of the
Mortgage Loans the ownership of each Mortgage Note, the related Mortgage and the
related Mortgage File and Servicing File shall vest immediately in the
Purchaser, and the ownership of all records and documents with respect to the
related Mortgage Loan prepared by or which come into the possession of the
Company shall vest immediately in the Purchaser and shall be retained and
maintained by the Company, in trust, at the will of the Purchaser and only in
such custodial capacity. The Company shall release its custody of the contents
of any Servicing File only in accordance with written instructions from the
Purchaser, unless such release is required as incidental to the Company's
servicing of the Mortgage Loans or is in connection with a repurchase of any
Mortgage Loan pursuant to Section 3.03 or 6.02.
Section 2.02 Books and Records; Transfers of Mortgage Loans.
From and after the sale of the Mortgage Loans to the Purchaser all rights
arising out of the Mortgage Loans, including, but not limited to, all funds
received on or in connection with the Mortgage Loans, except Prepayment
Premiums, shall be received and held by the Company in trust for the benefit of
the Purchaser as owner of the Mortgage Loans, and the Company, if applicable,
shall retain record title to the related Mortgages for the sole purpose of
facilitating the servicing and the supervision of the servicing of the Mortgage
Loans.
The sale of each Mortgage Loan shall be reflected on the Company's balance
sheet and other financial statements, tax returns and business records as a sale
of assets by the Company. The Company shall be responsible for maintaining, and
shall maintain, a complete set of books and records for each Mortgage Loan,
which shall be marked clearly to reflect the ownership of each Mortgage Loan by
the Purchaser. In particular, the Company shall maintain in its possession,
available for inspection by the Purchaser, or its designee, and shall deliver to
the Purchaser upon demand, evidence of compliance with all federal, state and
local laws, rules and regulations, and requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇
Mac, including but not limited to documentation as to the method used in
determining the applicability of the provisions of the Flood Disaster Protection
Act of 1973, as amended, to the Mortgaged Property, documentation evidencing
insurance coverage and eligibility of any condominium project for approval by
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and periodic inspection reports as required by Section
4.13. To the extent that original documents are not required for purposes of
realization of Liquidation Proceeds or Insurance Proceeds, documents maintained
by the Company may be in the form of microfilm or microfiche or such other
reliable means of recreating original documents, including
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but not limited to, optical imagery techniques so long as the Company complies
with the requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac.
The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by the Purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.
The Company shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Company shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Company shall be under no obligation to deal with any person
with respect to this Agreement or the Mortgage Loans unless the books and
records show such person as the owner of the Mortgage Loan. The Purchaser may,
subject to the terms of this Agreement, sell and transfer one or more of the
Mortgage Loans. The Purchaser shall advise the Company of any such transfer.
Upon receipt of notice of the transfer, the Company shall ▇▇▇▇ its books and
records to reflect the ownership of the Mortgage Loans of such assignee, and
shall release the previous Purchaser from its obligations hereunder with respect
to the Mortgage Loans sold or transferred. If the Company receives notification
of a transfer less than five Business Days before the last calendar day of the
month, the Company's duties to remit and report as required by Article V shall
begin with the next Due Period.
Section 2.03 Custodial Agreement; Delivery of Documents.
Pursuant to the related Custodial Agreement, the Company will, with respect
to each Mortgage Loan, deliver and release the Mortgage Loan Documents to the
Custodian at least five Business Days prior to the related Closing Date. In
addition, in connection with the assignment of any MERS Designated Mortgage
Loan, the Company agrees that on or prior to each Closing Date it will cause, at
its own expense, the MERS System to indicate that the related Mortgage Loans
have been assigned by the Company to the Purchaser in accordance with this
Agreement by entering in the MERS System the information required by the MERS
System to identify the Purchaser as owner of such Mortgage Loans. The Company
further agrees that it will not alter the information referenced in this
paragraph with respect to any Mortgage Loan during the term of this Agreement
unless and until such Mortgage Loan is repurchased in accordance with the terms
of this Agreement.
The Custodian shall be required to certify its receipt of the Mortgage Loan
Documents required to be delivered pursuant to the Custodial Agreement prior to
the related Closing Date, as evidenced by the initial certification of the
Custodian in the form annexed to the Custodial Agreement. The Company shall be
responsible for recording the Assignments of Mortgage, if necessary, in
accordance with Accepted Servicing Practices and this Agreement. The Purchaser
shall be responsible for the initial and on-going fees and expenses of the
Custodian.
All recording fees and other costs associated with the recording of
Assignments of Mortgage and other relevant documents to the Purchaser or its
designee will be borne by the Company. For Mortgage Loans not registered under
the MERS System, if the Purchaser requests that the related Assignments of
Mortgage be recorded, the Company shall cause such
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Assignments of Mortgage which were delivered in blank to be completed and to be
recorded. The Company shall be required to deliver such Assignments of Mortgage
for recording within 30 days after the date on which the Company is notified
that recording will be required pursuant to this Section 2.03. The Company shall
furnish the Custodian with a copy of each Assignment of Mortgage submitted for
recording. In the event that any such Assignment is lost or returned unrecorded
because of a defect therein, the Company shall promptly have a substitute
Assignment of Mortgage prepared or have such defect cured, as the case may be,
and thereafter cause such Assignment of Mortgage to be duly recorded.
Except as otherwise provided in this Section 2.03, upon discovery or
receipt of notice of any materially defective Mortgage Loan Document, or that a
Mortgage Loan Document is missing, the Company shall have 90 days to cure such
defect or deliver such missing document to the Custodian. Any Mortgage that is
not executed as required or does not strictly comply with all legal requirements
shall be deemed to be materially defective. If the Company does not cure such
defect or deliver such missing document within such time period, the Company
shall either repurchase or substitute for such Mortgage Loan in accordance with
Section 3.03.
The Company shall forward to the Custodian original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 4.01 or 6.01 within one week of their
execution, provided, however, that the Company shall provide the Custodian with
a certified true copy of any such document submitted for recordation within ten
days after 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 60 days after its submission for recordation.
If the original or a copy certified by the appropriate recording office of
any document submitted for recordation to the appropriate public recording
office is not so delivered to the Custodian within 180 days following the
related Closing Date, and if the Company does not cure such failure within 30
days after receipt of written notification of such failure from the Purchaser,
the related Mortgage Loan shall, upon the request of the Purchaser, be
repurchased by the Company at a price and in the manner specified in Section
3.03.
In the event the public recording office is delayed in returning any
original document, the Company shall deliver to the Custodian within 180 days
after its submission for recordation, a copy of such document and an Officer's
Certificate, which shall (i) identify the recorded document, (ii) state that the
recorded document has not been delivered to the Custodian due solely to a delay
by the public recording office, (iii) state the amount of time generally
required by the applicable recording office to record and return a document
submitted for recordation and (iv) specify the date the applicable recorded
document will be delivered to the Custodian. The Company will be required to
deliver the document to the Custodian by the date specified in (iv) above. An
extension of the date specified in (iv) above may be requested from the
Purchaser, which consent shall not be unreasonably withheld. However, if the
Company cannot deliver such original or clerk-certified copy of any document
submitted for recordation to the appropriate public recording office within the
specified time for any reason, within 30 days after receipt of written
notification of such failure from the Purchaser, the Company shall repurchase
the related Mortgage Loan at the price and in the manner specified in Section
3.03.
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In addition to any rights granted to the Purchaser hereunder to underwrite
the Mortgage Loans and review the Mortgage Loan Documents prior to the Closing
Date, the Purchaser shall be entitled to conduct a due diligence review of the
Mortgage Files in accordance with the timetable and any additional terms and
conditions set forth in the Purchase Price and Terms Letter. Such underwriting
by the Purchaser or its designee shall not impair or diminish the rights of the
Purchaser or any of its successors under this Agreement with respect to a breach
of the representations and warranties contained in this Agreement. The fact that
the Purchaser or its designee has conducted or has failed to conduct any partial
or complete examination of the Mortgage Files shall not affect the Purchaser's
or any of its successors' rights to demand repurchase or other relief or remedy
provided for in this Agreement.
Section 2.04 Quality Control Procedures.
The Company shall have an internal quality control program that verifies,
on a regular basis, the existence and accuracy of the legal documents, credit
documents, property appraisals, and underwriting decisions. The program shall
include evaluating and monitoring the overall quality of the Company's loan
production and the servicing activities of the Company in accordance with
industry standards. The Company shall make available upon request of any
Purchaser information regarding its quality control program.
Section 2.05 Closing Conditions.
The closing for the purchase and sale of each Mortgage Loan Package shall
take place on the respective Closing Date. The closing shall be either by
telephone, confirmed by letter or wire as the parties shall agree, or conducted
in person, at such place as the parties may agree.
The closing for each Mortgage Loan Package shall be subject to the
satisfaction of each of the following conditions precedent:
(a) with respect to the Purchaser's obligations to close:
(i) the Company shall have delivered to the Purchaser and the
Custodian the related Mortgage Loan Schedule and an electronic data file
containing information on a loan-level basis;
(ii) all of the representations and warranties of the Company under
this Agreement shall be true and correct as of the related Closing Date (or,
with respect to Section 3.02, such other date specified therein) in all material
respects and no default shall have occurred hereunder which, with notice or the
passage of time or both, would constitute an Event of Default hereunder;
(iii) the Purchaser and its counsel shall have received an opinion
from the Company's counsel, substantially in the form of Exhibit G attached
hereto (with respect to the initial closing only);
(iv) the Purchaser shall have received from the Custodian an initial
certification with respect to its receipt of the Mortgage Loan Documents for the
related Mortgage Loans;
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(v) the Purchaser shall have received originals of the related
Memorandum of Sale, the related Purchase Price and Terms Letter and a funding
memorandum setting forth the Purchase Price(s), and the accrued interest
thereon, for the Mortgage Loan Package, in each case executed on behalf of the
Company;
(vi) no Material Adverse Change or Market Change Event shall have
occurred since the date of the Purchase Price and Terms Letter;
(vii) all other terms and conditions of this Agreement, the related
Memorandum of Sale and the related Purchase Price and Terms Letter to be
satisfied by the Company shall have been complied with in all material respects;
and
(b) with respect to the Company's obligations to close:
(i) the Company shall have received a copy of the initial
certification of the Custodian with respect to its receipt of the Mortgage Loan
Documents for the related Mortgage Loans;
(ii) the Company has received originals of the related Memorandum of
Sale, the related Purchase Price and Terms Letter and a funding memorandum
setting forth the Purchase Price(s), and accrued interest thereon, for the
Mortgage Loan Package, in each case executed on behalf of the Purchaser; and
(iii) all terms and conditions of this Agreement, the related
Memorandum of Sale and the related Purchase Price and Terms Letter to be
satisfied by the Purchaser shall have been materially complied with.
Upon satisfaction of the foregoing conditions, the Purchaser shall pay to
the Company on such Closing Date the Purchase Price for the related Mortgage
Loan Package, including accrued interest pursuant to Section 2.01 of this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties.
The Company hereby represents and warrants to the Purchaser that, as of the
related Closing Date:
(a) Due Organization and Authority.
The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has all licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in each
state where a Mortgaged Property is located if the laws of such state
require licensing or qualification in order to conduct business of the
type conducted by the Company, and in any event the
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Company is in compliance with the laws of any such state to the extent
necessary to ensure the enforceability of the related Mortgage Loan
and the servicing of such Mortgage Loan in accordance with the terms
of this Agreement; the Company has the full corporate power and
authority to execute and deliver this Agreement and to perform in
accordance herewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered
pursuant to this Agreement) by the Company and the consummation of the
transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Company; and all requisite corporate
action has been taken by the Company to make this Agreement valid and
binding upon the Company in accordance with its terms.
(b) Ordinary Course of Business.
The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Company, who is in the
business of selling and servicing loans, and the transfer, assignment
and conveyance of the Mortgage Notes and the Mortgages by the Company
pursuant to this Agreement are not subject to the bulk transfer or any
similar statutory provisions in effect in any applicable jurisdiction.
(c) No Conflicts.
Neither the execution and delivery of this Agreement, the acquisition
of the Mortgage Loans by the Company, the sale of the Mortgage Loans
to the Purchaser or the transactions contemplated hereby, nor the
fulfillment of or compliance with the terms and conditions of this
Agreement will conflict with or result in a breach of any of the
terms, articles of incorporation or by-laws or any legal restriction
or any agreement or instrument to which the Company is now a party or
by which it is bound, or constitute a default or result in the
violation of any law, rule, regulation, order, judgment or decree to
which the Company or its property is subject, or impair the ability of
the Purchaser to realize on the Mortgage Loans, or impair the value of
the Mortgage Loans.
(d) Ability to Service.
The Company is an approved seller/servicer of conventional residential
mortgage loans for ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, with the facilities,
procedures, and experienced personnel necessary for the sound
servicing of mortgage loans of the same type as the Mortgage Loans.
The Company is a HUD approved mortgagee pursuant to Section 203 of the
National Housing Act and is in good standing to sell mortgage loans to
and service mortgage loans for ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, and no event
has occurred, including but not limited to a change in insurance
coverage, which would make the Company unable to comply with ▇▇▇▇▇▇
Mae or ▇▇▇▇▇▇▇ Mac eligibility requirements or which would require
notification to either ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac.
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(e) Reasonable Servicing Fee; Fair Consideration.
The Company acknowledges and agrees that the Servicing Fee represents
reasonable compensation for performing such services and that the
entire Servicing Fee shall be treated by the Company, for accounting
and tax purposes, as compensation for the servicing and administration
of the Mortgage Loans pursuant to this Agreement. The consideration
received by the Company upon the sale of the Mortgage Loans under this
Agreement shall constitute fair consideration and reasonably
equivalent value for the Mortgage Loans.
(f) Ability to Perform; Solvency.
The Company does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in
this Agreement. The Company is solvent and the sale of the Mortgage
Loans will not cause the Company to become insolvent. The sale of the
Mortgage Loans is not undertaken to hinder, delay or defraud any of
the Company's creditors.
(g) No Litigation Pending.
There is no action, suit, proceeding or investigation pending or to
its knowledge threatened against the Company which, either in any one
instance or in the aggregate, may result in any material adverse
change in the business, operations, financial condition, properties or
assets of the Company, or in any material impairment of the right or
ability of the Company to carry on its business substantially as now
conducted, or in any material liability on the part of the Company, or
which would draw into question the validity of this Agreement or the
Mortgage Loans or of any action taken or to be contemplated herein, or
which would be likely to impair materially the ability of the Company
to perform under the terms of this Agreement.
(h) No Consent Required.
No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery
and performance by the Company of or compliance by the Company with
this Agreement or the sale of the Mortgage Loans as evidenced by the
consummation of the transactions contemplated by this Agreement, or if
required, such consent, approval, authorization or order has been
obtained prior to the related Closing Date.
(i) Selection Process.
The Mortgage Loans will be selected on such Closing Date from among
the outstanding fixed and adjustable rate one- to four-family mortgage
loans in the Company's portfolio at such Closing Date as to which the
representations and warranties set forth in Section 3.02 could be made
and such selection will not be made in a manner so as to affect
adversely the interests of the Purchaser.
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(j) No Untrue Information.
Neither this Agreement nor any statement, report or other document
furnished by or on behalf of the Company or to be furnished pursuant
to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of material fact or omits to
state a material fact necessary to make the statements contained
therein not misleading.
(k) Sale Treatment.
The Company has determined that the disposition of the Mortgage Loans
pursuant to this Agreement will be afforded sale treatment for
accounting and tax purposes.
(l) No Material Change.
There has been no material adverse change in the business, operations,
financial condition or assets of the Company since the date of the
Company's most recent financial statements.
(m) No Brokers' Fees.
The Company has not dealt with any broker, investment banker, agent or
other Person that may be entitled to any commission or compensation in
the connection with the sale of the Mortgage Loans.
(n) Anti-Money Laundering Law Compliance.
The Company has complied with all applicable anti-money laundering
laws and regulations, including without limitation the USA Patriot Act
of 2001 (collectively, the "Anti-Money Laundering Laws"); the Company
has established an anti-money laundering compliance program as
required by the Anti-Money Laundering Laws, has conducted the
requisite due diligence in connection with the origination of each
Mortgage Loan for purposes of the Anti-Money Laundering Laws,
including with respect to the legitimacy of the applicable Mortgagor
and the origin of the assets used by the said Mortgagor to purchase
the property in question, and maintains, and will maintain, sufficient
information to identify the applicable Mortgagor for purposes of the
Anti-Money Laundering Laws.
(o) Securities Law Compliance.
Neither the Company nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Mortgage
Loans, any interest in any Mortgage Loans or any other similar
security to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of any Mortgage Loans, any interest in any
Mortgage Loans or any other similar security from, or otherwise
approached or negotiated with respect to any Mortgage Loans, any
interest in any Mortgage Loans or any other similar security with, any
person in any manner, or
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made any general solicitation by means of general advertising or in
any other manner, or taken any other action which would constitute a
distribution of the Mortgage Loans under the Securities Act of 1933 or
which would render the disposition of any Mortgage Loans a violation
of Section 5 of the 1933 Act or require registration pursuant thereto,
nor will it act, nor has it authorized or will it authorize any person
to act, in such manner with respect to the Mortgage Loans.
(p) MERS.
The Company is in good standing, and will comply in all material
respects with the rules and procedures of MERS in connection with the
servicing of the MERS Designated Mortgage Loans. On or within two
Business Days following the related Closing Date, the Company shall
provide the Custodian and the Purchaser with a MERS Report reflecting
the Purchaser as the Investor on the MERS System with respect to each
MERS Designated Mortgage Loan and no Person as Interim Funder for each
MERS Designated Mortgage Loan.
(q) Financial Statements.
The Company has delivered to the Purchaser financial statements as
requested by the Purchaser. All such financial statements fairly
present the pertinent results of operations and changes in financial
position for each of such periods and the financial position at the
end of each such period of the Company and its subsidiaries and have
been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved. There
has been no change in the business, operations, financial condition,
properties or assets of the Company since the date of the Company's
financial statements that would have a material adverse effect on its
ability to perform its obligations under this Agreement.
(r) Compliance with the FACT Act.
As of the Closing Date, the sale or transfer of each Mortgage Loan by
the Company complies with all applicable federal, state and local
laws, rules and regulations governing such sale or transfer, including
without limitation, the Fair and Accurate Transactions Act (the "FACT
Act") and the Fair Credit Reporting Act, each as may be amended from
time to time, and the Company has not received any actual or
constructive notice of any identity theft, fraud, or other
misrepresentation in connection with such Mortgage Loan or any party
thereto.
Section 3.02 Representations and Warranties Regarding Individual Mortgage Loans.
As to each Mortgage Loan, the Company hereby represents and warrants to the
Purchaser that as of the related Closing Date all of the representations and
warranties set forth on Exhibit F are true, complete and correct.
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Section 3.03 Repurchase.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans to
the Purchaser and the delivery of the Mortgage Loan Documents to the Custodian
and shall inure to the benefit of the Purchaser, notwithstanding any restrictive
or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the
examination or failure to examine any Mortgage File. Upon discovery by either
the Company or the Purchaser of any materially defective or missing Mortgage
Loan Document ("Defective Document") or a breach of any of the foregoing
representations and warranties that materially and adversely affects the value
of a Mortgage Loan or the interest of the Purchaser (or that materially and
adversely affects the interests of the Purchaser in the related Mortgage Loan in
the case of a representation and warranty relating to a particular Mortgage
Loan), the party discovering such Defective Document or a breach shall give
prompt written notice to the other. Any such breach or Defective Document that
causes a Mortgage Loan not to be a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code shall be deemed to materially and adversely
affect the interests of the Purchaser.
Within 60 days after the earlier of either discovery by or notice to the
Company of any Defective Document or a breach of a representation or warranty
which materially and adversely affects the value of a Mortgage Loan or the
interest of the Purchaser therein, the Company shall use its best efforts
promptly to cure such breach in all material respects and, if such Defective
Document or breach cannot be cured, the Company shall, at the Purchaser's
option, repurchase such Mortgage Loan at the Repurchase Price. In the event that
a breach shall involve any representation or warranty set forth in Section 3.01,
and such breach cannot be cured within 60 days of the earlier of either
discovery by or notice to the Company of such breach, all of the Mortgage Loans
shall, at the Purchaser's option, be repurchased by the Company at the
Repurchase Price. However, if the breach or Defective Document shall involve a
representation or warranty set forth in Section 3.02 and the Company discovers
or receives notice of any such breach within 90 days of the related Closing
Date, the Company shall, if the breach or Defective Document cannot be cured, at
the Purchaser's option and provided that the Company has a Qualified Substitute
Mortgage Loan, rather than repurchase the Mortgage Loan as provided above,
remove such Mortgage Loan (a "Deleted Mortgage Loan") and substitute in its
place a Qualified Substitute Mortgage Loan or Loans, provided that any such
substitution shall be effected not later than 120 days after the related Closing
Date. Notwithstanding any of the foregoing, if a breach or Defective Document
would cause the Mortgage Loan to be other than a "qualified mortgage," as
defined in Section 860G(a)(3) of the Code, any such repurchase or substitution
must occur within 45 days from the date the breach or Defective Document was
discovered unless such breach is cured during such period.
If the Company has no Qualified Substitute Mortgage Loan, it shall
repurchase the deficient Mortgage Loan within 60 days after the written notice
of the breach or Defective Document. Notwithstanding the above sentence, within
60 days after the earlier of either discovery by, or notice to, the Company of
any breach of the representations or warranties set forth in Section 3.02
related to a predatory or abusive lending law, the Company shall repurchase such
Mortgage Loan at the Repurchase Price. Any repurchase of a Mortgage Loan or
Loans pursuant to the foregoing provisions of this Section 3.03 shall occur on a
date designated by the Purchaser and shall be accomplished by deposit in the
Custodial Account of the amount of the
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Repurchase Price for distribution to the Purchaser on the next scheduled
Remittance Date, after deducting therefrom any amount received in respect of
such repurchased Mortgage Loan or Loans and being held in the Custodial Account
for future distribution.
At the time of repurchase or substitution, the Purchaser and the Company
shall arrange for the reassignment of the Deleted Mortgage Loan to the Company
and the delivery to the Company of any documents held by the Custodian relating
to the Deleted Mortgage Loan. In the event of a repurchase or substitution, the
Company shall, simultaneously with such reassignment, give written notice to the
Purchaser that such repurchase or substitution has taken place, amend the
related Mortgage Loan Schedule to reflect the withdrawal of the Deleted Mortgage
Loan from this Agreement, and, in the case of substitution, identify a Qualified
Substitute Mortgage Loan and amend the related Mortgage Loan Schedule to reflect
the addition of such Qualified Substitute Mortgage Loan to this Agreement. In
connection with any such substitution, the Company shall be deemed to have made
as to such Qualified Substitute Mortgage Loan the representations and warranties
set forth in Sections 3.01 and 3.02 except that all such representations and
warranties set forth in this Agreement shall be deemed made as of the date of
such substitution. The Company shall effect such substitution by delivering to
the Custodian for such Qualified Substitute Mortgage Loan the documents required
by Section 2.03, with the Mortgage Note endorsed as required by Section 2.03. No
substitution will be made in any calendar month after the Determination Date for
such month. The Company shall deposit in the Custodial Account the Monthly
Payment less the Servicing Fee due on such Qualified Substitute Mortgage Loan or
Loans in the month following the date of such substitution. Monthly Payments due
with respect to Qualified Substitute Mortgage Loans in the month of substitution
shall be retained by the Company. With respect to any Deleted Mortgage Loan,
distributions to the Purchaser shall include the Monthly Payment due on any
Deleted Mortgage Loan in the month of substitution, and the Company shall
thereafter be entitled to retain all amounts subsequently received by the
Company in respect of such Deleted Mortgage Loan.
For any month in which the Company substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the amount (if
any) by which the aggregate principal balance of all such Qualified Substitute
Mortgage Loans as of the date of substitution is less than the aggregate Stated
Principal Balance of all such Deleted Mortgage Loans (after application of the
principal portion of the Monthly Payments due in the month of substitution) (the
"Substitution Adjustment Amount") shall be deposited into the Custodial Account
by the Company on or before the Remittance Date in the month succeeding the
calendar month during which the related Mortgage Loan is required to be
purchased or replaced hereunder.
In addition to such repurchase or substitution obligation, the Company
shall indemnify the Purchaser and hold it harmless against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from, a material
breach of the representations and warranties of the Company contained in this
Agreement; provided, however, that such indemnification shall not include
punitive, consequential, exemplary or special damages (other than punitive,
consequential, exemplary and special damages required to be paid by the
indemnified party under this Agreement to any Person (other than a party to this
Agreement or any of its affiliates) arising out of an action or
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proceeding by such Person, which damages shall be deemed to be direct damages to
the party required to pay such punitive, consequential, exemplary or incidental
damages). It is understood and agreed that the obligations of the Company set
forth in this Section 3.03 to cure, substitute for or repurchase a defective
Mortgage Loan and to indemnify the Purchaser as provided in this Section 3.03
constitute the sole remedies of the Purchaser respecting a breach of the
foregoing representations and warranties.
Any cause of action against the Company relating to or arising out of the
breach of any representations and warranties made in Sections 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) discovery of such breach by the
Purchaser or notice thereof by the Company to the Purchaser, (ii) failure by the
Company to cure such breach or repurchase such Mortgage Loan as specified above,
and (iii) demand upon the Company by the Purchaser for compliance with this
Agreement.
In the event that any Mortgage Loan is held by a REMIC, notwithstanding any
contrary provision of this Agreement, with respect to any Mortgage Loan that is
not in default or as to which no default is imminent, the Purchaser may, in
connection with any repurchase or substitution of a Mortgage Loan pursuant to
this Section 3.03, require that the Company deliver, at the Company's expense,
an Opinion of Counsel to the effect that such repurchase or substitution will
not (i) result in the imposition of taxes on "prohibited transactions" of such
REMIC (as defined in Section 860F of the Code) or otherwise subject the REMIC to
tax, or (ii) cause the REMIC to fail to qualify as a REMIC at any time.
Section 3.04 Repurchase of Mortgage Loans With First Payment Defaults.
If the related Mortgagor is 30 days or more delinquent with respect to a
Monthly Payment under a Mortgage Loan at any time prior to the expiration of the
Holding Period for such Mortgage Loan, the Company shall, at the Purchaser's
option, repurchase such Loan from the Purchaser in accordance with Section 3.03
hereof; provided, that the Company shall not be required to repurchase such
Mortgage Loan if it can demonstrate to the Purchaser's reasonable satisfaction
within 30 days of such reported delinquency that the related Mortgagor timely
made all payments required of the Mortgagor but such payment was otherwise
misapplied. In the event a Mortgagor exercises any right of recession it may
have with respect to the related Mortgage Loan that arises as a result of an act
or omission prior to the related Closing Date, the Company shall repurchase such
Mortgage Loan at the related Repurchase Price within 30 days of receiving notice
of such Mortgagor's intention to rescind the Mortgage Loan.
Section 3.05 Purchase Price Protection.
With respect to any Mortgage Loan that prepays in full at any time prior to
the date that is 60 days after the Closing Date for such Mortgage Loan, the
Company shall reimburse the Purchaser, within 30 days following the prepayment
in full of such Mortgage Loan, the amount (if any) by which the portion of the
Purchase Price paid by the Purchaser to the Company for such Mortgage Loan
exceeded 100% of the outstanding scheduled principal balance of the Mortgage
Loan as of the related Cut-off Date.
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Section 3.06 Review of Mortgage Loans.
From the related Closing Date until the date 30 days after the related
Closing Date, the Purchaser shall have the right to review the Mortgage Files
and obtain BPOs on the Mortgaged Properties relating to the Mortgage Loans
purchased on the related Closing Date, with the results of such BPO reviews to
be communicated to the Company for a period up to 30 days after the related
Closing Date. In addition, the Purchaser shall have the right to reject any
Mortgage Loan which in the Purchaser's sole determination (i) fails to conform
to the Underwriting Guidelines, (ii) is underwritten without verification of the
Mortgagor's assets and there is no credit report or FICO Score, (iii) is not an
acceptable credit risk, or (iv) the value of the Mortgaged Property pursuant to
any BPO varies by more than plus or minus 15% from the lesser of (A) the
original appraised value of the Mortgaged Property or (B) the purchase price of
the Mortgaged Property as of the date of origination of the related Mortgage
Loan. In the event that the Purchaser so rejects any Mortgage Loan, the Company
shall repurchase the rejected Mortgage Loan at the Repurchase Price in the
manner prescribed in Section 3.03 upon receipt of notice from the Purchaser of
the rejection of such Mortgage Loan. Any rejected Mortgage Loan shall be removed
from the terms of this Agreement. The Company shall make available all files
required by the Purchaser in order to complete its review, including all
CRA/HMDA required data fields. To the extent that during the course of the
Purchaser's initial review, the Purchaser discovers that the Mortgage Loans do
not otherwise meet the Company's Underwriting Guidelines or the terms of this
Agreement, the Purchaser shall have the right to carry out additional due
diligence reviews, which additional due diligence shall be at the expense of the
Purchaser. The Purchaser's decision to increase its due diligence review or
obtain additional BPO's or other property evaluations is at its sole discretion.
The additional review may be for any reason including but not limited to credit
quality, property valuations, and data integrity. Any review performed by the
Purchaser prior to the related Closing Date shall not limit the Purchaser's
rights or the Company's obligations under this section.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
(a) The Company, as an independent contractor, shall service and administer
the Mortgage Loans, all in accordance with the terms of this Agreement
(including, without limitation, the provisions set forth in the Regulation AB
Compliance Addendum attached as Exhibit K hereto), Accepted Servicing Practices,
applicable law and the terms of the Mortgage Notes and Mortgages. In connection
with such servicing and administration, the Company shall have full power and
authority, acting alone or through Subservicers, to do or cause to be done any
and all things in connection with such servicing and administration which the
Company may deem necessary or desirable, including, without limitation, the
power and authority (1) to execute and deliver, on behalf of the Purchaser,
customary consents or waivers and other instruments and documents, (2) to
consent, with respect to the Mortgage Loans it services, to transfers of any
Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages
(but only in the manner provided in this Agreement), (3) to collect any
Insurance Proceeds and other Liquidation Proceeds relating to the Mortgage Loans
it services, and (4) to effectuate foreclosure
-29-
or other conversion of the ownership of the Mortgaged Property securing any
Mortgage Loan it services. The Servicer shall represent and protect the
interests of the Purchaser in the same manner as it protects its own interests
in mortgage loans in its own portfolio in any claim, proceeding or litigation
regarding a Mortgage Loan and shall not make or permit any modification, waiver
or amendment of any term of any Mortgage Loan, except as provided pursuant to
Section 4.22. Without limiting the generality of the foregoing, the Company
shall continue, and is hereby authorized and empowered, to execute and deliver
on behalf of itself and the Purchaser, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Properties. If reasonably required by the Company, the Purchaser shall
furnish the Company with any powers of attorney and other documents necessary or
appropriate to enable the Company to carry out its servicing and administrative
duties under this Agreement.
(b) The Company may arrange for the subservicing of any Mortgage Loan it
services by a Subservicer pursuant to a Subservicing Agreement; provided,
however, that such subservicing arrangement and the terms of the related
Subservicing Agreement must provide for the servicing of such Mortgage Loan in a
manner consistent with the servicing arrangements contemplated hereunder. The
Company shall be solely liable for all fees owed to the Subservicer under the
Subservicing Agreement, regardless whether the Company's compensation hereunder
is adequate to pay such fees. Notwithstanding the provisions of any Subservicing
Agreement, any of the provisions of this Agreement relating to agreements or
arrangements between the Company and a Subservicer or reference to actions taken
through a Subservicer or otherwise, the Company shall remain obligated and
liable to the Purchaser for the servicing and administration of the Mortgage
Loans it services in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue of such Subservicing
Agreements or arrangements or by virtue of indemnification from the Subservicer
and to the same extent and under the same terms and conditions as if the Company
alone were servicing and administering those Mortgage Loans. All actions of each
Subservicer performed pursuant to the related Subservicing Agreement shall be
performed as agent of the Company with the same force and effect as if performed
directly by the Company. For purposes of this Agreement, the Company shall be
deemed to have received any collections, recoveries or payments with respect to
the Mortgage Loans it services that are received by a Subservicer regardless of
whether such payments are remitted by the Subservicer to the Company. Any
Subservicing Agreement entered into by the Company shall provide that it may be
assumed or terminated by the Purchaser at any time, if the Purchaser has assumed
the duties of the Company, or by any successor servicer, at the Purchaser's or
successor servicer's option, as applicable, without cost or obligation to the
assuming or terminating party or its assigns. Any Subservicing Agreement, and
any other transactions or services relating to the Mortgage Loans involving a
Subservicer, shall be deemed to be between the Company and such Subservicer
alone, and the Purchaser shall not be deemed parties thereto and shall have no
claims or rights of action against, rights, obligations, duties or liabilities
to or with respect to the Subservicer or its officers, directors or employees,
except as set forth in Section 4.01(a).
Section 4.02 Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not postponed
pursuant to Section 4.01 is not paid when the same becomes due and payable, or
in the event the
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Mortgagor fails to perform any other covenant or obligation under the Mortgage
Loan and such failure continues beyond any applicable grace period, the Company
shall take such action as (1) the Company would take under similar circumstances
with respect to a similar mortgage loan held for its own account for investment,
(2) shall be consistent with Accepted Servicing Practices, (3) the Company shall
determine prudently to be in the best interest of the Purchaser, and (4) is
consistent with any related PMI Policy. The Company, on behalf of the Purchaser,
may also, in its sole and exclusive discretion, as an alternative to
foreclosure, sell defaulted Mortgage Loans at fair market value to
third-parties, if the Company believes, in its sole and exclusive discretion,
that such sale would maximize proceeds to the Purchaser (on a present value
basis) with respect to each such Mortgage Loan. Notwithstanding any other
provision in this Agreement or otherwise, the Company shall have no liability to
the Purchaser or any other party for the Company's determination hereunder.
Foreclosure or comparable proceedings shall be initiated within 120 days after
default with respect to Mortgaged Properties for which no satisfactory
arrangements can be made for collection of delinquent payments unless prevented
by statutory limitations or states whose bankruptcy laws prohibit such actions
within such timeframe. The Company shall use its best efforts to realize upon
defaulted Mortgage Loans in such manner as will maximize the receipt of
principal and interest by the Purchaser, taking into account, among other
things, the timing of foreclosure proceedings. In such connection, the Company
shall from its own funds make all necessary and proper Servicing Advances,
provided, however, that the Company shall not be required to expend its own
funds in connection with any foreclosure or towards the restoration or
preservation of any Mortgaged Property, unless it shall determine (a) that such
preservation, restoration and/or foreclosure will increase the proceeds of
liquidation of the Mortgage Loan to Purchaser after reimbursement to itself for
such expenses and (b) that such expenses will be recoverable by it either
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Custodial Account pursuant to Section 4.05) or
through Insurance Proceeds (respecting which it shall have similar priority).
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, in the event
the Company has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, or if the Purchaser
otherwise requests an environmental inspection or review of such Mortgaged
Property, such an inspection or review is to be conducted by a qualified
inspector. The cost for such inspection or review shall be borne by the
Purchaser. Upon completion of the inspection or review, the Company shall
promptly provide the Purchaser with a written report of the environmental
inspection.
After reviewing the environmental inspection report, the Purchaser shall
determine how the Company shall proceed with respect to the Mortgaged Property.
In the event (a) the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes
and (b) the Purchaser directs the Company to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Company shall be reimbursed for
all reasonable costs associated with such foreclosure or acceptance of a deed in
lieu of foreclosure and any related environmental clean up costs, as applicable,
from the related Liquidation Proceeds, and/or Insurance Proceeds, or if the
Liquidation Proceeds and/or Insurance Proceeds are insufficient to fully
reimburse the Company, the Company shall be entitled to be reimbursed from
amounts in the Custodial Account pursuant to Section 4.05 hereof. In the event
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the Purchaser directs the Company not to proceed with foreclosure or acceptance
of a deed in lieu of foreclosure, the Company shall be reimbursed for all
Servicing Advances made with respect to the related Mortgaged Property from the
Custodial Account pursuant to Section 4.05 hereof.
Section 4.03 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, in accordance with this Agreement and Accepted
Servicing Standards, the Company shall proceed diligently to collect all
payments due under each of the Mortgage Loans when the same shall become due and
payable and shall take special care in ascertaining and estimating Escrow
Payments and all other charges that will become due and payable with respect to
the Mortgage Loan and the Mortgaged Property, to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
Consistent with the foregoing, the Company may in its discretion (i) waive
any late payment charge with respect to a Mortgage Loan it services and (ii)
extend the due dates for payments due on a Mortgage Note for a period not
greater than 120 days; provided, however, that the Company cannot extend the
maturity of any such Mortgage Loan past the date on which the final payment is
due on the latest maturing Mortgage Loan as of the related Cut-off Date. In the
event of any such arrangement, the Company shall make Monthly Advances on the
related Mortgage Loan in accordance with the provisions of Section 5.03 during
the scheduled period in accordance with the amortization schedule of such
Mortgage Loan without modification thereof by reason of such arrangements. The
Company shall not be required to institute or join in litigation with respect to
collection of any payment (whether under a Mortgage, Mortgage Note or otherwise
or against any public or governmental authority with respect to a taking or
condemnation) if it reasonably believes that enforcing the provision of the
Mortgage or other instrument pursuant to which such payment is required is
prohibited by applicable law.
Section 4.04 Establishment of and Deposits to Custodial Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts, titled "[_________], in trust
for [Name of the Purchaser] and/or subsequent purchasers of Mortgage Loans, and
various Mortgagors - P&I." The Custodial Account shall be established with a
Qualified Depository. Upon request of the Purchaser and within ten days thereof,
the Company shall provide the Purchaser with written confirmation of the
existence of such Custodial Account. Any funds deposited in the Custodial
Account shall at all times be insured to the fullest extent allowed by
applicable law. Funds deposited in the Custodial Account may be drawn on by the
Company in accordance with Section 4.05.
The Company shall deposit in the Custodial Account within one Business Day
of Company's receipt, and retain therein, the following collections received by
the Company and payments made by the Company after the related Cut-off Date,
other than payments of principal and interest due on or before the related
Cut-off Date, or received by the Company prior to the related Cut-off Date but
allocable to a period subsequent thereto:
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(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments (including Prepayment Premiums
paid by the Mortgagor or by the Company pursuant to Section 4.22 of
this Agreement);
(ii) all payments on account of interest on the Mortgage Loans adjusted
to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds, including amounts required to be deposited
pursuant to Section 4.10 (other than proceeds to be held in the
Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with
Section 4.14), Section 4.11 and Section 4.15;
(v) all Condemnation Proceeds which are not applied to the restoration
or repair of the Mortgaged Property or released to the Mortgagor in
accordance with Section 4.14;
(vi) any amounts required to be deposited in the Custodial Account
pursuant to Section 4.01, 5.01, 5.03, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of or
substitution for any Mortgage Loan pursuant to Section 3.03;
(viii) with respect to each Principal Prepayment an amount (to be paid by
the Company out of its funds) which, when added to all amounts
allocable to interest received in connection with the Principal
Prepayment, equals one month's interest on the amount of principal
so prepaid at the Mortgage Loan Remittance Rate;
(ix) any amounts required to be deposited by the Company pursuant to
Section 4.10 in connection with the deductible clause in any blanket
hazard insurance policy; and
(x) any amounts received with respect to or related to any REO Property
and all REO Disposition Proceeds pursuant to Section 4.16.
The foregoing requirements for deposit into the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges, assumption
fees and other ancillary income (other than Prepayment Premiums), to the extent
permitted by Section 6.01, need not be deposited by the Company into the
Custodial Account. Any interest paid on funds deposited in the Custodial Account
by the depository institution shall accrue to the benefit of the Company and the
Company shall be entitled to retain and withdraw such interest from the
Custodial Account pursuant to Section 4.05. The Company shall maintain adequate
records with respect to all deposits and withdrawals made pursuant to this
Section 4.04 and Section 4.05. All funds required to be deposited in the
Custodial Account shall be held in trust for the Purchaser until withdrawn in
accordance with Section 4.05.
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Section 4.05 Permitted Withdrawals From Custodial Account.
The Company shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the manner
provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the Company's funds made
pursuant to Section 5.03, the Company's right to reimburse itself
pursuant to this subclause (ii) being limited to amounts received on
the related Mortgage Loan which represent late payments of principal
and/or interest respecting which any such advance was made, it being
understood that, in the case of any such reimbursement, the
Company's right thereto shall be prior to the rights of the
Purchaser, except that, where the Company is required to repurchase
a Mortgage Loan pursuant to Section 3.03 or 6.02, the Company's
right to such reimbursement shall be subsequent to the payment to
the Purchaser of the Repurchase Price pursuant to such sections and
all other amounts required to be paid to the Purchaser with respect
to such Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances, and for any
unpaid Servicing Fees, the Company's right to reimburse itself
pursuant to this subclause (iii) with respect to any Mortgage Loan
being limited to related Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Company from the Mortgagor or otherwise relating to
the Mortgage Loan, it being understood that, in the case of any such
reimbursement, the Company's right thereto shall be prior to the
rights of the Purchaser, except that where the Company is required
to repurchase a Mortgage Loan pursuant to Section 3.03, 3.04 or
6.02, in which case the Company's right to such reimbursement shall
be subsequent to the payment to the Purchaser of the Repurchase
Price pursuant to such sections and all other amounts required to be
paid to the Purchaser with respect to such Mortgage Loan;
(iv) to pay itself as part of its servicing compensation interest on
funds deposited in the Custodial Account;
(v) to reimburse itself for expenses incurred and reimbursable to it
pursuant to Section 8.01;
(vi) to pay any amount required to be paid pursuant to Section 4.16
related to any REO Property, it being understood that, in the case
of any such expenditure or withdrawal related to a particular REO
Property, the amount of such expenditure or withdrawal from the
Custodial Account shall be limited to amounts on deposit in the
Custodial Account with respect to the related REO Property;
(vii) to remove funds inadvertently placed in the Custodial Account by the
Company;
(viii) to transfer funds to another Qualified Depository; and
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(ix) to clear and terminate the Custodial Account upon the termination of
this Agreement.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Company shall withdraw all funds from the Custodial Account
except for those amounts which, pursuant to Section 5.01, the Company is not
obligated to remit on such Remittance Date. The Company may use such withdrawn
funds only for the purposes described in this Section 4.05.
The Company shall keep and maintain separate accounting, on a Mortgage Loan
by Mortgage Loan basis, for the purpose of justifying any withdrawal from the
Custodial Account.
Section 4.06 Establishment of and Deposits to Escrow Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of time deposit or demand accounts, titled,
"[____________], in trust for [Name of the Purchaser] and/or subsequent
purchasers of Residential Mortgage Loans, and various Mortgagors - T & I." The
Escrow Accounts shall be established with a Qualified Depository, in a manner
which shall provide maximum available insurance thereunder. Upon request of the
Purchaser and within ten days thereof, the Company shall provide the Purchaser
with written confirmation of the existence of such Escrow Account. Funds
deposited in the Escrow Account may be drawn on by the Company in accordance
with Section 4.07.
The Company shall deposit in the Escrow Account or Accounts, within two
Business Days after the Company's receipt, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans, for
the purpose of effecting timely payment of any such items as required
under the terms of this Agreement;
(ii) all amounts representing Insurance Proceeds or Condemnation Proceeds
which are to be applied to the restoration or repair of any Mortgaged
Property; and
(iii) all payments on account of Buydown Funds.
The Company shall make withdrawals from the Escrow Account only to effect
such payments as are required under this Agreement, as set forth in Section
4.07. The Company shall be entitled to retain any interest paid on funds
deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Company shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes.
Section 4.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the Company
only:
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(i) to effect timely payments of ground rents, taxes, assessments, water
rates, mortgage insurance premiums, condominium charges, fire and
hazard insurance premiums or other items constituting Escrow
Payments for the related Mortgage;
(ii) to reimburse the Company for any Servicing Advances made by the
Company pursuant to Section 4.08 with respect to a related Mortgage
Loan, but only from amounts received on the related Mortgage Loan
which represent late collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of the
amounts required under the terms of the related Mortgage Loan;
(iv) for transfer to the Custodial Account for 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 the restoration or repair of the Mortgaged
Property in accordance with the procedures outlined in Section 4.14;
(vi) to pay to the Company, or any Mortgagor to the extent required by
law, any interest paid on the funds deposited in the Escrow Account;
(vii) to remove funds inadvertently placed in the Escrow Account by the
Company;
(viii) to remit to the Purchaser payments on account of Buydown Funds as
applicable; and
(ix) to clear and terminate the Escrow Account on the termination of this
Agreement.
Section 4.08 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Company shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates,
sewer rents, and other charges which are or may become a lien upon the Mortgaged
Property and the status of PMI Policy premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date, employing for such purpose deposits
of the Mortgagor in the Escrow Account which shall have been estimated and
accumulated by the Company in amounts sufficient for such purposes, as allowed
under the terms of the Mortgage. The Company assumes full responsibility for the
timely payment of all such bills and shall effect timely payment of all such
charges irrespective of each Mortgagor's faithful performance in the payment of
same of the making of the Escrow Payments, and the Company shall make advances
from its own funds to effect such payments, which advances shall constitute
Servicing Advances hereunder; provided that the Company shall be required to so
advance only to the extent that the Company, in its good faith judgment,
believes the Servicing Advance to be recoverable from Insurance Proceeds or
Liquidation Proceeds or otherwise. The costs incurred by the Company, if any, in
effecting the timely payments of taxes and assessments on the Mortgaged
Properties and related insurance premiums shall not be added to the Stated
Principal
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Balances of the related Mortgage Loans, notwithstanding that the terms of such
Mortgage Loans so permit.
Section 4.09 Transfer of Accounts.
The Company may transfer the Custodial Account or the Escrow Account to a
different Qualified Depository from time to time; provided that the Company
shall give written notice to the Purchaser of any proposed change of the
location of either Account not later than ten Business Days prior to any change
thereof.
Section 4.10 Maintenance of Hazard Insurance.
The Company shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by an
insurer acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac against loss by fire, hazards of
extended coverage and such other hazards as are customary or required by law in
the area where the Mortgaged Property is located, in an amount which is at least
equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan and (ii) the greater of (a) the outstanding
principal balance of the Mortgage Loan and (b) an amount such that the proceeds
thereof shall be sufficient to prevent the Mortgagor or the loss payee from
becoming a co-insurer. In the event a hazard insurance policy shall be in danger
of being terminated, or in the event the insurer shall cease to be acceptable to
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, the Company shall notify the Purchaser and the
related Mortgagor, and shall use its best efforts, as permitted by applicable
law, to obtain from another qualified insurer a replacement hazard insurance
policy substantially and materially similar in all respects to the original
policy. In no event, however, shall a Mortgage Loan be without a hazard
insurance policy at any time, subject only to Section 4.11 hereof.
If the related Mortgaged Property is located in an area identified by the
Flood Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available), the Company will cause to be
maintained 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 Company determines in accordance with applicable law and
pursuant to the FEMA 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 Company shall notify the related Mortgagor to obtain such
flood insurance coverage, and if said Mortgagor fails to obtain the required
flood insurance coverage within 45 days after such notification, the Company
shall immediately force place the required flood insurance on the Mortgagor's
behalf. Any out-of-pocket expenses or advance made by the Company on such force
placed flood insurance coverage shall be deemed a Servicing Advance.
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If a Mortgage is secured by a unit in a condominium project, the Company
shall verify that the coverage required of the owner's association, including
hazard, flood, liability, and fidelity coverage, is being maintained in
accordance with then current ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac requirements, and secure
from the owner's association its agreement to notify the Company promptly of any
change in the insurance coverage or of any condemnation or casualty loss that
may have a material effect on the value of the Mortgaged Property as security.
In the event that the Purchaser or the Company shall determine that the
Mortgaged Property should be insured against loss or damage by hazards and risks
not covered by the insurance required to be maintained by the Mortgagor pursuant
to the terms of the Mortgage, the Company shall communicate and consult with the
Mortgagor with respect to the need for such insurance and bring to the
Mortgagor's attention the desirability of protection of the Mortgaged Property.
All policies required hereunder shall name the Company as loss payee and
shall be endorsed with standard mortgagee clauses, without contribution, which
shall provide for at least 30 days prior written notice of any cancellation,
reduction in amount or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom of choice in
selecting either an insurance carrier or agent, provided, however, that the
Company shall not accept any such insurance policies from insurance companies
unless such companies are acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and are
licensed to do business in the jurisdiction in which the Mortgaged Property is
located. The Company shall determine that such policies provide sufficient risk
coverage and amounts, that they insure the property owner, and that they
properly describe the property address. The Company 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 4.04, any amounts collected by the Company under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Company's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05.
Section 4.11 Maintenance of Mortgage Impairment Insurance.
In the event that the Company shall obtain and maintain a blanket policy
insuring against losses arising from fire and hazards covered under extended
coverage on all of the Mortgage Loans, then, to the extent such policy (1) names
the Company as loss payee, (2) provides coverage in an amount equal to the
amount required pursuant to Section 4.10 without coinsurance, and (3) otherwise
complies with Accepted Servicing Practices and all other requirements of Section
4.10, it shall conclusively be deemed to have satisfied its obligations as set
forth in Section 4.10. The Company shall prepare and make any claims on the
blanket policy as deemed necessary by the Company in accordance with prudent
servicing practices. Any amounts collected by the Company under any such policy
relating to a Mortgage Loan shall be
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deposited in the Custodial Account subject to withdrawal pursuant to Section
4.05. Such policy may contain a deductible clause, in which case, in the event
that there shall not have been maintained on the related Mortgaged Property a
policy complying with Section 4.10, and there shall have been a loss which would
have been covered by such policy, the Company shall deposit in the Custodial
Account at the time of such loss the amount not otherwise payable under the
blanket policy because of such deductible clause, such amount to be deposited
from the Company's funds, without reimbursement therefor. Upon request of the
Purchaser, the Company shall cause to be delivered to the Purchaser a certified
true copy of such policy and a statement from the insurer thereunder that such
policy shall in no event be terminated or materially modified without 30 days'
prior written notice to the Purchaser.
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions Insurance.
The Company shall maintain with responsible companies, at its own expense,
a blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad
coverage on all officers, employees or other persons acting in any capacity
requiring such persons to handle funds, money, documents or papers relating to
the Mortgage Loans ("Company Employees"). Any such Fidelity Bond and Errors and
Omissions Insurance Policy shall be in the form of the Mortgage Banker's Blanket
Bond and shall protect and insure the Company against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
Company Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy
also shall protect and insure the Company against losses in connection with the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 4.12
requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall
diminish or relieve the Company from its duties and obligations as set forth in
this Agreement. The minimum coverage under any such Fidelity Bond and Errors and
Omissions Insurance Policy shall be at least equal to the amounts acceptable to
▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac. Upon the request of the Purchaser, the Company shall
cause to be delivered to the Purchaser a certificate of insurance for such
Fidelity Bond and Errors and Omissions Insurance Policy and a statement from the
surety and the insurer that such Fidelity Bond and Errors and Omissions
Insurance Policy shall in no event be terminated or materially modified without
30 days' prior written notice to the Purchaser.
Section 4.13 Inspections.
If any Mortgage Loan is more than 60 days delinquent, the Company
immediately shall inspect the Mortgaged Property and shall conduct subsequent
inspections in accordance with Accepted Servicing Practices or as may be
required by the primary mortgage guaranty insurer. The Company shall keep a
written report of each such inspection.
Section 4.14 Restoration of Mortgaged Property.
The Company need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Accepted Servicing Practices. For claims greater than
$15,000, at a minimum the Company shall comply with the
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following conditions in connection with any such release of Insurance Proceeds
or Condemnation Proceeds:
(i) the Company shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with
respect thereto;
(ii) the Company shall take all steps necessary to preserve the priority
of the lien of the Mortgage, including, but not limited to requiring
waivers with respect to mechanics' and materialmen's liens;
(iii) the Company shall verify that the Mortgage Loan is not in default;
and
(iv) pending repairs or restoration, the Company shall place the Insurance
Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional loss payee, the Company is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Section 4.15 Maintenance of PMI Policy; Claims.
If a Mortgage Loan has original LTV of 80% or greater, the Company shall,
without any cost to the Purchaser maintain or cause the Mortgagor to maintain in
full force and effect a PMI Policy insuring the portion over 75% until
terminated pursuant to the Homeowners Protection Act of 1998, 12 UCS Section
4901, et seq. In the event that such PMI Policy shall be terminated other than
as required by law, the Company shall obtain from another Qualified Insurer a
comparable replacement policy, with a total coverage equal to the remaining
coverage of such terminated PMI Policy. If the insurer shall cease to be a
Qualified Insurer, the Company shall determine whether recoveries under the PMI
Policy are jeopardized for reasons related to the financial condition of such
insurer, it being understood that the Company shall in no event have any
responsibility or liability for any failure to recover under the PMI Policy for
such reason. If the Company determines that recoveries are so jeopardized, it
shall notify the Purchaser and the Mortgagor, if required, and obtain from
another Qualified Insurer a replacement insurance policy. The Company 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 Company would have been
covered thereunder. In connection with any assumption or substitution agreement
entered into or to be entered into pursuant to Section 6.01, the Company 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 Company shall obtain a replacement PMI Policy as provided above.
In connection with its activities as servicer, the Company agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any PMI Policy in a timely fashion in accordance with the terms of
such PMI Policy and, in this regard, to take such action as shall be necessary
to permit recovery under any PMI Policy respecting a defaulted Mortgage Loan.
Pursuant to Section 4.04, any amounts collected by the Company under any PMI
Policy shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 4.05.
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Section 4.16 Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser, or in the event the Purchaser is
not authorized or permitted to hold title to real property in the state where
the REO Property is located, or would be adversely affected under the "doing
business" or tax laws of such state by so holding title, the deed or certificate
of sale shall be taken in the name of such Person or Persons as shall be
consistent with an Opinion of Counsel obtained by the Company from any attorney
duly licensed to practice law in the state where the REO Property is located.
The Person or Persons holding such title other than the Purchaser shall
acknowledge in writing that such title is being held as nominee for the
Purchaser.
The Company shall manage, conserve, protect and operate each REO Property
for the Purchaser solely for the purpose of its prompt disposition and sale.
However, the Purchaser shall have the option to manage and operate the REO
Property provided the Purchaser gives written notice of its intention to do so
within 60 days after such REO Property is acquired in foreclosure or by deed in
lieu of foreclosure. The election by the Purchaser to manage the REO Property
shall not constitute a termination of any rights of the Company pursuant to
Section 11.02.
If the Purchaser does not elect to manage and operate the REO Property, the
Company shall manage, conserve, protect and operate each REO Property for the
Purchaser solely for the purpose of its prompt disposition and sale. The
Company, either itself or through an agent selected by the Company, shall
manage, conserve, protect and operate the REO Property in the same manner that
it manages, conserves, protects and operates other foreclosed property for its
own account, and in the same manner that similar property in the same locality
as the REO Property is managed. The Company shall attempt to sell the same (and
may temporarily rent the same for a period not greater than one year, except as
otherwise provided below) on such terms and conditions as the Company deems to
be in the best interest of the Purchaser.
The Company shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within one year
after title has been taken to such REO Property, unless (i) a REMIC election has
not been made with respect to the arrangement under which the Mortgage Loans and
the REO Property are held, and (ii) the Company determines, and gives an
appropriate notice to the Purchaser to such effect, that a longer period is
necessary for the orderly liquidation of such REO Property. If a period longer
than one year is permitted under the foregoing sentence and is necessary to sell
any REO Property, (i) the Company shall report monthly to the Purchaser as to
the progress being made in selling such REO Property and (ii) if, with the
written consent of the Purchaser, a purchase money mortgage is taken in
connection with such sale, such purchase money mortgage shall name the Company
as mortgagee, and such purchase money mortgage shall not be held pursuant to
this Agreement, but instead a separate participation agreement among the Company
and the Purchaser shall be entered into with respect to such purchase money
mortgage.
The Company shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required
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and available under the Flood Disaster Protection Act of 1973, as amended, flood
insurance in the amount required above.
The disposition of REO Property shall be carried out by the Company at such
price, and upon such terms and conditions, as the Company deems to be in the
best interests of the Purchaser. Notwithstanding any other provision in this
Section, no REO Property shall be marketed for less than the Appraised Value
without the prior consent of the Purchaser, and no REO Property shall be sold
for less than 90% of its Appraised Value without the prior consent of the
Purchaser. The proceeds of sale of the REO Property shall be promptly deposited
in the Custodial Account. As soon as practical thereafter the expenses of such
sale shall be paid and the Company shall reimburse itself for any related
unreimbursed Servicing Advances, unpaid Servicing Fees and unreimbursed advances
made pursuant to Section 5.03. On the Remittance Date immediately following the
Principal Prepayment Period in which such sale proceeds are received the net
cash proceeds of such sale remaining in the Custodial Account shall be
distributed to the Purchaser.
The Company shall withdraw from the Custodial Account funds necessary for
the proper operation management and maintenance of the REO Property, including
the cost of maintaining any hazard insurance pursuant to Section 4.11. The
Company shall make monthly distributions on each Remittance Date to the
Purchaser of the net cash flow from the REO Property (which shall equal the
revenues from such REO Property net of the expenses described in this Section
4.16 and of any reserves reasonably required from time to time to be maintained
to satisfy anticipated liabilities for such expenses).
Section 4.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 5.02, the Company
shall furnish to the Purchaser on or before the Remittance Date each month a
statement with respect to any REO Property covering the operation of such REO
Property for the previous month and the Company's efforts in connection with the
sale of such REO Property and any rental of such REO Property incidental to the
sale thereof for the previous month. That statement shall be accompanied by such
other information as the Purchaser shall reasonably request.
Section 4.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Company pursuant to a deed in lieu of foreclosure, the Company
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged Property.
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Company shall report such foreclosure or abandonment as required pursuant to
Section 6050J of the Code. The Company shall file information reports with
respect to the receipt of mortgage interest received in a trade or business,
reports of foreclosures and abandonments of any Mortgaged Property and
information returns relating to cancellation of indebtedness income with respect
to any Mortgaged Property as required by the Code. Such reports shall be in form
and substance sufficient to meet the reporting requirements imposed by the Code.
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Section 4.20 Application of Buydown Funds.
With respect to each Buydown Mortgage Loan, the Company shall have
deposited into the Escrow Account, no later than the last day of the month,
Buydown Funds in an amount equal to the aggregate undiscounted amount of
payments that, when added to the amount the Mortgagor on such Mortgage Loan is
obligated to pay on all Due Dates in accordance with the terms of the Buydown
Agreement, is equal to the full scheduled Monthly Payments which are required to
be paid by the Mortgagor under the terms of the related Mortgage Note (without
regard to the related Buydown Agreement as if the Mortgage Loan were not subject
to the terms of the Buydown Agreement). With respect to each Buydown Mortgage
Loan, the Company will distribute to the Purchaser on each Remittance Date an
amount of Buydown Funds equal to the amount that, when added to the amount
required to be paid on such date by the related Mortgagor, pursuant to and in
accordance with the related Buydown Agreement, equals the full Monthly Payment
that would otherwise be required to be paid on such Mortgage Loan by the related
Mortgagor under the terms of the related Mortgage Note (as if the Mortgage Loan
were not a Buydown Mortgage Loan and without regard to the related Buydown
Agreement).
If the Mortgagor on a Buydown Mortgage Loan defaults on such Mortgage Loan
during the Buydown Period and the Mortgaged Property securing such Buydown
Mortgage Loan is sold in the liquidation thereof (either by the Company or the
insurer under any related Primary Insurance Policy) the Company shall, on the
Remittance Date following the date upon which Liquidation Proceeds or REO
Disposition proceeds are received with respect to any such Buydown Mortgage
Loan, distribute to the Purchaser all remaining Buydown Funds for such Mortgage
Loan then remaining in the Escrow Account. Pursuant to the terms of each Buydown
Agreement, any amounts distributed to the Purchaser in accordance with the
preceding sentence will be applied to reduce the outstanding principal balance
of the related Buydown Mortgage Loan. If a Mortgagor on a Buydown Mortgage Loan
prepays such Mortgage Loan in it entirety during the related Buydown Period, the
Company shall be required to withdraw from the Escrow Account any Buydown Funds
remaining in the Escrow Account with respect to such Buydown Mortgage Loan in
accordance with the related Buydown Agreement. If a principal prepayment by a
Mortgagor on a Buydown Mortgage Loan during the related Buydown Period, together
with any Buydown Funds then remaining in the Escrow Account related to such
Buydown Mortgage Loan, would result in a principal prepayment of the entire
unpaid principal balance of the Buydown Mortgage Loan, the Company shall
distribute to the Purchaser on the Remittance Date occurring in the month
immediately succeeding the month in which such Principal Prepayment is received,
all Buydown Funds related to such Mortgage Loan so remaining in the Escrow
Account, together with any amounts required to be deposited into the Custodial
Account.
Section 4.21 Notification of Adjustments.
With respect to each Mortgage Loan, the Company shall adjust the Mortgage
Interest Rate on the related Adjustment Date in compliance with the requirements
of applicable law and the related Mortgage and Mortgage Note. The Company shall
execute and deliver any and all necessary notices required under applicable law
and the terms of the related Mortgage Note and Mortgage regarding the Mortgage
Interest Rate adjustments. The Company shall promptly, upon written request,
deliver to the Purchaser such notifications along with information regarding the
applicable date of such adjustments and the methods used to calculate and
implement such
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adjustments. Upon the discovery by the Company or the receipt of notice from the
Purchaser that the Company has failed to adjust a Mortgage Interest Rate in
accordance with the terms of the related Mortgage Note, the Company shall
immediately deposit in the Custodial Account from its own funds the amount of
any interest loss or deferral caused the Purchaser thereby.
Section 4.22 Modifications, Waivers, Amendments and Consents.
(a) Subject to this Section 4.22, the Company may agree to any
modification, waiver, forbearance, or amendment of any term of any Mortgage Loan
without the consent of the Purchaser. All modifications, waivers, forbearances
or amendments of any Mortgage Loan shall be in writing and shall be consistent
with Accepted Servicing Practices.
(b) The Company shall not agree to enter into, and shall not enter into,
any modification, waiver, forbearance or amendment of any term of any Mortgage
Loan if such modification, waiver, forbearance, or amendment would:
(i) affect the amount or timing of any related payment of principal,
interest or other amount payable thereunder;
(ii) in the Company's judgment, materially impair the security for
such Mortgage Loan or reduce the likelihood of timely payment of amounts
due thereon; or
(iii) otherwise constitutes a "significant modification" within the
meaning of Treasury Regulations Section 1.860G-2(b);
unless, in each case, (A) such Mortgage Loan is 90 days or more past due or (B)
the Company delivers to the Purchaser an Opinion of Counsel to the effect that
such modification, waiver, forbearance or amendment would not affect the REMIC
status of the Trust Estate and, in either case, such modification, waiver,
forbearance or amendment is reasonably likely to produce a greater recovery with
respect to such Mortgage Loan than would liquidation. Subject to Accepted
Servicing Practices, the Company may permit a forbearance for a Mortgage Loan
which, in the Company's judgment, is subject to imminent default.
(c) Any payment of interest, which is deferred pursuant to any
modification, waiver, forbearance or amendment permitted hereunder, shall not,
for purposes hereof, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan or such
modification, waiver or amendment so permit.
(d) The Company may, as a condition to granting any request by a Mortgagor
for consent, modification, waiver, forbearance or amendment, the granting of
which is within the Company's discretion pursuant to the Mortgage Loan and is
permitted by the terms of this Agreement, require that such Mortgagor pay to the
Company, as additional servicing compensation, a reasonable or customary fee for
the additional services performed in connection with such request, together with
any related costs and expenses incurred by the Company, which amount shall be
retained by the Company as additional servicing compensation.
(e) The Company shall notify the Purchaser, in writing, of any
modification, waiver, forbearance or amendment of any term of any Mortgage Loan
and the date thereof, and shall
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deliver to the Purchaser (or, at the direction of the Purchaser, the Custodian)
for deposit in the related Mortgage File, an original counterpart of the
agreement relating to such modification, waiver, forbearance or amendment,
promptly (and in any event within ten Business Days) following the execution
thereof; provided, however, that if any such modification, waiver, forbearance
or amendment is required by applicable law to be recorded, the Company (i) shall
deliver to the Purchaser a copy thereof and (ii) shall deliver to the Purchaser
such document, with evidence of notification upon receipt thereof from the
public recording office.
(f) To the extent consistent with the terms of this Agreement, the Company
may waive (or permit a Subservicer to waive) a Prepayment Premium only under the
following circumstances: (i) such waiver relates to a default or a reasonably
foreseeable default and would, in the reasonable judgment of the Company,
maximize recovery of total proceeds taking into account the value of such
Prepayment Premium and the related Mortgage Loan, (ii) such waiver is required
under state or federal law or (iii) the mortgage debt has been accelerated as a
result of the Mortgagor's default in making its Monthly Payments. The Company
shall not waive any Prepayment Premium unless it is waived in accordance with
this Section 4.22(f). The Company shall pay the amount of any Prepayment Premium
(to the extent not collected and remitted to the Purchaser) to the Purchaser or
its assignees if (1) the representation in Section 3.02(ggg) is breached and
such breach materially and adversely affects the interests of the Purchaser or
its assigns or (2) the Company waives any Prepayment Premium other than as
permitted under this Section 4.22(f). The Company shall pay the amount of such
Prepayment Premium, for the benefit of the Purchaser or any assignee of the
Purchaser, by depositing such amount into the Custodial Account at the time that
the amount prepaid on the related Mortgage Loan is required to be deposited into
the Custodial Account.
Section 4.23 Specially Serviced Mortgage Loans.
(a) Upon determining that a Servicing Transfer Event has occurred with
respect to any Mortgage Loan, the Company shall promptly give notice thereof to
the Purchaser and the Special Servicer, and, unless otherwise directed in
writing by the Purchaser, shall deliver a copy of the related Servicing File to
the Special Servicer and shall use its reasonable efforts to provide the Special
Servicer with all information, documents and records (including records stored
electronically on computer tapes, magnetic discs and the like) relating to the
Mortgage Loan either in the Company's possession or otherwise available to the
Company without undue burden or expense, and reasonably requested by the Special
Servicer to enable it to assume its functions hereunder with respect thereto.
The Company shall use its reasonable efforts to comply with the preceding
sentence within five Business Days of the occurrence of each related Servicing
Transfer Event and in any event shall continue to service and administrator of
such Mortgage Loan until the Special Servicer has commenced the servicing of
such Mortgage Loan, which will commence upon receipt by the Special Servicer of
the Servicing File. The Company shall deliver to the Custodian a copy of the
notice of such Servicing Transfer Event provided by the Company to the Purchaser
and Special Servicer pursuant to this Section.
(b) Upon determining that a Specially Serviced Mortgage Loan (other than an
REO Loan) has become current and has remained current for three consecutive
Monthly Payments (provided that (i) no additional Servicing Transfer Event is
foreseeable in the reasonable judgment of the Special Servicer, and (ii) for
such purposes taking into account any
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modification or amendment of such Mortgage Loan), and that no other Servicing
Transfer Event is continuing with respect thereto, the Special Servicer shall
immediately give notice thereof to the Company and the Purchaser, and shall
return the related Servicing File to the Company (or copies thereof if copies
only were delivered to the Special Servicer) and upon giving such notice, and
returning such Servicing File to the Company, the Special Servicer's obligation
to service such Mortgage Loan shall terminate and the obligations of the Company
to service and administer such Mortgage Loan shall re-commence.
(c) Notwithstanding the transfer of a Specially Serviced Mortgage Loan to
the Special Servicer, the Company shall maintain ongoing payment records with
respect to each of the Specially Serviced Mortgage Loans and REO Properties and
shall provide the Special Servicer with any information in its possession
required by the Special Servicer to perform its duties under this Agreement
provided that the Company shall only be required to maintain in such records to
the extent the Special Servicer has provided such information to the Company.
Section 4.24 Disaster Recovery/Business Continuity Plan.
The Company shall establish contingency plans, recovery plans and proper
risk controls to ensure Company's continued performance under this Agreement.
The plans must be in place within 30 calendar days after the date of this
Agreement and shall include, but not be limited to, testing, control functions,
accountability and corrective actions to be immediately implemented, if
necessary. The Company agrees to make copies or summaries of the plans available
to the Purchaser or its regulators upon request.
Section 4.25 Fair Credit Reporting Act.
(a) The Company shall furnish, in accordance with the Fair Credit Reporting
Act and its implementing regulations, accurate and complete information (i.e.,
favorable and unfavorable) on each Mortgagor's credit files to Equifax,
Experian, and Trans Union Credit Information Company (three of the credit
repositories), on a monthly basis.
(b) The Company agrees to transmit full-file credit reporting data for each
Mortgage Loan pursuant to ▇▇▇▇▇▇ Mae Guide Announcement 95-19 and for each
Mortgage Loan, the Company shall report one of the following statuses each
month: new origination, current, delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.
(c) The Company shall comply with Title V of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of
1999 and all applicable regulations promulgated thereunder, relating to the
Mortgage Loans and the related Mortgagors and shall provide all required notices
thereunder.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances.
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser (a) all amounts deposited in the
Custodial Account as of
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the close of business on the Determination Date (net of charges against or
withdrawals from the Custodial Account pursuant to Section 4.05), plus (b) all
amounts, if any, which the Company is obligated to distribute pursuant to
Section 5.03, minus (c) any amounts attributable to Principal Prepayments
received after the applicable Principal Prepayment Period which amounts shall be
remitted on the following Remittance Date, together with any additional interest
required to be deposited in the Custodial Account in connection with such
Principal Prepayment in accordance with Section 4.04(viii); minus (d) any
amounts attributable to Monthly Payments collected but due on a Due Date or
Dates subsequent to the first day of the month of the Remittance Date, and minus
(e) any amounts attributable to Buydown Funds being held in the Custodial
Account, which amounts shall be remitted on the Remittance Date next succeeding
the Due Period for such amounts.
With respect to any remittance received by the Purchaser after the
Remittance Date on which such payment was due, the Company shall pay to the
Purchaser interest on any such late payment at an annual rate equal to the Prime
Rate, adjusted as of the date of each change, plus 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 Company on the date
such late payment is made and shall cover the period commencing with the day
following the Business Day on which such payment was due 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 Company of any such interest shall not be
deemed an extension of time for payment or a waiver of any Event of Default by
the Company.
Section 5.02 Automated Servicing Systems and Statements to Purchaser.
The Company shall setup, format, maintain and transmit to the Purchaser the
Company's servicing date and other electronic data storage and transmission
systems related to the Mortgage Loans (collectively, the "Servicing Systems") in
accordance with the guidelines and requirements set forth in Exhibit J attached
hereto (the "Servicer Requirements"), and the Company shall cooperate with the
Purchaser to receive data fields from the Purchaser that are to be incorporated
in the Servicing Systems in accordance with the Servicer Requirements.
Not later than the first Business Day of each month, the Company shall
furnish to the Purchaser, with respect to the preceding month, a monthly
collection report, a monthly paid in full report that summarizes Mortgage Loans
paid in full during the Due Period and a monthly trial balance report that
provides a trial balance as of the last day of the month preceding such
Remittance Date in electronic format agreed upon by the Company and the
Purchaser.
Not later than the fifth Business Day of each month, the Company shall
furnish to the Purchaser a delinquency report and a monthly remittance advice,
including the information set forth in Exhibit J, in both a physical form and a
mutually agreeable electronic format as to the remittance on such Remittance
Date and as to the period ending on the last day of the month preceding such
Remittance Date.
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Section 5.03 Monthly Advances by Company.
No later than the close of business on the Business Day preceding each
Remittance Date, the Company shall deposit in the Custodial Account from its own
funds or from amounts held for future distribution an amount equal to (i) except
in the case of Option Arm Mortgage Loans, 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 related Determination Date or which were deferred pursuant to
Section 4.01 and (ii) in the case of each Option Arm Mortgage Loan, an amount
equal to the greater of (A) the Monthly Payment received from the slated
Mortgagor and (B) the minimum Monthly Payment required with respect to the
related Due Date pursuant to the terms of the related Mortgage Note. Any amounts
held for future distribution and so used shall be replaced by the Company by
deposit in the Custodial Account on or before any future Remittance Date if
funds in the Custodial Account on such Remittance Date shall be less than
payments to the Purchaser required to be made on such Remittance Date. The
Company's obligation to make such Monthly Advances as to any Mortgage Loan will
continue through the last Monthly Payment due prior to the payment in full of
the Mortgage Loan, or through the earlier of: (i) the last Remittance Date prior
to the Remittance Date for the distribution of all Liquidation Proceeds and
other payments or recoveries (including Insurance Proceeds and Condemnation
Proceeds) with respect to the Mortgage Loan; and (ii) the Remittance Date prior
to the date the Mortgage Loan is converted to REO Property, provided however,
that if requested by a Rating Agency in connection with a securitization, the
Company shall be obligated to make such advances through the Remittance Date
prior to the date on which cash is received in connection with the liquidation
of REO Property; provided, however, that any such obligation under this Section
5.03 shall cease if the Company determines, in its sole reasonable opinion, that
advances with respect to such Mortgage Loan are non-recoverable by the Company
from Liquidation Proceeds, Insurance Proceeds, Condemnation Proceeds, or
otherwise with respect to a particular Mortgage Loan. In the event that the
Company determines that any such advances are non-recoverable, the Company shall
provide the Purchaser with a certificate signed by two officers of the Company
evidencing such determination.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Due-on-Sale Provision and Assumptions.
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption by
the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Company shall, to the
extent it has knowledge of such conveyance, exercise its rights to accelerate
the maturity of such Mortgage Loan under the "due-on-sale" clause applicable
thereto, provided, however, that the Company shall not exercise such rights if
prohibited by law from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related PMI Policy, if any.
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If the Company reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause or that either a decision not to exercise the
"due-on-sale" provision or a decision to permit an assumption of the Mortgage
Loan is in the best interest of the Purchaser, the Company shall enter into (i)
an assumption and modification agreement with the person to whom such property
has been conveyed, pursuant to which such person becomes liable under the
Mortgage Note and the original Mortgagor remains liable thereon or (ii) in the
event the Company is unable under applicable law to require that the original
Mortgagor remain liable under the Mortgage Note and the Company has the prior
consent of the primary mortgage guaranty insurer, a substitution of liability
agreement with the purchaser of the Mortgaged Property pursuant to which the
original Mortgagor is released from liability and the purchaser of the Mortgaged
Property is substituted as Mortgagor and becomes liable under the Mortgage Note.
The Company shall notify the Purchaser that any such substitution of liability
or assumption agreement has been completed by forwarding to the Purchaser the
original of any such substitution of liability or assumption agreement, which
document shall be added to the related Mortgage File and shall, for all
purposes, be considered a part of such Mortgage File to the same extent as all
other documents and instruments constituting a part thereof. If an assumption
fee is collected by the Company for entering into an assumption agreement such
fee will be retained by the Company as additional servicing compensation. In
connection with any such assumption, neither the Mortgage Interest Rate borne by
the related Mortgage Note, the term of the Mortgage Loan, the outstanding
principal amount of the Mortgage Loan nor any other material terms shall be
changed without the Purchaser's consent.
To the extent that any Mortgage Loan is assumable, the Company shall
inquire diligently into the credit-worthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used by ▇▇▇▇▇▇ ▇▇▇ with respect to underwriting mortgage
loans of the same type as the Mortgage Loans. If the credit-worthiness of the
proposed transferee does not meet such underwriting criteria, the Company
diligently shall, to the extent permitted by the Mortgage or the Mortgage Note
and by applicable law, accelerate the maturity of the Mortgage Loan.
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Company of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Company immediately shall notify the Purchaser
and shall request the release of any Mortgage Loan Documents.
If the Company satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or should
the Company otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Company shall
repurchase the related Mortgage Loan at the Repurchase Price, plus any
prepayment penalty or premium provided for in the terms of the Mortgage Note, if
applicable, by deposit thereof in the Custodial Account within one Business Day
of receipt of such demand by the Purchaser. The Company shall maintain the
Fidelity Bond and Errors and Omissions Insurance Policy as provided for in
Section 4.12 insuring the Company against any loss it may sustain with respect
to any Mortgage Loan not satisfied in accordance with the procedures set forth
herein.
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Section 6.03 Servicing Compensation.
As compensation for its services hereunder, the Company shall be entitled
to withdraw from the Custodial Account the amount of its Servicing Fee. The
Servicing Fee shall be payable monthly and shall be computed on the basis of the
same unpaid scheduled principal balance and for the period respecting which any
related interest payment on a Mortgage Loan is computed. The obligation of the
Purchaser to pay the Servicing Fee is limited to, and payable solely from, the
interest portion of such Monthly Payments. Notwithstanding the foregoing, with
respect to the payment of the Servicing Fee for any month, the aggregate
Servicing Fee shall be reduced (but not below zero) by an amount equal to the
Prepayment Interest Shortfall for the related Principal Prepayment Period.
Additional servicing compensation in the form of assumption fees, to the
extent provided in Section 6.01, late payment charges and other ancillary income
(including Prepayment Premiums) shall be retained by the Company to the extent
not required to be deposited in the Custodial Account. The Company shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement thereof except
as specifically provided for herein.
Section 6.04 [Reserved]
Section 6.05 [Reserved]
Section 6.06 Right to Examine Company Records.
The Purchaser, or its designee, shall have the right to examine and audit
any and all of the related books, records, or other information of the Company,
whether held by the Company or by another on its behalf, with respect to or
concerning this Agreement or the Mortgage Loans, during business hours or at
such other times as may be reasonable under applicable circumstances, upon
reasonable advance notice. The Purchaser shall pay its own travel expenses
associated with such examination.
Section 6.07 Compliance with REMIC Provisions.
If a REMIC election has been made with respect to the arrangement under
which the Mortgage Loans and REO Property are held, the Company shall not take
any action, cause the REMIC to take any action or fail to take (or fail to cause
to be taken) any action that, under the REMIC Provisions, if taken or not taken,
as the case may be, could (i) endanger the status of the REMIC as a REMIC or
(ii) result in the imposition of a tax upon the REMIC (including but not limited
to the tax on "prohibited transactions" as defined in Section 860 (a) (2) of the
Code and the tax on "contributions" to a REMIC set forth in Section 860(d) of
the Code) unless the Company has received an Opinion of Counsel (at the expense
of the party seeking to take such action) to the effect that the contemplated
action will not endanger such REMIC status or result in the imposition of any
such tax.
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ARTICLE VII
COMPANY TO COOPERATE
Section 7.01 Provision of Information.
During the term of this Agreement, the Company shall furnish to the
Purchaser such periodic, special, or other reports or information, and copies or
originals of any documents contained in the Servicing File for each Mortgage
Loan provided for herein. All other special reports or information not provided
for herein as shall be necessary, reasonable, or appropriate with respect to the
Purchaser or any regulatory agency will be provided at the Purchaser's expense.
All such reports, documents or information shall be provided by and in
accordance with all reasonable instructions and directions which the Purchaser
may give. Upon request from the Purchaser, the Company shall deliver no later
than 60 days after such request any Servicing File or document therein, or
copies thereof, to the Purchaser at the direction of the Purchaser. The
Purchaser shall return any original Servicing File or document therein delivered
pursuant to this Section no later than 45 days after receipt thereof. In the
event that the Company fails to make delivery of the requested Servicing File or
document therein, or copies thereof, as required under this Section, the Company
shall repurchase the related Mortgage Loan in accordance with this Agreement
within 30 days of a request to do so by the Purchaser.
In addition, during the term of this Agreement, the Company shall provide
to the OCC and to comparable regulatory authorities supervising the Purchaser or
any of the Purchaser's assigns (including beneficial owners of securities issued
in Securitization Transactions backed by the Mortgage Loans) and the examiners
and supervisory agents of the OCC and such other authorities, access to the
documentation required by applicable regulations of the OCC and other
authorities supervising the Purchaser or any of its assigns with respect to the
Mortgage Loans. Such access shall be afforded without charge, but only upon
reasonable and prior written request and during normal business hours at the
offices designated by the Company.
The Company shall execute and deliver all such instruments and take all
such action as any Purchaser may reasonably request from time to time, in order
to effectuate the purposes and to carry out the terms of this Agreement.
Section 7.02 Financial Statements; Servicing Facility.
In connection with marketing the Mortgage Loans, a Purchaser may make
available to a prospective purchaser the audited financial statements of the
Company, which shall include information relating to the Company, for the most
recently completed two fiscal years for which such financial statements are
available, as well as a Consolidated Statement of Condition at the end of the
last two fiscal years covered by such Consolidated Statement of Operations. The
Company also shall make available any comparable interim statements to the
extent any such statements have been prepared by or on behalf of the Company
(and are available upon request to members or stockholders of the Company or to
the public at large).
The Company also shall make available to a Purchaser or prospective
purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions respecting
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recent developments affecting the Company or the financial statements of the
Company, and to permit any prospective purchaser to inspect the Company's
servicing facilities for the purpose of satisfying such prospective purchaser
that the Company has the ability to service the Mortgage Loans as provided in
this Agreement.
Section 7.03 Cooperation with Third-party Service Providers.
The Company shall cooperate with the Purchaser in servicing the Mortgage
Loans in accordance with the usual and customary requirements of any credit
enhancement, risk management and other service providers and shall otherwise
cooperate with the Purchaser in connection with such third-party service
providers and the provision of third-party services; provided, however, that
such requirements are reasonably acceptable to the Company and pose no greater
risk, obligation or expense to the Company than otherwise set forth in this
Agreement. Any additional costs and/or expenses will be paid by the requesting
party.
ARTICLE VIII
THE COMPANY
Section 8.01 Indemnification; Third Party Claims.
The Company shall indemnify each Purchaser and hold it harmless against any
and all claims, losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and any other costs, fees and
expenses that any Purchaser may sustain in any way related to the failure of the
Company to perform its duties and service the Mortgage Loans in strict
compliance with the terms of this Agreement; provided, however, that such
indemnification shall not include punitive, consequential, exemplary or special
damages (other than punitive, consequential, exemplary and special damages
required to be paid by the indemnified party under this Agreement to any Person
(other than a party to this Agreement or any of its affiliates) arising out of
an action or proceeding by such Person, which damages shall be deemed to be
direct damages to the party required to pay such punitive, consequential,
exemplary or incidental damages). The Company immediately shall notify the
Purchasers if a claim is made by a third party with respect to this Agreement or
the Mortgage Loans, assume (with the prior written consent of the Purchaser) the
defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or any Purchaser in respect of such
claim. The Company shall follow any written instructions received from the
Purchaser in connection with such claim. The Purchasers promptly shall reimburse
the Company for all amounts advanced by it pursuant to the preceding sentence
except when the claim is in any way related to the Company's indemnification
pursuant to Section 3.03, or the failure of the Company to service and
administer the Mortgage Loans in strict compliance with the terms of this
Agreement. The provisions of this Section 8.01(a) shall survive termination of
this Agreement.
Section 8.02 Merger or Consolidation of the Company.
The Company shall keep in full effect its existence, rights and franchises
as a corporation, and shall obtain and preserve its qualification to do business
as a foreign corporation in each
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jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans and
to perform its duties under this Agreement.
Any person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, provided, however, that
the successor or surviving Person shall be an institution (i) having a GAAP net
worth of not less than $25,000,000, (ii) the deposits of which are insured by
the FDIC, SAIF and/or BIF, (iii) who is a ▇▇▇▇▇▇ Mae/▇▇▇▇▇▇▇ Mac-approved
company in good standing. Furthermore, in the event the Company transfers or
otherwise disposes of all or substantially all of its assets to an affiliate of
the Company, such affiliate shall satisfy the condition above, and shall also be
fully liable to the Purchasers for all of the Company's obligations and
liabilities hereunder.
Section 8.03 Limitation on Liability of Company and Others.
Neither the Company nor any of the directors, officers, employees or agents
of the Company shall be under any liability to any Purchaser for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment, provided, however, that this
provision shall not protect the Company or any such person against any breach of
warranties or representations made herein, or failure to perform its obligations
in strict compliance with any standard of care set forth in this Agreement or
any other liability which would otherwise be imposed under this Agreement. The
Company and any director, officer, employee or agent of the Company may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Company
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement and which in its opinion may involve it in any
expense or liability, provided, however, that the Company may, with the consent
of the Purchasers, undertake any such action which it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the parties
hereto. In such event, the Company shall be entitled to reimbursement from the
Purchasers of the reasonable legal expenses and costs of such action, unless any
such costs result from a breach of the Company's representations and warranties
made herein or its failure to perform its obligations in compliance with this
Agreement.
Section 8.04 Limitation on Resignation and Assignment by Company.
Each Purchaser has entered into this Agreement with the Company and
subsequent purchasers will purchase the Mortgage Loans in reliance upon the
independent status of the Company, and the representations as to the adequacy of
its servicing facilities, personnel, records and procedures, its integrity,
reputation and financial standing, and the continuance thereof. Therefore, the
Company shall neither assign this Agreement or the servicing hereunder or
delegate its rights or duties hereunder or any portion hereof or sell or
otherwise dispose of all of its property or assets without the prior written
consent of each Purchaser, which consent shall not be unreasonably withheld.
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Except to the extent provided in Sections 4.01 and 8.02, the Company shall
not resign from the obligations and duties hereby imposed on it except by mutual
consent of the Company and each Purchaser or upon the determination that its
duties hereunder are no longer permissible under applicable law and such
incapacity cannot be cured by the Company. Any such determination permitting the
resignation of the Company shall be evidenced by an Opinion of Counsel to such
effect delivered to the Purchasers, which Opinion of Counsel shall be in form
and substance acceptable to each Purchaser. No such resignation shall become
effective until a successor shall have assumed the Company's responsibilities
and obligations hereunder in the manner provided in Section 12.01.
Without in any way limiting the generality of this Section 8.04, in the
event that the Company either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof or sell or otherwise dispose of all or substantially all of its property
or assets, without the prior written consent of each Purchaser, then any
Purchaser shall have the right to terminate this Agreement upon notice given as
set forth in Section 10.01, without any payment of any penalty or damages and
without any liability whatsoever to the Company or any third party.
ARTICLE IX
WHOLE LOAN TRANSFERS AND SECURITIZATION TRANSACTIONS
Section 9.01 Removal of Mortgage Loans from Inclusion Under this Agreement.
The Purchasers and the Company agree that with respect to some or all of
the Mortgage Loans, the Purchaser, at its sole option, may effect one or more
Whole Loan Transfers or Securitization Transactions, retaining the Company as
the servicer thereof or subservicer if a master servicer is employed, or as
applicable the "seller/servicer." On the Reconstitution Date, the Mortgage Loans
transferred shall cease to be serviced by the Company pursuant to this
Agreement; provided, however, that, in the event that any Mortgage Loan
transferred pursuant to this Section 9.01 is rejected by the transferee, the
Company shall continue to service such rejected Mortgage Loan on behalf of the
Purchaser in accordance with the terms and provisions of this Agreement.
The Company shall cooperate with the Purchaser in connection with each
Whole Loan Transfer or Securitization Transaction in accordance with this
Section 9.01. In connection therewith the Company shall:
(a) make all representations and warranties made herein with respect to
the Mortgage Loans as of the related Closing Date and with respect to
the Company itself as of the closing date of each Whole Loan Transfer
or Securitization Transaction and, in the event of a Whole Loan
Transfer or Securitization Transaction occurring within twelve months
of the related Closing Date or such later period as specified in the
related Purchase Price and Terms Letter, the representations and
warranties set forth in Section 3.02 of this Agreement with respect to
the Mortgage Loans subject to such Whole Loan Transfer or
Securitization Transaction as of the date of such Whole Loan Transfer
or Securitization Transaction, modified to the extent
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necessary to accurately reflect the pool statistics of the Mortgage
Loans as of the date of such Whole Loan Transfer or Securitization
Transaction and any events or circumstances existing subsequent to the
related Closing Date(s);
(b) execute an Assignment, Assumption and Recognition Agreement or at the
option of the Purchaser, negotiate in good faith and execute any
pooling and servicing agreement or similar agreements (a
"Reconstitution Agreement") necessary to effectuate the foregoing
provided such agreements create no greater obligation or cost on the
part of the Company than otherwise set forth in this Agreement or do
not materially and adversely alter the Company's rights hereunder;
(c) make representations and warranties (1) that the Company has serviced
the Mortgage Loans in accordance with the terms of this Agreement,
provided accurate statements to the Purchaser pursuant to Section 5.02
of this Agreement, and otherwise complied with all covenants and
obligations hereunder and (2) that the Company has taken no action nor
omitted to take any required action the omission of which would have
the effect of impairing any mortgage insurance or guarantee on the
Mortgage Loans, and (3) regarding the accuracy of the information
provided to the Purchaser by the Company on or before the closing date
of the applicable Whole Loan Transfer or Securitization Transaction;
(d) provide as applicable:
(i) any and all information and appropriate verification of
information which may be reasonably available to the Company,
including information regarding the Company's foreclosure,
delinquency and loss experience and the Company's underwriting
standards, whether through letters of its auditors and counsel or
otherwise, as the Purchaser shall request; and
(ii) such additional opinions of counsel, letters from auditors, and
certificates of public officials or officers of the Company as
are reasonably believed necessary by the trustee, any rating
agency or any credit enhancement provider, as the case may be, in
connection with Whole-Loan Transfers or Securitization
Transactions; provided, however, that the Purchaser shall pay the
reasonable third-party costs associated with the preparation of
the foregoing information;
(e) indemnify each Purchaser, each Affiliate designated by any Purchaser,
each Person who controls any Purchaser or such Affiliate and the
Successor Servicer and hold each of them harmless from and against any
losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and any other
costs, fees and expenses that each of them may sustain in any way
related to any information provided by or on behalf of the Company
regarding the Company, the Mortgage Loans or the Underwriting
Guidelines which is set forth in any offering document prepared in
connection with any Securitization Transaction. For purposes of the
previous sentence, "Purchaser" shall mean the Person then acting as
the Purchaser under this Agreement and any
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and all Persons who previously were "Purchasers" under this Agreement
and "Successor Servicer" shall mean the Person then acting as a
Successor Servicer under this Agreement and any and all Persons who
previously were "Successor Servicers" under this Agreement; and
(f) with respect to any Mortgage Loans that are subject to a
Securitization Transaction, unless otherwise provided in the related
pooling and servicing agreement or similar agreement, the Company
shall (i) cause the servicing officer in charge of servicing for the
Company to execute and deliver a certification (the "SEC
Certification") in the format attached hereto as Exhibit H (or in such
other form as may be required by the SEC), which at Purchaser's option
shall be (A) attached to any Form 10-K's filed with the Securities and
Exchange Commission ("SEC") in connection --- with the related
securitization trust (or similar transaction) or (B) provided to the
Purchaser and such other Persons as are specified in the pooling and
servicing agreement or similar agreement, and (ii) indemnify the
Purchaser and such other Persons as are specified in the pooling and
servicing agreement or similar agreement for losses in connection with
or relating to the inaccuracy of the SEC Certification provided by the
Company.
The Company hereby agrees to the inclusion in any Reconstitution Agreement,
where applicable, a section relating to special foreclosure rights in the form
of Exhibit L attached hereto which provisions shall be applicable to the Company
or any subservicer with respect to the applicable Mortgage Loans.
In the event the Purchaser has elected to have the Company hold record
title to the Mortgages, prior to the Reconstitution Date the Company shall
prepare an Assignment of Mortgage in blank or to the trustee from the Company
acceptable to the Purchaser or the trustee for each Mortgage Loan that is part
of the Whole Loan Transfers or Securitization Transactions. The Company shall
pay all preparation and recording costs associated therewith if the Assignments
of Mortgage have not been previously prepared and recorded in Purchaser's name.
The Company shall execute each Assignment of Mortgage, track such Assignments of
Mortgage to ensure they have been recorded and deliver them as required by the
Purchaser or the trustee upon the Company's receipt thereof. Additionally, the
Company shall prepare and execute, at the direction of the Purchaser, any note
endorsements in connection with any pooling and servicing agreements.
All Mortgage Loans not sold or transferred pursuant to Whole Loan Transfers
or Securitization Transactions shall remain subject to this Agreement and shall
continue to be serviced in accordance with the terms of this Agreement and with
respect thereto this Agreement shall remain in full force and effect.
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ARTICLE X
DEFAULT
Section 10.01 Events of Default.
Each of the following shall constitute an Event of Default on the part
of the Company:
(i) any failure by the Company to remit to the Purchaser any payment
required to be made under the terms of this Agreement which
continues unremedied for a period of one Business Day after the date
upon which written notice of such failure, requiring the same to be
remedied, shall have been given to the Company by the Purchaser or,
the Company first becomes aware of such failure; or
(ii) failure by the Company duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the
Company set forth in this Agreement, including but not limited to
breach by the Company of any one or more of the representations,
warranties and covenants of the Company as set forth in Section 3.01
of this Agreement which continues unremedied for a period of 30 days
after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Company by the
Purchaser or by the Custodian; or
(iii) failure by the Company to maintain its license to do business in any
jurisdiction where the Mortgaged Property is located if such license
is required; or
(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, including
bankruptcy, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Company and such decree or order
shall have remained in force undischarged or unstayed for a period
of 60 days; or
(v) the Company shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to the Company or of or relating to all or substantially
all of its assets; or
(vi) the Company shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of
any applicable insolvency, bankruptcy or reorganization statute,
make an assignment for the benefit of its creditors, voluntarily
suspend payment of its obligations or cease its normal business
operations for three Business Days; or
(vii) the Company ceases to meet the servicer eligibility qualifications
of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac; or
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(viii) the Company attempts to assign its right to servicing compensation
hereunder or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or
any portion thereof in violation of Section 8.04.
If the Company obtains knowledge of an Event of Default, the Company shall
promptly notify the Purchasers. In each and every such case, so long as an Event
of Default shall not have been remedied, in addition to whatever rights any
Purchaser may have at law or equity to damages, including injunctive relief and
specific performance, any Purchaser, by notice in writing to the Company, may
terminate all the rights and obligations of the Company under this Agreement and
in and to the Mortgage Loans and the proceeds thereof.
Upon receipt by the Company of such written notice, all authority and power
of the Company under this Agreement, whether with respect to the Mortgage Loans
or otherwise, shall pass to and be vested in the successor appointed pursuant to
Section 12.01. Upon written request from the Purchaser, the Company shall, at
its expense, prepare, execute and deliver to the successor entity designated by
the Purchaser any and all documents and other instruments, place in such
successor's possession all Mortgage Files, and do or cause to be done all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer and endorsement or
assignment of the Mortgage Loans and related documents, at the Company's sole
expense. The Company shall cooperate with the Purchaser and such successor in
effecting the termination of the Company's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section 10.02 Waiver of Defaults.
By a written notice, the Purchasers may waive any default by the Company in
the performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
ARTICLE XI
TERMINATION
Section 11.01 Termination.
This Agreement shall terminate upon either: (i) the later of the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or the disposition of any REO Property with respect to the last
Mortgage Loan and the remittance of all funds due hereunder; or (ii) mutual
consent of the Company and the Purchaser in writing. The representations and
warranties and indemnification provisions contained herein shall survive the
termination of this Agreement.
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Upon written request from the Purchasers in connection with any such
termination, the Company shall prepare, execute and deliver, any and all
documents and other instruments, place in the Purchaser's possession all
Mortgage Files, and do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise, at the Company's sole expense. The Company
agrees to cooperate with the Purchasers and such successor in effecting the
termination of the Company's responsibilities and rights hereunder as servicer,
including, without limitation, the transfer to such successor for administration
by it of all cash amounts which shall at the time be credited by the Company to
the Custodial Account or Escrow Account or thereafter received with respect to
the Mortgage Loans.
Section 11.02 Termination Without Cause.
The Purchaser may terminate, at its sole option, any rights the Company may
have hereunder with respect to any Mortgage Loan Package, without cause as
provided in this Section 11.02. Any such notice of termination shall be in
writing and delivered to the Company by registered mail as provided in Section
12.05.
In the event the servicing rights with respect to a Mortgage Loan Package
are terminated pursuant to this Section 11.02, the Company shall be entitled to
receive, as liquidated damages, upon the transfer of the servicing rights, an
amount equal to the fair market value of such servicing rights based on the
aggregate outstanding principal amount of the Mortgage Loans as of the
termination date, plus all reasonable costs and expenses incurred by the Company
in managing the transfer of the servicing. The fair market value of the
servicing rights shall be determined based on the average of three bids made by
experienced evaluators unaffiliated to the Purchaser and the Company and chosen
as follows: one by the Purchaser, one by the Company and one by mutual
agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Company.
Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 10.01, 11.01(ii) or pursuant to
Section 11.02, the Purchaser shall, (i) succeed to and assume all of the
Company's responsibilities, rights, duties and obligations under this Agreement,
or (ii) appoint a successor having the characteristics set forth in Section 8.02
and which shall succeed to all rights and assume all of the responsibilities,
duties and liabilities of the Company under this Agreement prior to the
termination of Company's responsibilities, duties and liabilities under this
Agreement. In connection with such appointment and assumption, the Purchaser may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree. In the event that the
Company's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the Company shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof
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with the same degree of diligence and prudence which it is obligated to exercise
under this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The resignation or
removal of the Company pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 12.01
and shall in no event relieve the Company of the representations and warranties
made pursuant to Sections 3.01 and 3.02 and the remedies available to the
Purchaser under Section 3.03, it being understood and agreed that the provisions
of such Sections 3.01, 3.02, and 3.03 shall be applicable to the Company
notwithstanding any such sale, assignment, resignation or termination of the
Company, or the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Company and to the Purchaser an instrument accepting such
appointment, wherein the successor shall make the representations and warranties
set forth in Section 3.01, except for subsections (h), (i) and (k) thereof,
whereupon such successor shall become fully vested with all the rights, powers,
duties, responsibilities, obligations and liabilities of the Company, with like
effect as if originally named as a party to this Agreement. Any termination or
resignation of the Company or termination of this Agreement pursuant to Section
8.04, 10.01, 11.01 or 11.02 shall not affect any claims that any Purchaser may
have against the Company arising out of the Company's actions or failure to act
prior to any such termination or resignation.
The Company shall deliver promptly to the successor servicer the funds in
the Custodial Account and Escrow Account and all Mortgage Files and related
documents and statements held by it hereunder and the Company shall account for
all funds and shall execute and deliver such instruments and do such other
things as may reasonably be required to more fully and definitively vest in the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Company.
Unless the Company is terminated pursuant to Section 11.02, the Purchaser
shall be entitled to be reimbursed from the Company for all costs associated
with the transfer of servicing, including, without limitation, any costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Purchaser to correct any errors or insufficiencies in the servicing data
or otherwise to enable the Purchaser to service the Mortgage Loans properly and
effectively.
Upon a successor's acceptance of appointment as such, the Company shall
notify by mail the Purchaser of such appointment in accordance with the
procedures set forth in Section 12.05.
Section 12.02 Amendment.
This Agreement may be amended from time to time by the Company and by
written agreement signed by the Company and the Purchaser.
Section 12.03 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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EACH OF THE COMPANY AND THE PURCHASERS HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OR ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT, OR ANY OTHER DOCUMENTS AND INSTRUMENTS EXECUTED IN
CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE COMPANY OR THE PURCHASER. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASER TO ENTER INTO THIS
AGREEMENT.
Section 12.04 Arbitration.
In the event a claim or controversy arises concerning the interpretation or
enforcement of the terms of this Agreement, the parties hereto agree that such
claim or controversy may be settled by final, binding arbitration if the parties
hereto, as applicable, consent to such arbitration at the time such claim or
controversy arises which consent may be withheld by any party hereto in its sole
discretion.
Section 12.05 Duration of Agreement.
This Agreement shall continue in existence and effect until terminated as
herein provided. This Agreement shall continue notwithstanding transfers of the
Mortgage Loans by the Purchaser.
Section 12.06 Notices.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, addressed as follows:
(i) if to the Company:
[_____________]
[ADDRESS]
[CITY, STATE ZIP]
[Attention: _________________]
[Telephone: _______________]
[Fax: ___________________]
or such other address as may hereafter be furnished to the Purchasers
in writing by the Company;
(ii) if to any Purchaser:
Luminent Mortgage Capital, Inc.
One Commerce Square,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Luminent Mortgage Capital Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
or such other address as may hereafter be furnished to the Company in
writing by any Purchaser.
Section 12.07 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
Section 12.08 Relationship of Parties.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Company shall be rendered as an independent contractor and not as agent for any
Purchaser.
Section 12.09 Execution; Successors and Assigns.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Sections 8.02 and 8.04, this
Agreement shall inure to the benefit of and be binding upon the Company and each
Purchaser and their respective successors and assigns.
Section 12.10 Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Company's expense, in the event recordation is either necessary
or advisable in accordance with Acceptable Servicing Practices or under
applicable law or is requested by the Purchaser at its sole option in the case
of Mortgage Loans that are not registered on MERS.
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Section 12.11 Assignment by Purchaser.
The Purchaser shall have the right, without the consent of the Company but
subject to the limits set forth in Section 2.02 and Section 9.01 hereof, to
assign, in whole or in part, its interest under this Agreement with respect to
some or all of the Mortgage Loans, and designate any person to exercise any
rights of the Purchaser hereunder, by executing an Assignment, Assumption and
Recognition Agreement and the assignee or designee shall accede to the rights
and obligations hereunder of the Purchaser with respect to such Mortgage Loans.
All references to the Purchaser in this Agreement shall be deemed to include its
assignee or designee. In the event the Purchaser assigns this Agreement, and the
assignee assumes any of the Purchaser's obligations hereunder, the Company
acknowledges and agrees to look solely to such assignee, and not the Purchaser,
for performance of the obligations so assumed and the Purchaser shall be
relieved from any liability to the Company with respect thereto.
Section 12.12 Solicitation of Mortgagor.
From and after the Closing Date, the Company 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 or independent mortgage brokerage
companies on the Company's behalf, to personally, by telephone, mail or
electronic mail, solicit the Mortgagor under any Mortgage Loan for the purpose
of refinancing such Mortgage Loan. It is understood and agreed that (i)
promotions undertaken by the Company or any of its affiliates which are directed
to the general public at large, including, without limitation, mass mailings
based on commercially acquired mailing lists, newspaper, radio or television
advertisements shall not constitute solicitation under this Section, nor is the
Company prohibited from responding to unsolicited requests or inquiries made by
a Mortgagor or an agent of a Mortgagor and (ii) all rights and benefits relating
to the solicitation of any Mortgagors to refinance any Mortgage Loans 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 Purchaser on the Closing Date and the Company shall take no
action to undermine these rights and benefits.
Section 12.13 Further Agreements.
Each of the Purchasers and the Company agrees to execute and deliver to the
other such additional documents, instruments or agreements as may be necessary
or appropriate to effectuate the purposes of this Agreement.
Section 12.14 Confidential Information.
The Company shall keep confidential and shall not divulge to any party,
without the Purchaser's prior written consent, the price paid by the Purchaser
for the Mortgage Loans, except to the extent that it is reasonable and necessary
for the Company to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies.
Each of the Purchasers and the Company agrees that it (i) shall comply with
all applicable laws and regulations regarding the privacy or security of
Consumer Information, (ii) shall not collect, create, use, store, access,
disclose or otherwise handle Consumer Information in any manner inconsistent
with any applicable laws or regulations regarding the privacy or security
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of Consumer Information, (iii) shall not disclose Consumer Information to any
affiliated or non-affiliated third party except to enforce or preserve its
rights, as otherwise permitted or required by applicable law (or by regulatory
authorities having jurisdiction in the premises) or, in the case of the Company,
at the specific written direction of any Purchaser, (iv) shall maintain
appropriate administrative, technical and physical safeguards to protect the
security, confidentiality and integrity of Consumer Information, including
maintaining security measures designed to meet the Interagency Guidelines
Establishing Standards for Safeguarding Consumer Information published in final
form on February 1, 2001, 66 Fed. Reg. 8616, and the rules promulgated
thereunder and (v) shall promptly notify the other party in writing upon
becoming aware of any actual breach and of any suspected breach of this section.
The Company shall promptly provide any Purchaser's regulators information
regarding such security measures upon the reasonable request of such Purchaser,
which information shall include, but not be limited to, any SAS 70 or similar
independent audit reports, summaries of test results or equivalent measures
taken by the Company with respect to its security measures, as agreed upon by
the parties. Each party shall indemnify and defend the other party against, and
shall hold the other party harmless from, any cost, expense, loss, claim or
other liability that such other party may suffer as a result of or in connection
with its failure to comply with or perform the obligations set forth in this
section. The restrictions set forth herein shall survive the termination of this
Agreement.
Section 12.15 Equal Opportunity.
Each of the Purchasers and the Company represents that it is an equal
opportunity employer and that it does not discriminate in employment of persons
or awarding of subcontracts because of a person's race, sex, age, religion,
national origin, veteran or handicap status. The Company is aware of and fully
informed of each Purchaser's responsibilities and agrees to the provisions under
the following: (a) Executive Order 11246, as amended or superseded in whole or
in part, and as contained in Section 202 of said Executive Order as found at 41
C.F.R. Section 60-1.4(a)(1-7); (b) Section 503 of the Rehabilitation Act of 1973
as contained in 41 C.F.R. Section 60-741.4; and (c) The Vietnam Era Veterans'
Readjustment Assistance Act of 1974 as contained in 41 C.F.R. Section 60-250.4.
Section 12.16 Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
Section 12.17 Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 12.18 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
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(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 GAAP;
(c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document
are to designated Articles, Sections, Subsections, Paragraphs and
other subdivisions of this Agreement;
(d) a reference to a Subsection without further reference to a Section is
a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to
Paragraphs and other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
Section 12.19 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.
Section 12.20 Purchase Price and Terms Letter.
The terms and conditions set forth in the Purchase Price and Terms Letter
among the Purchasers and the Company with respect to each Closing Date shall be
incorporated herein. In the event of any conflict between the terms of this
Agreement and the related Purchase Price and Terms Letter, the Purchase Price
and Terms Letter shall control.
[SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, the Company and the Purchasers have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
COMPANY
[_______________________]
By:
------------------------------------
Name:
Title:
PURCHASERS
LUMINENT MORTGAGE CAPITAL, INC.
By:
------------------------------------
Name:
Title:
MERCURY MORTGAGE STATUTORY TRUST
By:
------------------------------------
Name:
Title:
MAIA MORTGAGE FINANCE STATUTORY TRUST
By:
------------------------------------
Name:
Title:
EXHIBIT A
FORM OF MORTGAGE LOAN SCHEDULE
[On file with Purchaser]
EXHIBIT B
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each of
the following items, which shall be available for inspection by the Purchaser
and any prospective Purchaser, and which shall be retained by the Company in the
Servicing File or delivered to the Custodian pursuant to Sections 2.01, 2.02 and
2.03 of the Flow Sale and Servicing Agreement to which this Exhibit is attached
(the "Agreement"):
1. The original Mortgage Note endorsed "Pay to the order of
_____________, without recourse" and signed in the name of the Company
by an authorized officer (provided that, in the event that the
Mortgage Loan was acquired by the Company in a merger, the signature
must be in the following form: "[Company], successor by merger to
[name of predecessor]"; and in the event that the Mortgage Loan was
acquired or originated by the Company while doing business under
another name, the signature must be in the following form: "[Company],
formerly known as [previous name]"). The Mortgage Note must contain
all necessary intervening endorsements showing a complete chain of
endorsement from the originator (each such endorsement being
sufficient to transfer all right, title and interest of the party so
endorsing, as noteholder or assignee thereof, in and to that Mortgage
Note);
2. The original of any guarantee executed in connection with the Mortgage
Note (if any).
3. The original Mortgage, with evidence of recording thereon, except as
follows. If in connection with any Mortgage Loan, the Company cannot
deliver or cause to be delivered the original Mortgage with evidence
of recording thereon on or prior to the Closing Date because of a
delay caused by the public recording office where such Mortgage has
been delivered for recordation or because such Mortgage has been lost
or because such public recording office retains the original recorded
Mortgage, the Company shall deliver or cause to be delivered to the
Custodian, a photocopy of such Mortgage, together with (i) in the case
of a delay caused by the public recording office, an Officer's
Certificate of the Company stating that such Mortgage has been
dispatched to the appropriate public recording office for recordation
and that the original recorded Mortgage or a copy of such Mortgage
certified by such public recording office to be a true and complete
copy of the original recorded Mortgage will be promptly delivered to
the Custodian upon receipt thereof by the Company; or (ii) in the case
of a Mortgage where a public recording office retains the original
recorded Mortgage or in the case where a Mortgage is lost after
recordation in a public recording office, a copy of such Mortgage
certified by such public recording office or by the title insurance
company that issued the title policy to be a true and complete copy of
the original recorded Mortgage.
4. The originals or certified true copies of any document sent for
recordation of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon, or, if the
original of any such agreement with evidence of recording thereon has
not been returned by the public recording office where such agreement
has been delivered for recordation or such agreement has been lost or
such public recording office retains the original recorded agreement,
a photocopy of such agreement, certified by the Company or its agent
to be a true and correct copy of the agreement delivered to the
appropriate public recording office for recordation. The original
recorded agreement or, in the case of a agreement where a public
recording office retains the original recorded agreement or in the
case where an agreement is lost after recordation in a public
recording office, a copy of such agreement certified by such public
recording office to be a true and complete copy of the original
recorded agreement, will be promptly delivered to the Custodian upon
receipt thereof by the Company.
5. The original Assignment of Mortgage, in blank, for each Mortgage Loan,
in form and substance acceptable for recording (except for the
insertion of the name of the assignee and recording information). If
the Mortgage Loan was acquired by the Company in a merger, the
Assignment of Mortgage must be made by "[Company], successor by merger
to [name of predecessor]." If the Mortgage Loan was acquired or
originated by the Company while doing business under another name, the
Assignment of Mortgage must be made by "[Company], formerly know as
[previous name]." Subject to the foregoing and where permitted under
the applicable laws of the jurisdiction wherein the Mortgaged property
is located, such Assignments of Mortgage may be made by blanket
assignments for Mortgage Loans secured by the Mortgaged Properties
located in the same county. If the related Mortgage has been recorded
in the name of Mortgage Electronic Registration Systems, Inc. ("MERS")
or its designee, no Assignment of Mortgage will be required to be
prepared or delivered and instead, the Company shall take all actions
as are necessary to cause the Purchaser to be shown as the owner of
the related Mortgage Loan on the records of MERS for purposes of the
system of recording transfers of beneficial ownership of mortgages
maintained by MERS.
6. For any Mortgage Loan not recorded in the name of MERS, originals or
certified true copies of documents sent for recordation of all
intervening assignments of the Mortgage with evidence of recording
thereon, or if any such intervening assignment has not been returned
from the applicable recording office or has been lost or if such
public recording office retains the original recorded assignments of
mortgage, the Company shall deliver or cause to be delivered to the
Custodian, a photocopy of such intervening assignment, together with
(i) in the case of a delay caused by the public recording office, an
Officer's Certificate of the Company stating that such intervening
Assignment of Mortgage has been dispatched to the appropriate public
recording office for recordation and that such original recorded
intervening Assignment of Mortgage or a copy of such intervening
Assignment of Mortgage certified by the appropriate public recording
office or by the title insurance company that issued the title policy
to be a true and complete copy of
2
the original recorded intervening Assignment of Mortgage will be
promptly delivered to the Custodian upon receipt thereof by the
Company; or (ii) in the case of an intervening assignment where a
public recording office retains the original recorded intervening
Assignment of Mortgage or in the case where an intervening Assignment
of Mortgage is lost after recordation in a public recording office, a
copy of such intervening Assignment of Mortgage certified by such
public recording office to be a true and complete copy of the original
recorded intervening Assignment of Mortgage.
7. The original PMI Policy or certificate of insurance, where required
pursuant to the Agreement.
8. The original mortgagee policy of title insurance or evidence of title.
9. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
10. For each Mortgage Loan which is secured by a residential long-term
lease, if any, a copy of the lease with evidence of recording
indicated thereon, or, if the lease is in the process of being
recorded, a photocopy of the lease, certified by an officer of the
respective prior owner of such Mortgage Loan or by the applicable
title insurance company, closing/settlement/escrow agent or company or
closing attorney to be a true and correct copy of the lease
transmitted for recordation.
11. For each Mortgage Loan secured by Co-op Shares, the originals of the
following documents or instruments:
(A) the stock certificate;
(B) the stock power executed in blank;
(C) the executed proprietary lease;
(D) the executed recognition agreement;
(E) the executed assignment of recognition agreement;
(F) the executed UCC-1 financing statement with evidence of
recording thereon; and
(G) executed UCC-3 financing statements or other appropriate UCC
financing statements required by state law, evidencing a complete and
unbroken line from the mortgagee to the Trustee with evidence of
recording thereon (or in a form suitable for recordation).
With respect to each Mortgage Loan, the Mortgage File shall include each of the
following items to the extent in the possession of the Company or in the
possession of the Company's agent(s):
3
12. The original hazard insurance policy and, if required by law, flood
insurance policy, in accordance with Section 4.10 of the Agreement.
13. Residential loan application.
14. Mortgage Loan closing statement.
15. Verification of employment and income.
16. Verification of acceptable evidence of source and amount of down
payment.
17. Credit report on the Mortgagor.
18. Residential appraisal report.
19. Photograph of the Mortgaged Property.
20. Survey of the Mortgaged Property, if required by the title company or
applicable law.
21. Copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy,
i.e. map or plat, restrictions, easements, sewer agreements, home
association declarations, etc.
22. All required disclosure statements.
23. If available, termite report, structural engineer's report, water
potability and septic certification.
24. Sales contract, if applicable.
25. Evidence of payment of taxes and insurance premiums, insurance claim
files, correspondence, current and historical computerized data files,
and all other processing, underwriting and closing papers and records
which are customarily contained in a mortgage file and which are
required to document the Mortgage Loan or to service the Mortgage
Loan.
26. Amortization schedule, if available.
27. Original power of attorney, if applicable.
In the event of a delay by the public recording office in returning any
recorded document, the Company shall deliver to the Custodian, within 180 days
of the Closing Date, an Officer's Certificate which shall (i) identify the
recorded document, (ii) state that the recorded document has not been delivered
to the Custodian due solely to a delay caused by the public recording office,
(iii) state the amount of time generally required by the applicable recording
office to record and return a document submitted for recordation, and (iv)
specify the date the applicable recorded document will be delivered to the
Custodian. The Company shall be required to deliver to the Custodian the
applicable recorded document by the date specified in (iv) above. An
4
extension of the date specified in (iv) above may be requested form the
Purchaser, which consent shall not be unreasonably withheld.
5
EXHIBIT C
FORM OF CUSTODIAL AGREEMENT
EXHIBIT D
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
[DATE OF ASSIGNMENT]
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT dated ___________________,
among _________________, a _________________ corporation having an office at
_________________ ("Assignor"), _________________, having an office at
_________________ ("Assignee") and [NAME OF COMPANY] (the "Company"), having an
office at [INSERT COMPANY ADDRESS]:
For and in consideration of the sum of one dollar ($1.00) and other
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. With respect to the Mortgage Loans listed on Exhibit A hereto, the
Assignor hereby grants, transfers and assigns to Assignee all of the right,
title and interest of Assignor, as Purchaser, in, to and under that certain Flow
Sale and Servicing Agreement, (the "Flow Sale and Servicing Agreement"), dated
as of [INSERT DATE OF AGREEMENT], and the Memorandum of Sale dated [INSERT DATE]
(together with the Flow Sale and Servicing Agreement, the "Flow Sale
Agreement"), each by and among Luminent Mortgage Capital, Inc., Mercury Mortgage
Finance Statutory Trust, Maia Mortgage Finance Statutory Trust, as purchasers
(collectively, the "Purchasers", and individually, as the purchaser of any
Mortgage Loan under the Flow Sale Agreement, the "Purchaser"), and the Company,
and the Mortgage Loans delivered thereunder by the Company to the Assignor, and
that certain Custodial Agreement, (the "Custodial Agreement"), dated as of
[INSERT DATE OF AGREEMENT], by and among the Company, the Purchasers and
_________________ (the "Custodian").
2. The Assignor warrants and represents to, and covenants with, the
Assignee that:
a. The Assignor is the lawful owner of the Mortgage Loans with the
full right to transfer the Mortgage Loans free from any and all claims and
encumbrances whatsoever;
b. The Assignor has not received notice of, and has no knowledge of,
any offsets, counterclaims or other defenses available to the Company with
respect to the Flow Sale Agreement or the Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver under, or
agreed to any amendment or other modification of, the Flow Sale Agreement, the
Custodial Agreement or the Mortgage Loans, including without limitation the
transfer of the servicing obligations under the Flow Sale Agreement. The
Assignor has no knowledge of, and has not received notice of, any waivers under
or amendments or other modifications of, or assignments of rights or obligations
under, the Flow Sale Agreement or the Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the
1
Mortgage Loans or any other similar security to, or solicited any offer to buy
or accept a transfer, pledge or other disposition of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security from, or otherwise
approached or negotiated with respect to the Mortgage Loans, any interest in the
Mortgage Loans or any other similar security with, any person in any manner, or
made any general solicitation by means of general advertising or in any other
manner, or taken any other action which would constitute a distribution of the
Mortgage Loans under the Securities Act of 1933 (the "Securities Act") or which
would render the disposition of the Mortgage Loans a violation of Section 5 of
the Securities Act or require registration pursuant thereto.
3. That Assignee warrants and represent to, and covenants with, the
Assignor and the Company pursuant to Section 12.10 of the Flow Sale Agreement
that:
a. The Assignee agrees to be bound, as Purchaser, by all of the terms,
covenants and conditions of the Flow Sale Agreement, the Mortgage Loans and the
Custodial Agreement, and from and after the date hereof, the Assignee assumes
for the benefit of each of the Company and the Assignor all of the Assignor's
obligations as purchaser thereunder;
b. The Assignee understands that the Mortgage Loans have not been
registered under the Securities Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the Mortgage
Loans is in excess of $250,000.00 and will be paid by cash remittance of the
full purchase price within 60 days of the sale;
d. The Assignee is acquiring the Mortgage Loans for investment for its
own account only and not for any other person. In this connection, neither the
Assignee nor any person authorized to act therefor has offered to sell the
Mortgage Loans by means of any general advertising or general solicitation
within the meaning of Rule 502(c) Regulation D, promulgated under the Securities
Act;
e. The Assignee considers itself a substantial sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
f. The Assignee has been furnished with all information regarding the
Mortgage Loans that it has requested from the Assignor or the Company;
g. Neither the Assignee nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accepted a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner which would constitute a distribution of the Mortgage Loans
under the Securities Act or which would render the disposition of the Mortgage
Loans a violation of Section 5 of the Securities Act or require registration
pursuant thereto, nor will it act, nor has it
2
authorized or will it authorize any person to act, in such manner with respect
to the Mortgage Loans; and
h. Either (1) the Assignee is not an employee benefit plan ("Plan")
within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or a plan ("Plan") within the meaning of
section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code"), and the
Assignee is not directly or indirectly purchasing the Mortgage Loans on behalf
of, investment manager of, as named fiduciary of, as trustee of, or with assets
of, a Plan; or (2) the Assignee's purchase of the Mortgage Loans will not result
in a prohibited transaction under section 406 of ERISA or section 4975 of the
Code.
i. The Assignee's address for purposes of all notices and
correspondence related to the Mortgage Loans and the Flow Sale Agreement is:
[NAME AND ADDRESS OF ASSIGNEE]
Attention: _____________________
Telephone: _________________________
Fax: _________________________
The Assignee's wire transfer instructions for purposes of all remittances
and payments related to the Mortgage Loans and the Flow Sale Agreement is:
For the account of [NAME OF ASSIGNEE]
A/C#: _________________________
ABA#: _________________________
Attention: _________________________
Taxpayer ID#: _______________________
4. Accuracy of the Servicing Agreement.
The Company and the Assignor represent and warrant to the Assignee that (i)
attached hereto as Exhibit B are true, accurate and complete copies of the Flow
Sale Agreement, the Custodial Agreement and all amendments and modifications, if
any, thereto, (ii) neither the Flow Sale Agreement nor the Custodial Agreement
has been amended or modified in any respect, except as set forth in this
Agreement, and (iii) no notice of termination has been given to the Company
under the Flow Sale Agreement. The Company represents and warrants that through
the date hereof the Company has serviced the Mortgage Loans in accordance with
the terms of the Flow Sale Agreement.
5. Recognition of Assignee.
From and after the date hereof, the Company shall note the transfer of the
Mortgage Loans to the Assignee in its books and records, the Company shall
recognize the Assignee as the owner of the Mortgage Loans and the Company shall
service the Mortgage Loans for the benefit of the Assignee pursuant to the Flow
Sale Agreement, the terms of which are incorporated herein by reference. It is
the intention of the Assignor, the Company and the Assignee that the Flow
3
Sale Agreement and the Custodial Agreement shall be binding upon and inure to
the benefit of the Company and the Assignee and their respective successors and
assigns.
[Signatures Follow]
4
IN WITNESS WHEREOF, the parties have caused this Assignment, Assumption and
Recognition Agreement be executed by their duly authorized officers as of the
date first above written.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Its: Its:
-------------------------------- ----------------------------------
[NAME OF COMPANY]
Company
By:
---------------------------------
Name:
---------------------------------
Its:
---------------------------------
5
EXHIBIT A
to the Assignment, Assumption and Recognition Agreement
MORTGAGE LOAN SCHEDULE
6
EXHIBIT B
to the Assignment, Assumption and Recognition Agreement
EXECUTION COPIES OF FLOW SALE AND SERVICING AGREEMENT
AND MEMORANDUM OF SALE
7
EXHIBIT E
UNDERWRITING GUIDELINES
[On file with Purchaser]
EXHIBIT F
REPRESENTATIONS AND WARRANTIES
REGARDING INDIVIDUAL MORTGAGE LOANS
(a) Mortgage Loans as Described.
The information set forth in the Mortgage Loan Schedule annexed to the
related Memorandum of Sale and the information contained on the
related electronic data file delivered to the Purchaser is complete,
true and correct;
(b) Payments Current.
All payments required to be made prior to the related Cut-off Date for
the Mortgage Loan under the terms of the Mortgage Note have been made
and credited. No payment under any Mortgage Loan has ever been 30 days
or more delinquent. The first two Monthly Payments after the related
Cut-off Date shall be made with respect to the Mortgage Loan within
the respective month in which it is due, all in accordance with the
terms of the Mortgage Note;
(c) No Outstanding Charges.
There are no defaults in complying with the terms of the Mortgages,
and there are no delinquent taxes, governmental assessments, insurance
premiums, leasehold payments, ground rents, water, sewer and municipal
charges, including assessments payable in future installments or any
other charge affecting the lien priority of the related Mortgaged
Property. The Company has not advanced funds, or induced, or solicited
directly or indirectly, the payment of any amount required under the
Mortgage Loan, except for interest accruing from the date of the
Mortgage Note or date of disbursement of the Mortgage Loan proceeds,
whichever is later, to the day which precedes by one month the Due
Date of the first installment of principal and interest;
(d) Original Terms Unmodified.
The terms of the Mortgage Note and Mortgage have not been impaired,
waived, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the
interests of the Purchaser and maintain the lien priority of the
Mortgage and which has been delivered to the Custodian. The substance
of any such waiver, alteration or modification has been approved by
the issuer of any related PMI Policy and the title insurer, to the
extent required by the policy, and its terms are reflected on the
Mortgage Loan Schedule. No instrument of waiver, alteration or
modification has been executed, and no Mortgagor has been released, in
whole or in part, except in connection with an assumption agreement
approved by the issuer of any related PMI Policy and the title
insurer, to the extent required by the policy, and which assumption
agreement is part of
the Mortgage File delivered to the Custodian and the terms of which
are reflected on the related Mortgage Loan Schedule;
(e) No Defenses.
The Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, nor will the operation of any of the
terms of the Mortgage Note or the Mortgage, or the exercise of any
right thereunder, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect
thereto, and no Mortgagor was a debtor in any state or federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated;
(f) No Satisfaction of Mortgage.
The Mortgage has not been satisfied, canceled, subordinated or
rescinded, in whole or in part, and the Mortgaged Property has not
been released from the lien of the Mortgage, in whole or in part, nor
has any instrument been executed that would effect any such
satisfaction, release, cancellation, subordination or rescission;
(g) Validity of Mortgage Documents.
The Mortgage Note and the Mortgage and related documents are genuine,
and each is the legal, valid and binding obligation of the maker
thereof enforceable in accordance with its terms. All parties to the
Mortgage Note and the Mortgage had legal capacity to enter into the
Mortgage Loan and to execute and deliver the Mortgage Note and the
Mortgage, and the Mortgage Note and the Mortgage have been duly and
properly executed by such parties;
(h) No Fraud.
No fraud, error, omission, misrepresentation, negligence or similar
occurrence with respect to a Mortgage Loan has taken place on the part
of the Company, or to the best of the Company's knowledge after
reasonable inquiry, the Mortgagor, the appraiser, any builder, or any
developer, or any other party involved in the solicitation or
origination of the Mortgage Loan or in the application of any
insurance in relation to such Mortgage Loan or in connection with the
sale of such Mortgage Loan to the Purchaser, and there are no
circumstances existing with respect to the Mortgage Loan which would
permit the primary mortgage guaranty insurer to deny coverage under
any insurance policy;
(i) Compliance with Applicable Laws.
All requirements of federal, state and local law including, without
limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, predatory and abusive lending,
equal credit opportunity or disclosure laws applicable to the
solicitation, origination and servicing of the Mortgage Loan have been
complied with, the Mortgagor received all disclosure materials
required by applicable law with respect to the making of mortgage
loans of the same type as the Mortgage Loan and, if the Mortgage Loan
is a refinanced Mortgage Loan, rescission materials required by
applicable laws, and the Company shall maintain in its possession,
available for the Purchaser's inspection, and shall deliver to the
Purchaser upon demand, evidence of compliance with all such
requirements. All inspections, licenses and certificates required to
be made or issued with respect to all occupied portions of the
Mortgaged Property and, with respect to the use and occupancy of the
same, including, but not limited to, certificates of occupancy and
fire underwriting certificates, have been made or obtained from the
appropriate authorities;
(j) Fair Credit Reporting Act.
The Company has fully furnished, in accordance with the Fair Credit
Reporting Act and its implementing regulations, accurate and complete
information (i.e., favorable and unfavorable) on the related
Mortgagor's credit files to Equifax, Experian, and Trans Union Credit
Information Company (three of the credit repositories), on a monthly
basis.
(k) Location and Type of Mortgaged Property.
The Mortgaged Property is located in the state identified in the
Mortgage Loan Schedule and consists of a contiguous parcel of real
property with a detached single family residence erected thereon, or a
two- to four-family dwelling, or an individual condominium unit in a
condominium project, or an individual unit in a planned unit
development, or, in the case of a Mortgage Loan secured by a Co-op
Share, leases or occupancy agreements. None of the Mortgaged
Properties are Manufactured Homes, log homes, mobile homes, geodesic
domes or other unique property types. As of the respective appraisal
date for each Mortgaged Property, no portion of the Mortgaged Property
was being used for commercial or mixed-use purposes and, to the
Company's knowledge, since the date of such Appraisal, no portion of
the Mortgaged Property has been used for commercial purposes. No
Mortgage Loan finances builder inventory. If the Mortgaged Property is
next to another Mortgaged Property, such "row houses" do not, in the
aggregate for all the Mortgage Loans in the Mortgage Loan Package,
represent more than 1.0% of the aggregate principal balance of such
Mortgage Loans;
(l) Valid First Lien.
The Mortgage is a valid, subsisting and enforceable first lien on the
Mortgaged Property, including all buildings on the Mortgaged Property
and all installations and mechanical, electrical, plumbing, heating
and air conditioning systems
located in or annexed to such buildings, and all additions,
alterations and replacements made at any time with respect to the
foregoing. The lien of the Mortgage is subject only to:
(1) the lien of current real property taxes and assessments not yet
due and payable;
(2) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of
recording acceptable to mortgage lending institutions generally
and specifically referred to in the lender's title insurance
policy delivered to the originator of the Mortgage Loan and (i)
referred to or otherwise considered in the Appraisal made for the
originator of the Mortgage Loan and (ii) which do not adversely
affect the Appraised Value of the Mortgaged Property set forth in
such Appraisal;
(3) if the Mortgaged Property consists of Co-op Shares, any lien for
amounts due to the cooperative housing corporation for unpaid
assessments or charges or any lien of any assignment of rents or
maintenance expenses secured by the real property owned by the
cooperative housing corporation; and
(4) other matters to which like properties are commonly subject which
do not individually or in the aggregate, materially interfere
with the benefits of the security intended to be provided by the
mortgage or the use, enjoyment, value or marketability of the
related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting and enforceable first lien
and first priority security interest on the property described therein
and the Company has full right to sell and assign the same to the
Purchaser;
(m) Full Disbursement of Proceeds.
The proceeds of the Mortgage Loan have been fully disbursed to or for
the account of the Mortgagor, and there is no requirement for future
advances thereunder. Any and all requirements as to completion of any
on-site or off-site improvements and any and all requirements as to
disbursements of escrow funds for such improvements have been complied
with. All costs, fees and expenses incurred in making or closing the
Mortgage Loan and the recording of the Mortgage were paid, and the
Mortgagor is not entitled to any refund of any amounts paid or due
under the Mortgage Note or Mortgage;
(n) Consolidation of Future Advances.
Any future advances made prior to the related Cut-off Date have been
consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term reflected on the
Mortgage Loan Schedule. The lien of the Mortgage securing the
consolidated principal amount is expressly insured as having first
lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by other
title evidence acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac; the
consolidated principal amount does not exceed the original principal
amount of the Mortgage Loan; the Company shall not make future
advances after the related Cut-off Date;
(o) Ownership.
The Company is the sole owner of record and holder of the Mortgage
Loan, and the related Mortgage Note and the Mortgage are not assigned
or pledged, and the Company has good and marketable title thereto and
has full right and authority to transfer and sell the Mortgage Loan to
the Purchaser. The Company is transferring the Mortgage Loan free and
clear of any and all encumbrances, liens, pledges, equities,
participation interests, claims, agreements with other parties to sell
or otherwise transfer the Mortgage Loan, charges or security interests
of any nature encumbering such Mortgage Loan;
(p) Origination/Doing Business.
The Mortgage Loan was originated by a savings and loan association, a
savings bank, a commercial bank, a credit union, an insurance company,
or similar institution that is supervised and examined by a federal or
state authority or by a mortgagee approved by the Secretary of Housing
and Urban Development pursuant to Sections 203 and 211 of the National
Housing Act. All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest,
were) (1) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property
is located, and (2) either (A) organized under the laws of such state,
(B) qualified to do business in such state, (C) federal savings and
loan associations or national banks having principal offices in such
state, or (D) not doing business in such state;
(q) LTV, PMI Policy.
No Mortgage Loan has a LTV greater than 95%. If a Mortgage Loan had an
original LTV of 80% or greater, the excess over 75% is and will be
insured as to payment defaults by a PMI Policy until terminated
pursuant to the Homeowners Protection Act of 1998, 12 USC Section
4901, et seq. All provisions of such PMI Policy have been and are
being complied with, such policy is in full force and effect, and all
premiums due thereunder have been paid. The insurer under such PMI
Policy is a Qualified Insurer that has a claims paying ability
acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac. Any Mortgage Loan subject to
a PMI Policy obligates the
Mortgagor thereunder to maintain the PMI Policy and to pay all
premiums and charges in connection therewith. The Mortgage Interest
Rate for the Mortgage Loan as set forth on the Mortgage Loan Schedule
is net of any such insurance premium;
(r) Title Insurance.
The Mortgage Loan is covered by an ALTA lender's title insurance
policy, acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, or other generally
acceptable form of policy of insurance acceptable to ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac, issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac and qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the Company, its successors
and assigns, as to the first priority lien of the Mortgage in the
original principal amount of the Mortgage Loan, subject only to the
exceptions contained in clauses (1), (2), (3) and (4) of Paragraph (l)
of this Section 3.02. For each Adjustable Rate Mortgage Loan, such
policy shall include an adjustable rate mortgage endorsement and shall
insure the Company, its successors and assigns, against any loss by
reason of the invalidity or unenforceability of the lien resulting
from the provisions of the Mortgage providing for adjustment to the
Mortgage Interest Rate or Monthly Payment. Additionally, such lender's
title insurance policy affirmatively insures ingress and egress, and
against encroachments by or upon the Mortgaged Property or any
interest therein. Where required by state law or regulation, the
Mortgagor has been given the opportunity to choose the carrier of such
lender's title insurance policy. The Company, its successors and
assigns, are the sole insureds of such lender's title insurance policy
for each Mortgage Loan, and such lender's title insurance policy is
valid and remains in full force and effect and will be in full force
and effect upon the sale of the Mortgage Loan to the Purchaser. No
claims have been made under such lender's title insurance policy, and
no prior holder of the Mortgage, including the Company, has done, by
act or omission, anything which would impair the coverage of such
lender's title insurance policy. In connection with the issuance of
such lender's title insurance policy, no unlawful fee, commission,
kickback or other unlawful compensation or value of any kind has been
or will be received, retained or realized by any attorney, firm or
other person or entity, and no such unlawful items have been received,
retained or realized by the Company;
(s) No Defaults.
There is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and no event which,
with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or
event of acceleration, and neither the Company nor its predecessors
have waived any default, breach, violation or event of acceleration;
(t) No Mechanics' Liens.
There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that
under the law could give rise to such liens) affecting the related
Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(u) Location of Improvements; No Encroachments.
All improvements which were considered in determining the Appraised
Value of the Mortgaged Property lay wholly within the boundaries and
building restriction lines of the Mortgaged Property and no
improvements on adjoining properties encroach upon the Mortgaged
Property. No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning law or regulation;
(v) Payment Terms.
Payments on the Mortgage Loan commenced no more than 60 days after the
proceeds of such Mortgage Loan were disbursed to the related
Mortgagor. The Mortgage Loans have an original term to maturity of not
more than 40 years, with interest payable, to the extent required, in
arrears on the Due Date set forth on the related Mortgage Loan
Schedule. As to each Adjustable Rate Mortgage Loan on each applicable
Adjustment Date, the Mortgage Interest Rate has been or will be
adjusted to equal the sum of the Index plus the applicable Gross
Margin, rounded up or down to the nearest multiple of 0.125% indicated
by the Mortgage Note; provided that the Mortgage Interest Rate has not
increased or decreased and will not increase or decrease by more than
the Periodic Interest Rate Cap on any Adjustment Date, and has not,
nor will it in any event, exceed the maximum Mortgage Interest Rate or
be lower than the minimum Mortgage Interest Rate listed on the
Mortgage Loan Schedule for such Mortgage Loan. The related Mortgage
Note requires a monthly payment which is sufficient, during the period
prior to the first adjustment to the Mortgage Interest Rate, to fully
amortize the outstanding principal balance as of the first day of such
period over the then remaining term of such Mortgage Note and to pay
interest at the related Mortgage Interest Rate. Except with respect to
Option ARM Mortgage Loans, no Mortgage Loan contains terms or
provisions which would result in Negative Amortization;
(w) Customary Provisions.
The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and remedies of
the holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security provided thereby, including,
(i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. There is
no homestead or other exemption available to a Mortgagor which would
interfere with the right to sell the Mortgaged Property at a trustee's
sale or the right to foreclose the Mortgage;
(x) Occupancy of the Mortgaged Property.
As of the date of origination, the Mortgaged Property was lawfully
occupied under applicable law and to the best of the Company's
knowledge, the Mortgaged Property is lawfully occupied as of the
Closing Date;
(y) No Additional Collateral.
The Mortgage Note is not and has not been secured by any collateral,
pledged account or other security except the lien of the corresponding
Mortgage and the security interest of any applicable security
agreement or chattel mortgage referred to in Paragraph (l) above;
(z) Deeds of Trust.
In the event the Mortgage constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and
no fees or expenses are or will become payable by the Mortgagee to the
trustee under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor;
(aa) Acceptable Investment.
The Company has no knowledge of any circumstances or conditions with
respect to the Mortgage Loan, the Mortgaged Property, the Mortgagor or
the Mortgagor's credit standing that can reasonably be expected to
cause private institutional investors to regard the Mortgage Loan as
an unacceptable investment, cause the Mortgage Loan to become
delinquent, or adversely affect the value or marketability of the
Mortgage Loan;
(bb) Transfer of Mortgage Loans.
With respect to each Mortgage that is not recorded in the name of MERS
or its designee, the Assignment of Mortgage, upon the insertion of the
name of the assignee and recording information, is in recordable form
(other than the name of the assignee if in blank) and is acceptable
for recording under the laws of the jurisdiction in which the related
Mortgaged Property is located;
(cc) Mortgaged Property Undamaged.
The Mortgaged Property is in good repair and undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property
as security for the Mortgage Loan or the use for which the premises
were intended;
(dd) Servicing and Collection Practices; Escrow Deposits.
The origination, servicing and collection practices used with respect
to the Mortgage Loan have been in accordance with Accepted Servicing
Practices and the terms of the Mortgage Note and have been in all
material respects legal and proper. All escrow deposits and Escrow
Payments, if any, are in the possession of, or under the control of,
Seller and have been collected and handled in full compliance with the
Real Estate Settlement Procedures Act ("RESPA") and other state and
federal laws. No escrow deposits or Escrow Payments or other charges
or payments due the Company have been capitalized under the Mortgage
Note;
(ee) No Condemnation.
There is no proceeding pending or to the best of the Company's
knowledge threatened for the total or partial condemnation of the
related Mortgaged Property;
(ff) The Appraisal.
The Mortgage File contains an Appraisal of the related Mortgaged
Property in a form acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac. The
appraisal was made and signed, prior to the approval of the Mortgage
Loan application, by a Qualified Appraiser (1) who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on
the security thereof, (2) whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, and (3) who met the
minimum qualifications of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and Title XI of
the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 and the regulations promulgated thereunder, all as in effect on
the date the Mortgage Loan was originated;
(gg) Insurance.
All buildings on the Mortgaged Property are insured by an insurer
generally acceptable to prudent mortgage lending institutions (and to
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac) against loss by fire and such hazards as
are covered under a standard extended coverage endorsement and such
other hazards as are customary in the area where the Mortgaged
Property is located pursuant to insurance policies conforming to
Accepted Servicing Practices and the requirements of Section 4.10, in
an amount which is not less than the lesser of 100% of the insurable
value of the Mortgaged Property and, subject to insurability, the
outstanding principal
balance of the Mortgage Loan, but in no event less than the minimum
amount necessary to fully compensate for any damage or loss on a
replacement cost basis. If the Mortgaged Property is a condominium
unit, it is included under the coverage afforded by a blanket policy
for the project. If the improvements on the Mortgaged Property are in
an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, then 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 and such policy conforms to the
requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. Such flood insurance policy
is in an amount representing coverage not less than the least of (A)
the outstanding principal balance of the Mortgage Loan, (B) the full
insurable value and (C) the maximum amount of insurance which was
available under the Flood Disaster Protection Act of 1973, as amended.
All individual insurance policies contain a standard mortgagee clause
naming the Company and its successors and assigns as mortgagee, and
all premiums thereon have been paid. The Mortgage obligates the
Mortgagor thereunder to maintain a hazard insurance policy at the
Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such
insurance at such Mortgagor's cost and expense, and to seek
reimbursement therefor from the Mortgagor. Each such insurance policy
is the valid and binding obligation of the insurer, is in full force
and effect, and will be in full force and effect and inure to the
benefit of the Purchaser upon the consummation of the transactions
contemplated by this Agreement. The Company has not acted or failed to
act so as to impair the coverage of any such insurance policy or the
validity, binding effect and enforceability thereof;
(hh) No Impairment of Insurance Coverage.
No action, inaction, or event has occurred and no state of facts
exists or has existed that has resulted or will result in the
exclusion from, denial of, or defense to coverage under any applicable
hazard insurance policy, PMI Policy or bankruptcy bond, irrespective
of the cause of such failure of coverage. In connection with the
placement of any such insurance, no commission, fee, or other
compensation has been or will be received by the Company or any
designee of the Company or any corporation which the Company or any
officer, director, or employee had a financial interest at the time of
placement of such insurance.
(ii) Servicemembers Civil Relief Act.
The Mortgagor has not notified the Company, and the Company has no
knowledge of any relief requested by or provided to the Mortgagor
under the Servicemembers Civil Relief Act, as amended, or any similar
state law;
(jj) Balloon Payments, Graduated Payments or Contingent Interests.
With respect to any Mortgage Loan which is identified on the Mortgage
Loan Schedule as a balloon mortgage loan (each, a "Balloon Mortgage
Loan"), the Mortgage Note is payable in Monthly Payments based on a
thirty or forty year amortization schedule with a final Monthly
Payment substantially greater than the preceding Monthly Payment which
is sufficient to amortize the remaining principal balance of the
Balloon Mortgage Loan and such final Monthly Payment shall not be due
prior to 180 months following the origination of the Balloon Mortgage
Loan. The Mortgage Loan is not a graduated payment mortgage loan and
the Mortgage Loan does not have a shared appreciation or other
contingent interest feature;
(kk) No Construction Loans.
No Mortgage Loan was made in connection with (i) the construction or
rehabilitation of a Mortgaged Property or (ii) facilitating the
trade-in or exchange of a Mortgaged Property other than a
construction-to-permanent loan which has converted to a permanent
Mortgage Loan;
(ll) Underwriting.
Each Mortgage Loan was underwritten in accordance with the
Underwriting Guidelines; and the Mortgage Note, the Mortgage and all
other documents contained in the Mortgage Files are on ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac uniform instruments or are on forms acceptable to ▇▇▇▇▇▇
Mae or ▇▇▇▇▇▇▇ Mac;
(mm) Buydown Mortgage Loans.
With respect to each Mortgage Loan that is a Buydown Mortgage Loan:
(i) On or before the date of origination of such Mortgage Loan, the
Company and the Mortgagor, or the Company, the Mortgagor and the
seller of the Mortgaged Property or a third party entered into a
Buydown Agreement. The Buydown Agreement provides that the
seller of the Mortgaged Property (or third party) shall deliver
to the Company temporary Buydown Funds in an amount equal to the
aggregate undiscounted amount of payments that, when added to
the amount the Mortgagor on such Mortgage Loan is obligated to
pay on each Due Date in accordance with the terms of the Buydown
Agreement, is equal to the full scheduled Monthly Payment due on
such Mortgage Loan. The temporary Buydown Funds enable the
Mortgagor to qualify for the Buydown Mortgage Loan. The
effective interest rate of a Buydown Mortgage Loan if less than
the interest rate set forth in the related Mortgage Note will
increase within the Buydown Period as provided in the related
Buydown Agreement so that the effective interest rate will be
equal to the interest rate as set forth in the related Mortgage
Note. The Buydown Mortgage Loan satisfies the requirements of
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac guidelines;
(ii) The Mortgage and Mortgage Note reflect the permanent payment
terms rather than the payment terms of the Buydown Agreement.
The Buydown Agreement provides for the payment by the Mortgagor
of the full amount of the Monthly Payment on any Due Date that
the Buydown Funds are available. The Buydown Funds were not used
to reduce the original principal balance of the Mortgage Loan or
to increase the Appraised Value of the Mortgage Property when
calculating the Loan-to-Value Ratios for purposes of the
Agreement and, if the Buydown Funds were provided by the Company
and if required under ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac guidelines, the
terms of the Buydown Agreement were disclosed to the Qualified
Appraiser of the Mortgaged Property;
(iii) The Buydown Funds may not be refunded to the Mortgagor unless
the Mortgagor makes a principal payment for the outstanding
balance of the Mortgage Loan; and
(iv) As of the date of origination of the Mortgage Loan, the
provisions of the related Buydown Agreement complied with the
requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac regarding buydown
agreements;
(nn) Delivery of Mortgage Files.
The Mortgage Loan Documents for the related Mortgage Loans have been
delivered to the Custodian in accordance with the Custodial Agreement.
The Company is in possession of a complete Mortgage File for each
Mortgage Loan in compliance with Exhibit B, except for such documents
the originals of which have been delivered to the Custodian. All
documents required to be included in the Mortgage File shall be
complete, executed as required and in compliance with applicable law.
With respect to each Mortgage Loan for which a lost note affidavit has
been delivered to the Custodian in place of the original Mortgage
Note, the related Mortgage Note is no longer in existence, and, if
such Mortgage Loan is subsequently in default, the enforcement of such
Mortgage Loan or of the related Mortgage by or on behalf of the
Purchaser will not be affected by the absence of the original Mortgage
Note.
(oo) No Bankruptcy.
No Mortgagor was a debtor in any state or federal bankruptcy or
insolvency proceeding at the time the Mortgage Loan was originated
and, to the best of the Company's knowledge, following the date of
origination of the Mortgage Loan, the Mortgagor with respect to the
Mortgage Loan was not a debtor in any state or federal bankruptcy or
insolvency proceeding, and the Mortgaged Property has not been subject
to any bankruptcy or foreclosure proceedings;
(pp) No Violation of Environmental Laws.
The Mortgaged Property is free from any and all toxic or hazardous
substances and there exists no violation of any local, state or
federal environmental law, rule or regulation. There is no pending
action or proceeding directly involving any Mortgaged Property of
which the Company is aware in which compliance with any environmental
law, rule or regulation is an issue; and to the best of the Company's
knowledge, nothing further remains to be done to satisfy in full all
requirements of each such law, rule or regulation constituting a
prerequisite to use and enjoyment of said property;
(qq) Texas Refinance Mortgage Loans.
Each Mortgage Loan originated in the state of Texas pursuant to
Article XVI, Section 50(a)(6) of the Texas Constitution has been
originated in compliance with the provisions of Article XVI, Section
50(a)(6) of the Texas Constitution, Texas Civil Statutes and the Texas
Finance Code. If the Mortgage Loan was originated in Texas, it is not
a cash-out refinancing;
(rr) Conversion to Fixed Interest Rate.
No Adjustable Rate Mortgage Loan contains a provision permitting or
requiring conversion to a fixed interest rate Mortgage Loan;
(ss) The Mortgagor.
The Mortgagor is one or more natural persons and/or an Illinois land
trust or a "living trust" and such "living trust" is in compliance
with ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac guidelines. In the event the Mortgagor
is a trust, the trustee of such trust is a natural person and is an
obligor under the Mortgage Note in his or her individual capacity;
(tt) Homeownership and Equity Protection Act; No High Cost Loans.
No Mortgage Loan is (a) a "high cost" loan under the Home Ownership
and Equity Protection Act of 1994 as amended, or (b) a "high cost,"
"threshold," "covered," "predatory," "abusive," or similarly defined
loan, including refinance loans, under any other applicable state,
federal or local law (or a similarly classified loan using different
terminology under a law imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high
interest rates, points and/or fees), provided that any Mortgage Loan
secured by a Mortgaged Property in Illinois characterized as a
"threshold" loan shall not be a "high cost" loan unless it is
characterized as "predatory" under applicable local law or (c) a "High
Cost Loan" or "Covered Loan" as defined in the S&P LEVELS Glossary;
the Company has implemented and conducted compliance procedures to
determine if each Mortgage Loan is "high-cost" home loan under the
applicable laws and performed a review of the disclosure provided to
the related Mortgagor in accordance with such laws and the related
Mortgage Note in order to determine that such Mortgage Loan, if
subject to any such law, does not violate any such law;
(uu) Georgia Mortgage Loans.
No Mortgage Loan secured by property located in Georgia and originated
on or after October 1, 2002 and prior to March 7, 2003 meets the
definition of a "home loan" under the Georgia Fair Lending Act;
(vv) Kentucky Mortgage Loans.
No Mortgage Loan secured by property located in the Commonwealth of
Kentucky and originated on or after June 24, 2003 had an original
principal amount of $200,000 or less;
(ww) New Jersey Mortgage Loans.
Each Mortgage Loan secured by property located within the State of New
Jersey and subject to the provisions of the New Jersey Home Ownership
Security Act of 2002 (the "NJ Act") (i) is either a purchase money
mortgage loan or a rate-term refinancing and (ii) does not meet
definition of a (A) "Covered Home Loan," except for a Mortgage Loan
that is (x) a purchase money mortgage loan and (y) neither a
"High-Cost Home Loan" nor a "Manufactured Home Loan" under the NJ Act,
(B) "High-Cost Home Loan," (C) "Home Improvement Loan" or (D)
"Manufactured Housing Loan" under the NJ Act;
(xx) New York Loans.
No Mortgage Loan is secured by property located in the State of New
York, had an original principal balance of $300,000 or less, and has a
mortgage application date on or after April 1, 2003, the terms of
which loan equal or exceed either the annual percentage rate or the
points and fees threshold for "high-cost home loans," as defined in
Section 6-L of the New York State Banking Law;
(yy) New Mexico Loans.
No Mortgage Loan secured by property located in the State of New
Mexico and originated on or after January 1, 2004 meets the definition
of a "home loan" under The Home Loan Protection Act;
(zz) Qualified Mortgages.
Each Mortgage Loan is a "qualified mortgage" within Section 860G(a)(3)
of the Code;
(aaa) Pledged Asset Loans.
The Mortgage Loan is not a "pledged asset" mortgage loan;
(bbb) Leaseholds.
If the Mortgage Loan is secured by a long-term residential lease, (i)
the lessor under the lease holds a fee simple interest in the land;
(ii) the terms of such lease expressly permit the mortgaging of the
leasehold estate, the assignment of the lease without the lessor's
consent and the acquisition by the holder of the Mortgage of the
rights of the lessee upon foreclosure or assignment in lieu of
foreclosure or provide the holder of the Mortgage with substantially
similar protections; (iii) the terms of such lease do not (A) allow
the termination thereof upon the lessee's default without the holder
of the Mortgage being entitled to receive written notice of, and
opportunity to cure, such default, (B) allow the termination of the
lease in the event of damage or destruction as long as the Mortgage is
in existence, (C) prohibit the holder of the Mortgage from being
insured (or receiving proceeds of insurance) under the hazard
insurance policy or policies relating to the Mortgaged Property (D)
permit any increase in the rent other than pre-established increases
set forth in the lease, (E) the original term of such lease is not
less than the term of the related Mortgage; (F) the term of such lease
does not terminate earlier than five years after the maturity date of
the Mortgage Note, and (G) the Mortgaged Property is located in a
jurisdiction in which the use of leasehold estates in transferring
ownership in residential properties is a widely accepted practice;
(ccc) Adjustments.
All of the terms of the related Mortgage Note pertaining to interest
adjustments, payment adjustments and adjustments of the outstanding
principal balance, if any, are enforceable and such adjustments on
such Mortgage Loan have been made properly and in accordance with the
provisions of such Mortgage Loan, including any required notices, and
such adjustments do not and will not affect the priority of the
Mortgage lien;
(ddd) FICO Scores.
Each Mortgage Loan has a non-zero FICO score and a minimum FICO score
of 620;
(eee) Prepayment Penalties.
All information on the Mortgage Loan Schedule and electronic data file
delivered to the Purchaser regarding the Prepayment Premium is
complete and accurate in all material respects and each Prepayment
Premium is permissible and enforceable in accordance with its terms
under applicable law. Prepayment Premiums on the Mortgage Loans are
applicable to prepayments resulting from both refinancings and sales
of the related Mortgaged Properties, as disclosed in the related
Mortgage Loan Schedule, and the terms of such Prepayment Premiums do
not provide for a waiver or release (i.e., "holidays") during the term
of the Prepayment Premium. No Mortgage Loan originated on or after
October 1, 2002
provides for the payment of a Prepayment Premium beyond the three year
term following the origination of the Mortgage Loan. No Mortgage Loan
originated prior to such date provides for the payment of a Prepayment
Premium beyond the five-year term following the origination of the
Mortgage Loan. With respect to any Mortgage Loan that contains a
provision permitting imposition of a Prepayment Premium: (i) prior to
the Mortgage Loan's origination, the Mortgagor agreed to such
Prepayment Premium in exchange for a monetary benefit, including, but
not limited to, a rate or fee reduction, (ii) prior to the Mortgage
Loan's origination, the Mortgagor was offered the choice of another
mortgage product that did not require payment of such a premium, (iii)
the Prepayment Premium is disclosed to the Mortgagor in the loan
documents pursuant to applicable state and federal law, and (iv)
notwithstanding any state or federal law to the contrary, the Company
shall not impose such Prepayment Premium in any instance when the
mortgage debt is accelerated as the result of the Mortgagor's default
in making the Monthly Payments;
(fff) Interest Calculation.
Interest on each Mortgage Loan is calculated on the basis of a 360-day
year consisting of twelve 30-day months;
(ggg) Due on Sale.
The Mortgage contains an enforceable provision, to the extent not
prohibited by federal law as of the date of such Mortgage, for the
acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the mortgagee
thereunder;
(hhh) Flood Certification Contract.
The Company has obtained a life of loan, transferable flood
certification contract with an Approved Flood Policy Insurer
acceptable to Purchaser in its sole discretion for each Mortgage Loan
and such contract is assignable without penalty, premium or cost to
the Purchaser;
(iii) Single Premium Credit Life Insurance.
None of the proceeds of the Mortgage Loan were used to finance single
premium credit life insurance policies;
(jjj) Tax Service Contracts.
The Company has obtained a life of loan, transferable real estate Tax
Service Contract on each Mortgage Loan with an Approved Tax Servicer
Contract Provider and such contract is assignable without penalty,
premium or cost to the Purchaser;
(kkk) Debt to Income Ratio.
Each Mortgage Loan has a debt to income ratio of 60% or less. Each
Mortgage Loan with an original principal balance of $1 million or more
has a debt to income ratio of 50% or less;
(lll) No Arbitration Provisions.
With respect to any Mortgage Loan originated on or after August 1,
2004, neither the related Mortgage nor Mortgage Note requires the
Mortgagor to submit to arbitration to resolve any dispute arising
thereunder or in connection with the origination of such Mortgage
Loan; and
(mmm) OCC Guidelines.
Neither the origination of the Mortgage Loan nor the purchase thereof
by the Purchaser will cause the Mortgage Loan or the Purchaser to fail
to comply with the OCC Guidelines Establishing Standards for
Residential Mortgage Lending Practices.
EXHIBIT G
FORM OF OPINION OF COUNSEL
Luminent Mortgage Capital, Inc.
[___]
Re: [NAME OF COMPANY]
Dear Sir/Madam:
I am [general counsel] of [NAME OF COMPANY] (the "Company"), with respect to
certain matters in connection with the sale by the Company of certain mortgage
loans (the "Mortgage Loans") pursuant to that certain Flow Sale and Servicing
Agreement, dated as of [___] (the "Agreement"), by and among the Company and by
and among Luminent Mortgage Capital, Inc., Mercury Mortgage Finance Statutory
Trust, Maia Mortgage Finance Statutory Trust, as purchasers (collectively, the
"Purchasers", and individually, as the purchaser of any Mortgage Loan under the
Agreement, the "Purchaser"), which sale is in the form of whole Mortgage Loans.
Capitalized terms not otherwise defined herein have the meanings set forth in
the Agreement.
I have examined the following documents:
1. the Agreement;
2. the Custodial Agreement;
3. the form of endorsement of the Mortgage Notes; and
4. such other documents, records and papers as I have deemed necessary and
relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon the
representations and warranties of the Company contained in the Agreement. I have
assumed the authenticity of all documents submitted to me as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents.
Based upon the foregoing, it is my opinion that;
1. The Company is a [___] duly organized, validly existing and in good
standing under the laws of the state of [___].
2. The Company has the power to engage in the transactions contemplated by the
Agreements, the Custodial Agreement and all requisite power, authority and
legal right to
execute and deliver the Agreement, the Custodial Agreement and the Mortgage
Loans, and to perform and observe the terms and conditions of such
instruments.
3. Each person who, as an officer or attorney-in-fact of the Company, signed
(a) the Agreement and the Custodial Agreement, and (b) any other document
delivered prior hereto or on the date hereof in connection with the sale
and servicing of the Mortgage Loans in accordance with the Agreement and
the person was, at the respective times of such signing and delivery, and
is, as of the date hereof, duly elected or appointed, qualified and acting
and as such officer or attorney-in-fact, and the signatures of such persons
appearing on such documents are their genuine signatures.
4. Each of the Agreement, the Custodial Agreement, and the Mortgage Loans, has
been duly authorized, executed and delivered by the Company and is a legal,
valid and binding agreement enforceable in accordance with its terms,
subject to bankruptcy laws and other similar laws of general application
affecting rights of creditors and subject to the application of the rules
of equity, including those respecting the availability of specific
performance, none of which will materially interfere with the realization
of the benefits provided thereunder or with the Purchaser's ownership of
the Mortgage Loans.
5. The Company has been duly authorized to allow any of its officers to
execute any and all documents by original signature in order to complete
the transactions contemplated by the Agreement and the Custodial Agreement,
and by original or facsimile signature in order to execute the endorsements
to the Mortgage Notes and the assignments of the Mortgages, and the
original or facsimile signature of the officer at the Company executing the
endorsements to the Mortgage Notes and the assignments of the Mortgages
represents the legal and valid signature of said officer of the Company.
6. Either (i) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Company of or compliance by the Company with the
Agreement, the Custodial Agreement or the sale and delivery of the Mortgage
Loans or the consummation of the transactions contemplated by the
Agreement, and the Custodial Agreement; or (ii) any required consent,
approval, authorization or order has been obtained by the Company.
7. Neither the consummation of the transactions contemplated by, nor the
fulfillment of the terms of the Agreement and the Custodial Agreement, will
conflict with or results in or will result in a breach of or constitutes or
will constitute a default under the charter or by-laws of the Company, the
terms of any indenture or other agreement or instrument to which the
Company is a party or by which it is bound or to which it is subject, or
violates any statute or order, rule, regulations, writ, injunction or
decree of any court, governmental authority or regulatory body to which the
Company is subject or by which it is bound.
8. There is no action, suit, proceeding or investigation pending or, to the
best of my knowledge, threatened against the Company which, in my opinion,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties
or assets of the Company or in any material
impairment of the right or ability of the Company to carry on its business
substantially as now conducted or in any material liability on the part of
the Company or which would draw into question the validity of the Agreement
or the Custodial Agreement, or of any action taken or to be taken in
connection with the transactions contemplated thereby, or which would be
likely to impair materially the ability of the Company to perform under the
terms of the Agreement and the Custodial Agreement.
9. The sale of each Mortgage Note and Mortgage as and in the manner
contemplated by the Agreement is sufficient fully to transfer all right,
title and interest of the Company thereto as noteholder and mortgagee,
apart from the rights to service the Mortgage Loans pursuant to the
Agreement.
10. The form of endorsement that is to be used with respect to the Mortgage
Loans is legally valid and sufficient to duly endorse the Mortgage Notes to
the Purchaser. Upon the completion of the endorsement of the Mortgage Notes
and the completion of the assignments of the Mortgages, and the recording
thereof, the endorsement of the Mortgage Notes, the delivery to the
Custodian of the completed assignments of the Mortgages, and the delivery
of the original endorsed Mortgage Notes to the Custodian would be
sufficient to permit the entity to which such Mortgage Note is initially
endorsed at the Purchaser's direction, and to whom such assignment of
Mortgages is initially assigned at the Purchaser's direction, to avail
itself of all protection available under applicable law against the claims
of any present or future creditors of the Company, and would be sufficient
to prevent any other sale, transfer, assignment, pledge or hypothecation of
the Mortgages and the Mortgage Notes by the Company from being enforceable.
This opinion is given to you for your sole benefit, and no other person or
entity is entitled to rely hereon except that the purchaser or purchasers to
which you initially and directly resell the Mortgage Loans may rely on this
opinion as if it were addressed to them as of its date.
Sincerely,
EXHIBIT H
SEC CERTIFICATION
I, ___________________________, certify to ___________________________ (the
"Depositor"), and its officers, directors and affiliates, and with the knowledge
and intent that they will rely upon this certification, that:
(a) I have reviewed the information required to be delivered to the
trustee by the servicer pursuant to the pooling and servicing
agreement (the "Servicing Information");
(b) Based on my knowledge, the Servicing Information, taken as a whole,
does not contain erroneous or incomplete information required to be
provided to the trustee by the servicer under the pooling and
servicing agreement;
(c) Based on my knowledge, the Servicing Information required to be
provided to the trustee by the servicer under the pooling and
servicing agreement has been provided to the trustee;
(d) I am responsible for reviewing the activities performed by the
servicer under the pooling and servicing agreement and based upon the
review required under the pooling and servicing agreement, and except
as disclosed in the report, the servicer has fulfilled its obligations
under the pooling and servicing agreement; and
(e) I have disclosed to ___________________________ 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 pooling and servicing
agreement.
Date:
----------------------
----------------------------
[Signature]
-----------------------------
[Title]
EXHIBIT I
FORM OF MEMORANDUM OF SALE
CLOSING DATE:
This Memorandum of Sale (this "Memorandum"), dated as of _______ (the
"Closing Date"), confirms the sale by [____________________] (the "Company"), to
[LUMINENT MORTGAGE CAPITAL, INC. / MERCURY MORTGAGE FINANCE STATUTORY TRUST/
MAIA MORTGAGE FINANCE STATUTORY TRUST (the "Purchaser"), and the purchase by the
Purchaser from the Company, of the first lien [fixed rate] [adjustable rate]
residential mortgage loans on a servicing retained basis described on the
Mortgage Loan Schedule attached hereto as Schedule I (the "Mortgage Loans"),
pursuant to the terms of the Flow Sale and Servicing Agreement (the "Flow Sale
and Servicing Agreement"), dated as of _________, and is by and between the
Purchaser and the Company.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Company does hereby bargain, sell, convey, assign
and transfer to Purchaser without recourse, except as provided in the Flow Sale
and Servicing Agreement, and on a servicing retained basis, all right, title and
interest of the Company in and to each of the Mortgage Loans, together with all
documents maintained as part of the related Mortgage Files, all Mortgaged
Properties which secure any Mortgage Loan but are acquired by foreclosure, deed
in lieu of foreclosure after the Cut-off Date or otherwise, all payments of
principal and interest received on the Mortgage Loans after the Cut-off Date,
all other unscheduled collections collected in respect of the Mortgage Loans
after the Cut-off Date, and all proceeds of the foregoing, subject, however, to
the rights of the Company under the Flow Sale and Servicing Agreement.
The Company has delivered to the Custodian prior to the date hereof the
documents with respect to each Mortgage Loan required to be delivered under the
Flow Sale and Servicing Agreement.
Capitalized terms that are used herein but are not defined herein shall
have the respective meanings set forth in the Flow Sale and Servicing Agreement.
IN WITNESS WHEREOF, the parties hereto, by the hands of their duly
authorized officers, execute this Memorandum as of the Closing Date referred to
above.
LUMINENT MORTGAGE CAPITAL, INC.
MERCURY MORTGAGE FINANCE STATUTORY TRUST
MAIA MORTGAGE FINANCE STATUTORY TRUST,
as Purchaser
By:
---------------------------
Name:
-------------------------
Its:
--------------------------
[------------------------],
as Company
By:
---------------------------
Name:
-------------------------
Its:
--------------------------
SCHEDULE I
MORTGAGE LOAN SCHEDULE
EXHIBIT J
SERVICER REQUIREMENTS
[On file with Purchaser]
EXHIBIT K
REGULATION AB COMPLIANCE ADDENDUM
ARTICLE I
DEFINED TERMS
Capitalized terms used but not defined in this Regulation AB Compliance
Addendum (this "Reg AB Addendum") shall have the meanings assigned to such terms
in the Agreement to which this Reg AB Addendum is attached and of which it forms
a part. As used in this Reg AB Addendum, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
Commission: The United States Securities and Exchange Commission.
Company Information: As defined in Section 2.07(a) of this Reg AB Addendum.
Depositor: The depositor, as such term is defined in Regulation AB, with
respect to any Securitization Transaction.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Master Servicer: With respect to a Securitization Transaction, the "master
servicer," if any, identified by the Purchaser and identified in related
transaction documents.
Qualified Correspondent: Any Person from which the Company purchased
Mortgage Loans, provided that the following conditions are satisfied: (i) such
Mortgage Loans were originated pursuant to an agreement between the Company and
such Person that contemplated that such Person would underwrite mortgage loans
from time to time, for sale to the Company, in accordance with underwriting
guidelines designated by the Company ("Designated Guidelines") or guidelines
that do not vary materially from such Designated Guidelines; (ii) such Mortgage
Loans were in fact underwritten as described in clause (i) above and were
acquired by the Company within 180 days after origination; (iii) either (x) the
Designated Guidelines were, at the time such Mortgage Loans were originated,
used by the Company in origination of mortgage loans of the same type as the
Mortgage Loans for the Company's own account or (y) the Designated Guidelines
were, at the time such Mortgage Loans were underwritten, designated by the
Company on a consistent basis for use by lenders in originating mortgage loans
to be purchased by the Company; and (iv) the Company employed, at the time such
Mortgage Loans were acquired by the Company, pre-purchase or post-purchase
quality assurance procedures (which may involve, among other things, review of a
sample of mortgage loans purchased during a particular time period or through
particular channels) designed to ensure that Persons from which it purchased
mortgage loans properly applied the underwriting criteria designated by the
Company.
Reconstitution: Any Securitization Transaction or Whole Loan Transfer.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. ▇▇.▇▇. 229.1100-229.1123, as such may be amended from time to time,
and subject to such clarification and interpretation as have been provided by
the Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Commission, or as may be provided by the Commission or its staff from
time to time.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: Any transaction involving either (1) a sale or
other transfer of some or all of the Mortgage Loans directly or indirectly to an
issuing entity in connection with an issuance of publicly offered or privately
placed, rated or unrated mortgage-backed securities or (2) an issuance of
publicly offered or privately placed, rated or unrated securities, the payments
on which are determined primarily by reference to one or more portfolios of
residential mortgage loans consisting, in whole or in part, of some or all of
the Mortgage Loans.
Servicer: As defined in Section 2.03(c) of this Reg AB Addendum.
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.
Static Pool Information: Static pool information as described in Item
1l05(a)(l)-(3) and 1105(c) of Regulation AB.
Subcontractor: Any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as "servicing" is commonly understood by
participants in the mortgage-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item l122(d) of
Regulation AB with respect to Mortgage Loans under the direction or authority of
the Company or a Subservicer.
Subservicer: Any Person that services Mortgage Loans on behalf of the
Company or any Subservicer and is responsible for the performance (whether
directly or through Subservicers or Subcontractors) of a substantial portion of
the material servicing functions required to be performed by the Company under
this Agreement or any Reconstitution Agreement that are identified in Item
1122(d) of Regulation AB.
Third-Party Originator: Each Person, other than a Qualified Correspondent,
that originated Mortgage Loans acquired by the Company.
Whole Loan Transfer: Any sale or transfer of some or all of the Mortgage
Loans, other than a Securitization Transaction.
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ARTICLE II
COMPLIANCE WITH REGULATION AB
Section 2.01. Intent of the Parties; Reasonableness.
The Purchaser and the Company acknowledge and agree that the purpose of
this Reg AB Addendum is to facilitate compliance by the Purchaser and any
Depositor with the provisions of Regulation AB and related rules and regulations
of the Commission and that the provisions of this Reg AB Addendum shall be
applicable to all Mortgage Loans included in a Securitization Transaction
closing on or after January 1, 2006, regardless whether the Mortgage Loans were
purchased by the Purchaser from the Company prior to the date hereof. Although
Regulation AB is applicable by its terms only to offerings of asset-backed
securities that are registered under the Securities Act, the Company
acknowledges that investors in privately offered securities may require that the
Purchaser or any Depositor provide comparable disclosure in unregistered
offerings. References in this Agreement to compliance with Regulation AB include
provision of comparable disclosure in private offerings.
Neither the Purchaser nor any Depositor shall exercise its right to request
delivery of information or other performance under these provisions other than
in good faith, or for purposes other than compliance with the Securities Act,
the Exchange Act and the rules and regulations of the Commission thereunder (or
the provision in a private offering of disclosure comparable to that required
under the Securities Act). The Company acknowledges that interpretations of the
requirements of Regulation AB may change over time, whether due to interpretive
guidance provided by the Commission or its staff, consensus among participants
in the asset-backed securities markets, advice of counsel, or otherwise, and
agrees to comply with requests made by the Purchaser or any Depositor in good
faith for delivery of information under these provisions on the basis of
evolving interpretations of Regulation AB. In connection with any Securitization
Transaction, the Company shall cooperate fully with the Purchaser to deliver to
the Purchaser (including any of its assignees or designees) and any Depositor,
any and all statements, reports, certifications, records and any other
information necessary in the good faith determination of the Purchaser or any
Depositor to permit the Purchaser or such Depositor to comply with the
provisions of Regulation AB, together with such disclosures relating to the
Company, any Subservicer, any Third-Party Originator and the Mortgage Loans, or
the servicing of the Mortgage Loans, reasonably believed by the Purchaser or any
Depositor to be necessary in order to effect such compliance.
The Purchaser (including any of its assignees or designees) shall cooperate
with the Company by providing timely notice of requests for information under
these provisions and by reasonably limiting such requests to information
required, in the Purchaser's reasonable judgment, to comply with Regulation AB.
Section 2.02. Additional Representations and Warranties of the Company.
(a) The Company shall be deemed to represent to the Purchaser and to any
Depositor, as of the date on which information is first provided to the
Purchaser or any Depositor under Section 2.03 of this Reg AB Addendum that,
except as disclosed in writing to the Purchaser or such Depositor prior to such
date: (i) the Company is not aware and has not received notice that
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any default, early amortization or other performance triggering event has
occurred as to any other securitization due to any act or failure to act of the
Company; (ii) the Company has not been terminated as servicer in a residential
mortgage loan securitization, either due to a servicing default or to
application of a servicing performance test or trigger; (iii) no material
noncompliance with the applicable Servicing Criteria with respect to other
securitizations of residential mortgage loans involving the Company as servicer
has been disclosed or reported by the Company; (iv) no material changes to the
Company's policies or procedures with respect to the servicing function it will
perform under this Agreement and any Reconstitution Agreement for mortgage loans
of a type similar to the Mortgage Loans have occurred during the three-year
period immediately preceding the related Securitization Transaction; (v) there
are no aspects of the Company's financial condition that could have a material
adverse effect on the performance by the Company of its servicing obligations
under this Agreement or any Reconstitution Agreement; (vi) there are no material
legal or governmental proceedings pending (or known to be contemplated) against
the Company, any Subservicer or any Third-Party Originator; and (vii) there are
no affiliations, relationships or transactions relating to the Company, any
Subservicer or any Third-Party Originator with respect to any Securitization
Transaction and any party thereto identified by the related Depositor of a type
described in Item 1119 of Regulation AB.
(b) If so requested by the Purchaser or any Depositor on any date following
the date on which information is first provided to the Purchaser or any
Depositor under Section 2.03 of this Reg AB Addendum, the Company shall, within
five Business Days following such request, confirm in writing the accuracy of
the representations and warranties set forth in paragraph (a) of this Section
or, if any such representation and warranty is not accurate as of the date of
such request, provide reasonably adequate disclosure of the pertinent facts, in
writing, to the requesting party.
Section 2.03. Information to Be Provided by the Company.
In connection with any Securitization Transaction, the Company shall (i)
within five Business Days following request by the Purchaser or any Depositor,
provide to the Purchaser and such Depositor (or, as applicable, cause each
Third-Party Originator and each Subservicer to provide), in writing and in form
and substance reasonably satisfactory to the Purchaser and such Depositor, the
information and materials specified in paragraphs (a), (b), (c) and (f) of this
Section, and (ii) as promptly as practicable following notice to or discovery by
the Company, provide to the Purchaser and any Depositor (in writing and in form
and substance reasonably satisfactory to the Purchaser and such Depositor) the
information specified in paragraph (d) of this Section.
(a) If so requested by the Purchaser or any Depositor, the Company shall
provide such information regarding (i) the Company, as originator of the
Mortgage Loans (including as an acquirer of Mortgage Loans from a Qualified
Correspondent), or (ii) each Third-Party Originator, and (iii) as applicable,
each Subservicer, as is requested for the purpose of compliance with Items
1103(a)(l), 1105, 1110, 1117 and 1119 of Regulation AB. Such information shall
include, at a minimum:
(A) the originator's form of organization;
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(B) a description of the originator's origination program and how long
the originator has been engaged in originating residential mortgage loans,
which description shall include a discussion of the originator's experience
in originating mortgage loans of a similar type as the Mortgage Loans;
information regarding the size and composition of the originator's
origination portfolio; and information that may be material, in the good
faith judgment of the Purchaser or any Depositor, to an analysis of the
performance of the Mortgage Loans, including the originators'
credit-granting or underwriting criteria for mortgage loans of similar
type(s) as the Mortgage Loans and such other information as the Purchaser
or any Depositor may reasonably request for the purpose of compliance with
Item 1110(b)(2) of Regulation AB;
(C) a description of any material legal or governmental proceedings
pending (or known to be contemplated) against the Company, each Third-Party
Originator and each Subservicer; and
(D) a description of any affiliation or relationship between the
Company, each Third-Party Originator, each Subservicer and any of the
following parties to a Securitization Transaction, as such parties are
identified to the Company by the Purchaser or any Depositor in writing in
advance of such Securitization Transaction:
(1) the sponsor;
(2) the depositor;
(3) the issuing entity;
(4) any servicer;
(5) any trustee;
(6) any originator;
(7) any significant obligor;
(8) any enhancement or support provider; and
(9) any other material transaction party.
(b) If so requested by the Purchaser or any Depositor, the Company shall
provide (or, as applicable, cause each Third-Party Originator to provide) Static
Pool Information with respect to the mortgage loans (of a similar type as the
Mortgage Loans, as reasonably identified by the Purchaser as provided below)
originated by (i) the Company, if the Company is an originator of Mortgage Loans
(including as an acquirer of Mortgage Loans from a Qualified Correspondent),
and/or (ii) each Third-Party Originator. Such Static Pool Information shall be
prepared by the Company (or Third-Party Originator) on the basis of its
reasonable, good faith interpretation of the requirements of Item 1105(a)(1)-(3)
of Regulation AB. To the extent that there is reasonably available to the
Company (or Third-Party Originator) Static Pool Information with respect to more
than one mortgage loan type, the Purchaser or any Depositor shall be entitled to
specify whether some or all of such information shall be provided pursuant to
this paragraph. The content of such Static Pool Information may be in the form
customarily provided by the Company, and need not be customized for the
Purchaser or any Depositor. Such Static Pool Information for each vintage
origination year or prior securitized pool, as applicable, shall be presented in
increments no less frequently than quarterly over the life of the mortgage loans
included in the vintage origination year or prior securitized pool. The most
recent periodic increment must be as of a date no later than 135 days prior to
the date of the prospectus or other
-5-
offering document in which the Static Pool Information is to be included or
incorporated by reference. The Static Pool Information shall be provided in an
electronic format that provides a permanent record of the information provided,
such as a portable document format (pdf) file, or other such electronic format
reasonably required by the Purchaser or the Depositor, as applicable.
Promptly following notice or discovery of a material error in Static Pool
Information provided pursuant to the immediately preceding paragraph (including
an omission to include therein information required to be provided pursuant to
such paragraph), the Company shall provide corrected Static Pool Information to
the Purchaser or any Depositor, as applicable, in the same format in which
Static Pool Information was previously provided to such party by the Company.
If so requested by the Purchaser or any Depositor, the Company shall
provide (or, as applicable, cause each Third-Party Originator to provide), at
the expense of the requesting party (to the extent of any additional incremental
expense associated with delivery pursuant to this Agreement), such agreed-upon
procedures letters of certified public accountants reasonably acceptable to the
Purchaser or Depositor, as applicable, pertaining to Static Pool Information
relating to prior securitized pools for securitizations closed on or after
January 1, 2006 or, in the case of Static Pool Information with respect to the
Company's or Third-Party Originator's originations or purchases, to calendar
months commencing January 1, 2006, as the Purchaser or such Depositor shall
reasonably request. Such letters shall be addressed to and be for the benefit of
such parties as the Purchaser or such Depositor shall designate, which may
include, by way of example, any Sponsor, any Depositor and any broker dealer
acting as underwriter, placement agent or initial purchaser with respect to a
Securitization Transaction. Any such letter may take the form of a standard,
generally applicable document accompanied by a reliance letter authorizing
reliance by the addressees designated by the Purchaser or such Depositor.
(c) If so requested by the Purchaser or any Depositor, the Company shall
provide such information regarding the Company, as servicer of the Mortgage
Loans, and each Subservicer (each of the Company and each Subservicer, for
purposes of this Section 2.03(c), a "Servicer"), as is requested for the purpose
of compliance with Item 1108, 1117 and 1119 of Regulation AB. Such information
shall include, at a minimum:
(A) the Servicer's form of organization;
(B) a description of how long the Servicer has been servicing
residential mortgage loans; a general discussion of the Servicer's
experience in servicing assets of any type as well as a more detailed
discussion of the Servicer's experience in, and procedures for, the
servicing function it will perform under the Agreement and any
Reconstitution Agreements; information regarding the size, composition and
growth of the Servicer's portfolio of residential mortgage loans of a type
similar to the Mortgage Loans and information on factors related to the
Servicer that may be material, in the good faith judgment of the Purchaser
or any Depositor, to any analysis of the servicing of the Mortgage Loans or
the related asset-backed securities, as applicable, including, without
limitation:
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(1) whether any prior securitizations of mortgage loans of a type
similar to the Mortgage Loans involving the Servicer have defaulted or
experienced an early amortization or other performance triggering
event because of servicing during the three-year period immediately
preceding the related Securitization Transaction;
(2) the extent of outsourcing the Servicer utilizes;
(3) whether there has been previous disclosure of material
noncompliance with the applicable servicing criteria with respect to
other securitizations of residential mortgage loans involving the
Servicer as a servicer during the three-year period immediately
preceding the related Securitization Transaction;
(4) whether the Servicer has been terminated as servicer in a
residential mortgage loan securitization, either due to a servicing
default or to application of a servicing performance test or trigger;
and
(5) such other information as the Purchaser or any Depositor may
reasonably request for the purpose of compliance with Item 1108(b)(2)
of Regulation AB;
(C) a description of any material changes during the three-year period
immediately preceding the related Securitization Transaction to the
Servicer's policies or procedures with respect to the servicing function it
will perform under the Agreement and any Reconstitution Agreements for
mortgage loans of a type similar to the Mortgage Loans;
(D) information regarding the Servicer's financial condition, to the
extent that there is a material risk that an adverse financial event or
circumstance involving the Servicer could have a material adverse effect on
the performance by the Company of its servicing obligations under the
Agreement or any Reconstitution Agreement;
(E) information regarding advances made by the Servicer on the
Mortgage Loans and the Servicer's overall servicing portfolio of
residential mortgage loans for the three-year period immediately preceding
the related Securitization Transaction, which may be limited to a statement
by an authorized officer of the Servicer to the effect that the Servicer
has made all advances required to be made on residential mortgage loans
serviced by it during such period, or, if such statement would not be
accurate, information regarding the percentage and type of advances not
made as required, and the reasons for such failure to advance;
(F) a description of the Servicer's processes and procedures designed
to address any special or unique factors involved in servicing loans of a
similar type as the Mortgage Loans;
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(G) a description of the Servicer's processes for handling
delinquencies, losses, bankruptcies and recoveries, such as through
liquidation of mortgaged properties, sale of defaulted mortgage loans or
workouts;
(H) information as to how the Servicer defines or determines
delinquencies and charge-offs, including the effect of any grace period,
re-aging, restructuring, partial payments considered current or other
practices with respect to delinquency and loss experience;
(I) a description of any material legal or governmental procedures
pending (or known to be contemplated against the Company; and
(J) a description of any affiliation or relationship between the
Company and any of the following parties to a Securitization Transaction,
as such parties are identified to the Company by the Purchaser or any
Depositor in writing in advance of such Securitization Transaction: (1) the
sponsor, (2) the depositor, (3) the issuing entity, (4) any servicer, (5)
any trustee, (6) any originator, (7) any significant obligor, (8) any
enhancement or support provider and (9) any other material transaction
party.
(d) If so requested by the Purchaser or any Depositor for the purpose of
satisfying its reporting obligation under the Exchange Act with respect to any
class of asset-backed securities, the Company shall (or shall cause each
Subservicer and Third-Party Originator to) (i) notify the Purchaser, any
Depositor, and any Master Servicer in writing of (A) any material litigation or
governmental proceedings pending against the Company, any Subservicer or any
Third-Party Originator and (B) any affiliations or relationships that develop
following the closing date of a Securitization Transaction between the Company,
any Subservicer or any Third-Party Originator and any of the parties specified
in clause (D) of paragraph (a) of this Section (and any other parties identified
in writing by the requesting party) with respect to such Securitization
Transaction, and (ii) provide to the Purchaser, any Depositor, and any Master
Servicer a description of such proceedings, affiliations or relationships.
(e) As a condition to the succession to the Company or any Subservicer as
servicer or subservicer under the Agreement or any Reconstitution Agreement by
any Person (i) into which the Company or such Subservicer may be merged or
consolidated, or (ii) which may be appointed as a successor to the Company or
any Subservicer, the Company shall provide to the Purchaser and any Depositor,
at least 15 calendar days prior to the effective date of such succession or
appointment, (x) written notice to the Purchaser and any Depositor of such
succession or appointment and (y) in writing and in form and substance
reasonably satisfactory to the Purchaser and such Depositor, all information
reasonably requested by the Purchaser or any Depositor in order to comply with
its reporting obligation under Item 6.02 of Form 8-K with respect to any class
of asset-backed securities.
(f) In addition to such information as the Company, as servicer, is
obligated to provide pursuant to other provisions of the Agreement, if so
requested by the Purchaser, any Depositor or any Master Servicer, the Company
shall provide such information regarding the performance or servicing of the
Mortgage Loans as is reasonably required to facilitate preparation of
distribution reports in accordance with Item 1121 of Regulation AB.
-8-
Additionally, the Company shall provide to the Purchaser or its designee any
loan-level or pool information with respect to the Mortgage Loans necessary to
confirm loss, prepayment and delinquency information required in connection with
the provision of Static Pool Information pursuant to Item 1105 of Regulation AB.
Such information shall be provided concurrently with the monthly reports
otherwise required to be delivered by the servicer under this Agreement,
commencing with the first such report due not less than ten Business Days
following such request. Such information will include, but not be limited to:
(i) any material modifications, extensions or waivers of pool asset terms, fees,
penalties or payments during the distribution period or that have cumulatively
become material over time; (ii) material breaches of pool asset representations
or warranties or transaction covenants; and (iii) information regarding new
asset-backed securities issuances backed by the same pool assets, any pool asset
changes (such as additions, substitutions or repurchases), and any material
changes in origination, underwriting or other criteria for acquisition or
selection of pool assets.
(g) The Company shall provide to the Purchaser, any Depositor and any
Master Servicer such additional information as they may reasonably request,
including evidence of the authorization of the person signing any certification
or statement, financial information and reports, and such other information
related to the Company or its performance hereunder.
Section 2.04. Servicer Compliance Statement.
On or before March 1 of each calendar year, commencing in 2007, the Company
shall deliver to the Purchaser, any Depositor, and any Master Servicer a
statement of compliance addressed to the Purchaser, such Depositor, and such
Master Servicer and signed by an authorized officer of the Company, to the
effect that (i) a review of the Company's activities during the immediately
preceding calendar year (or applicable portion thereof) and of its performance
under the Agreement and any applicable Reconstitution Agreement during such
period has been made under such officer's supervision, and (ii) to the best of
such officers' knowledge, based on such review, the Company has fulfilled all of
its obligations under the Agreement and any applicable Reconstitution Agreement
in all material respects throughout such calendar year (or applicable portion
thereof) or, if there has been a failure to fulfill any such obligation in any
material respect, specifically identifying each such failure known to such
officer and the nature and the status thereof.
Section 2.05. Report on Assessment of Compliance and Attestation.
(a) On or before March 1 of each calendar year, commencing in 2007, the
Company shall:
(i) deliver to the Purchaser, any Depositor, and any Master Servicer a
report (in form and substance reasonably satisfactory to the Purchaser and
such Depositor) regarding the Company's assessment of compliance with the
Servicing Criteria during the immediately preceding calendar year, as
required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of
Regulation AB. Such report shall be addressed to the Purchaser and such
Depositor and signed by an authorized officer of the Company, and shall
address each of the applicable Servicing Criteria as specified on the form
of certification attached as Annex II hereto;
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(ii) deliver to the Purchaser, any Depositor, and any Master Servicer
a report of a registered public accounting firm reasonably acceptable to
the Purchaser and such Depositor that attests to, and reports on, the
assessment of compliance made by the Company and delivered pursuant to the
preceding paragraph. Such attestation shall be in accordance with Rules
1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act;
(iii) cause each Subservicer, and each Subcontractor determined by the
Company pursuant to Section 2.06(b) of this Reg AB Addendum to be
"participating in the servicing function" within the meaning of Item 1122
of Regulation AB, to deliver to the Purchaser, any Depositor, and any
Master Servicer an assessment of compliance and accountants' attestation as
and when provided in paragraphs (a) and (b) of this Section; and
(iv) deliver to the Purchaser, any Depositor, any Master Servicer and
any other Person that will be responsible for signing the certification (a
"Sarbanes Certification") required by Rules 13a-14(d) and 15d-14(d) under
the Exchange Act (pursuant to Section 302 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002) on behalf of an asset-backed issuer with respect to a Securitization
Transaction a certification in the form attached hereto as Annex I.
The Company acknowledges that the parties identified in clause (a)(iv) above may
rely on the certification provided by the Company pursuant to such clause in
signing a Sarbanes Certification and filing such with the Commission. Neither
the Purchaser nor any Depositor will request delivery of a certification under
clause (a)(iv) above unless a Depositor is required under the Exchange Act to
file an annual report on Form 10-K with respect to an issuing entity whose asset
pool includes Mortgage Loans.
(b) Each assessment of compliance provided by a Subservicer pursuant to
Section 2.05(a)(iii) of this Reg AB Addendum shall address each of the Servicing
Criteria specified on a certification substantially in the form of Annex II
hereto delivered to the Purchaser concurrently with the execution of this Reg AB
Addendum or, in the case of a Subservicer subsequently appointed as such, on or
prior to the date of such appointment. An assessment of compliance provided by a
Subcontractor pursuant to Section 2.05(a)(iii) of this Reg AB Addendum need not
address any elements of the Servicing Criteria other than those specified by the
Company pursuant to Section 2.06 of this Reg AB Addendum.
Section 2.06. Use of Subservicers and Subcontractors.
The Company shall not hire or otherwise utilize the services of any
Subservicer to fulfill any of the obligations of the Company as servicer under
the Agreement or any Reconstitution Agreement unless the Company complies with
the provisions of paragraph (a) of this Section. The Company shall not hire or
otherwise utilize the services of any Subcontractor, and shall not permit any
Subservicer to hire or otherwise utilize the services of any Subcontractor, to
fulfill any of the obligations of the Company as servicer under the Agreement or
any Reconstitution Agreement unless the Company complies with the provisions of
paragraph (b) of this Section.
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(a) It shall not be necessary for the Company to seek the consent of the
Purchaser or any Depositor to the utilization of any Subservicer. The Company
shall cause any Subservicer used by the Company (or by any Subservicer) for the
benefit of the Purchaser and any Depositor to comply with the provisions of this
Section and with Sections 2.02, 2.03(c) and (e), 2.04, 2.05 and 2.07 of this Reg
AB Addendum to the same extent as if such Subservicer were the Company, and to
provide the information required with respect to such Subservicer under Section
2.03(d) of this Reg AB Addendum. The Company shall be responsible for obtaining
from each Subservicer and delivering to the Purchaser and any Depositor any
servicer compliance statement required to be delivered by such Subservicer under
Section 2.04 of this Reg AB Addendum, any assessment of compliance and
attestation required to be delivered by such Subservicer under Section 2.05 of
this Reg AB Addendum and any certification required to be delivered to the
Person that will be responsible for signing the Sarbanes Certification under
Section 2.05 of this Reg AB Addendum as and when required to be delivered.
(b) It shall not be necessary for the Company to seek the consent of the
Purchaser or any Depositor to the utilization of any Subcontractor. The Company
shall promptly upon request provide to the Purchaser and any Depositor (or any
designee of the Depositor, such as a master servicer or administrator) a written
description (in form and substance satisfactory to the Purchaser and such
Depositor) of the role and function of each Subcontractor utilized by the
Company or any Subservicer, specifying (i) the identity of each such
Subcontractor, (ii) which (if any) of such Subcontractors are "participating in
the servicing function" within the meaning of Item 1122 of Regulation AB, and
(iii) which elements of the Servicing Criteria will be addressed in assessments
of compliance provided by each Subcontractor identified pursuant to clause (ii)
of this paragraph.
As a condition to the utilization of any Subcontractor determined to be
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, the Company shall cause any such Subcontractor used by the
Company (or by any Subservicer) for the benefit of the Purchaser and any
Depositor to comply with the provisions of Sections 2.05 and 2.07 of this Reg AB
Addendum to the same extent as if such Subcontractor were the Company. The
Company shall be responsible for obtaining from each Subcontractor and
delivering to the Purchaser and any Depositor any assessment of compliance and
attestation required to be delivered by such Subcontractor under Section 2.05 of
this Reg AB Addendum, in each case as and when required to be delivered.
Section 2.07. Indemnification; Remedies.
(a) The Company shall indemnify the Purchaser, each affiliate of the
Purchaser, and each of the following parties participating in a Securitization
Transaction: each sponsor and issuing entity; each Person responsible for the
preparation, execution or filing of any report required to be filed with the
Commission with respect to such Securitization Transaction, or for execution of
a certification pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange
Act with respect to such Securitization Transaction; each broker dealer acting
as underwriter, placement agent or initial purchaser, each Person who controls
any of such parties or the Depositor (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act); and the respective present
and former directors, officers, employees and agents of each of the foregoing
and of the Depositor, and shall hold each of them harmless from and
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against any losses, damages, penalties, fines, forfeitures, legal fees and
expenses and related costs, judgments, and any other costs, fees and expenses
that any of them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or alleged
to be contained in any information, report, certification, accountants'
letter or other material in written or electronic form provided under this
Article II by or on behalf of the Company, or provided under this Article
II by or on behalf of any Subservicer, Subcontractor or Third-Party
Originator (collectively, the "Company Information"), or (B) the omission
or alleged omission to state in the Company Information a material fact
required to be stated in the Company Information or necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, by way of clarification, that
clause (B) of this paragraph shall be construed solely by reference to the
Company Information and not to any other information communicated in
connection with a sale or purchase of securities, without regard to whether
the Company Information or any portion thereof is presented together with
or separately from such other information;
(ii) any failure by the Company, any Subservicer, any Subcontractor or
any Third-Party Originator to deliver any information, report,
certification, accountants' letter or other material when and as required
under this Article II, including any failure by the Company to identify
pursuant to Section 2.06(b) of this Reg AB Addendum any Subcontractor
"participating in the servicing function" within the meaning of Item 1122
of Regulation AB;
(iii) any breach by the Company of a representation or warranty set
forth in Section 2.02(a) of this Reg AB Addendum or in a writing furnished
pursuant to Section 2.02(b) of this Reg AB Addendum and made as of a date
prior to the closing date of the related Securitization Transaction, to the
extent that such breach is not cured by such closing date, or any breach by
the Company of a representation or warranty in a writing furnished pursuant
to Section 2.02(b) of this Reg AB Addendum to the extent made as of a date
subsequent to such closing date; or
(iv) the negligence, bad faith or willful misconduct of the Company in
connection with its performance hereunder.
This indemnification shall survive the termination of this Reg AB
Addendum, or any party to this Reg AB Addendum.
In the case of any failure of performance described in clause (a)(ii) of
this Section, the Company shall promptly reimburse the Purchaser, any Depositor,
as applicable, and each Person responsible for the preparation, execution or
filing of any report required to be filed with the Commission with respect to
such Securitization Transaction, or for execution of a certification pursuant to
Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such
Securitization Transaction, for all costs reasonably incurred by each such party
in order to obtain the information, report, certification, accountants' letter
or other material not delivered as required by the Company, any Subservicer, any
Subcontractor or any Third-Party Originator.
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(b) (i) Any failure by the Company, any Subservicer, any Subcontractor or
any Third-Party Originator to deliver any information, report,
certification, accountants' letter or other material when and as required
under this Article II, or any breach by the Company of a representation or
warranty set forth in Section 2.02(a) of this Reg AB Addendum or in a
writing furnished pursuant to Section 2.02(b) of this Reg AB Addendum and
made as of a date prior to the closing date of the related Securitization
Transaction, to the extent that such breach is not cured by such closing
date, or any breach by the Company of a representation or warranty in a
writing furnished pursuant to Section 2.02(b) of this Reg AB Addendum to
the extent made as of a date subsequent to such closing date, shall, except
as provided in clause (ii) of this paragraph, immediately and
automatically, without notice or grace period, constitute an Event of
Default with respect to the Company under the Agreement and any applicable
Reconstitution Agreement, and shall entitle the Purchaser or Depositor, as
applicable, in its sole discretion to terminate the rights and obligations
of the Company as servicer under the Agreement and/or any applicable
Reconstitution Agreement without payment (notwithstanding anything in this
Agreement or any applicable Reconstitution Agreement to the contrary) of
any compensation to the Company; provided that to the extent that any
provision of the Agreement and/or any applicable Reconstitution Agreement
expressly provides for the survival of certain rights or obligations
following termination of the Company as servicer, such provision shall be
given effect.
(ii) Any failure by the Company, any Subservicer or any Subcontractor
to deliver any information, report, certification or accountants' letter
when and as required under Section 2.04 or 2.05 of this Reg AB Addendum,
including (except as provided below) any failure by the Company to identify
pursuant to Section 2.06(b) of this Reg AB Addendum any Subcontractor
"participating in the servicing function" within the meaning of Item 1122
of Regulation AB, which continues unremedied for ten calendar days after
the date on which such information, report, certification or accountants'
letter was required to be delivered shall constitute an Event of Default
with respect to the Company under the Agreement and any applicable
Reconstitution Agreement, and shall entitle the Purchaser or Depositor, as
applicable, in its sole discretion to terminate the rights and obligations
of the Company as servicer under the Agreement and/or any applicable
Reconstitution Agreement without payment (notwithstanding anything in this
Agreement to the contrary) of any compensation to the Company; provided
that to the extent that any provision of the Agreement and/or any
applicable Reconstitution Agreement expressly provides for the survival of
certain rights or obligations following termination of the Company as
servicer, such provision shall be given effect.
Neither the Purchaser nor any Depositor shall be entitled to terminate
the rights and obligations of the Company pursuant to this subparagraph
(b)(ii) if a failure of the Company to identify a Subcontractor
"participating in the servicing function" within the meaning of Item 1122
of Regulation AB was attributable solely to the role or functions of such
Subcontractor with respect to mortgage loans other than the Mortgage Loans
(iii) The Company shall promptly reimburse the Purchaser (or any
designee of the Purchaser, such as a master servicer) and any Depositor, as
applicable, for all reasonable expenses incurred by the Purchaser (or such
designee) or such Depositor, as
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such are incurred, in connection with the termination of the Company as
servicer and the transfer of servicing of the Mortgage Loans to a successor
servicer. The provisions of this paragraph shall not limit whatever rights
the Purchaser or any Depositor may have under other provisions of the
Agreement and/or any applicable Reconstitution Agreement or otherwise,
whether in equity or at law, such as an action for damages, specific
performance or injunctive relief.
Section 2.08. Third Party Beneficiary.
For purposes of Sections 2.03, 2.04, and 2.05 related to the requirements
of delivery of Reports on Assessment of Compliance, attestation reports,
statements of compliance, Sarbanes Certifications and additional monthly
reporting requirements, the Master Servicer shall be considered a third-party
beneficiary of this Reg AB Addendum, entitled to all the rights and benefits
hereof as if it were a direct party to this Reg AB Addendum.
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ANNEX I
FORM OF ANNUAL CERTIFICATION
Re: The [________] agreement dated as of [ ], 200[ ] (the "Agreement"),
among [IDENTIFY PARTIES]
I, ________________________________, the _____________________ of [NAME OF
COMPANY], certify to [the Purchaser], [the Depositor], and the [Master Servicer]
[Securities Administrator] [Trustee], and their officers, with the knowledge and
intent that they will rely upon this certification, that:
(1) I have reviewed the servicer compliance statement of the Company
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Company's compliance with the
servicing criteria set forth in Item 1122(d) of Regulation AB and
identified as the responsibility of the Company on Annex II to the
Regulation AB Compliance Addendum to the Agreement (the "Servicing
Criteria"), provided in accordance with Rules 13a-18 and 15d-18 under
Securities Exchange Act of 1934, as amended (the "Exchange Act") and Item
1122 of Regulation AB (the "Servicing Assessment"), the registered public
accounting firm's attestation report provided in accordance with Rules
13a-18 and 15d-18 under the Exchange Act and Section 1122(b) of Regulation
AB (the "Attestation Report"), and all servicing reports, officer's
certificates and other information relating to the performance of the
Company under the terms of the Agreement and the servicing of the Mortgage
Loans by the Company during 200[ ] that were delivered by the Company to
the [Depositor] [Master Servicer] [Securities Administrator] [Trustee]
pursuant to the Agreement (collectively, the "Company Servicing
Information");
(2) Based on my knowledge, the Company Servicing Information, 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 the
light of the circumstances under which such statements were made, not
misleading with respect to the period of time covered by the Company
Servicing Information;
(3) Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been
provided to the [Depositor] [Master Servicer] [Securities Administrator]
[Trustee];
(4) I am responsible for reviewing the activities performed by the
Company as servicer under the Agreement, and based on my knowledge and the
compliance review conducted in preparing the Compliance Statement and
except as disclosed in the Compliance Statement, the Servicing Assessment
or the Attestation Report, the Company has fulfilled its obligations under
the Agreement in all material respects; and
(5) The Compliance Statement required to be delivered by the Company
pursuant to this Agreement, and the Servicing Assessment and Attestation
Report required to be provided by the Company and by any Subservicer or
Subcontractor
pursuant to the Agreement, have been provided to the [Depositor] [Master
Servicer]. Any material instances of noncompliance described in such
reports have been disclosed to the [Depositor] [Master Servicer]. Any
material instance of noncompliance with the Servicing Criteria has been
disclosed in such reports.
Date: __________________________________
By:
------------------------------------
Name:
Title:
2
ANNEX II
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the Company] [Name of
Subservicer] shall address, at a minimum, the criteria identified as below as
"Applicable Servicing Criteria";
APPLICABLE
SERVICING
SERVICING CRITERIA CRITERIA
---------------------------------------------------------------------------------------------
REFERENCE CRITERIA
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GENERAL SERVICING CONSIDERATIONS
1122(d)(1)(i) Policies and procedures are instituted to monitor any X
performance or other triggers and events of default in
accordance with the transaction agreements.
1122(d)(1)(ii) If any material servicing activities are outsourced to third X
parties, policies and procedures are instituted to monitor
the third party's performance and compliance with such
servicing activities.
1122(d)(1)(iii) Any requirements in the transaction agreements to maintain a X
back-up servicer for the mortgage loans are maintained.
1122(d)(1)(iv) A fidelity bond and errors and omissions policy is in effect X
on the party participating in the servicing function
throughout the reporting period in the amount of coverage
required by and otherwise in accordance with the terms of the
transaction agreements.
CASH COLLECTION AND ADMINISTRATION
1122(d)(2)(i) Payments on mortgage loans are deposited into the appropriate X
custodial bank accounts and related bank clearing accounts no
more than two (2) business days following receipt, or such
other number of days specified in the transaction agreements.
1122(d)(2)(ii) Disbursements made via wire transfer on behalf of an obligor X
or to an investor are made only by authorized personnel.
1122(d)(2)(iii) Advances of funds or guarantees regarding collections, cash X
flows or distributions, and any interest or other fees
charged for such advances, are made, reviewed and approved as
specified in the transaction agreements.
1122(d)(2)(iv) The related accounts for the transaction, such as cash X
reserve accounts or accounts established as a form of
overcollateralization, are separately maintained (e.g., with
respect to commingling of cash) as set forth in the
transaction agreements.
1122(d)(2)(v) Each custodial account is maintained at a federally insured X
depository institution as set forth in the transaction
agreements. For purposes of this criterion, "federally
insured depository institution" with respect to a foreign
financial institution means a foreign financial institution
that meets the requirements of Rule 13k-1 (b)(1) of the
Securities Exchange Act.
APPLICABLE
SERVICING
SERVICING CRITERIA CRITERIA
---------------------------------------------------------------------------------------------
REFERENCE CRITERIA
---------------------------------------------------------------------------------------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized X
access.
1122(d)(2)(vii) Reconciliations are prepared on a monthly basis for all X
asset-backed securities related bank accounts, including
custodial accounts and related bank clearing accounts. These
reconciliations are (A) mathematically accurate; (B) prepared
within 30 calendar days after the bank statement cutoff date,
or such other number of days specified in the transaction
agreements; (C) reviewed and approved by someone other than
the person who prepared the reconciliation; and (D) contain
explanations for reconciling items. These reconciling items
are resolved within 90 calendar days of their original
identification, or such other number of days specified in the
transaction agreements.
INVESTOR REMITTANCES AND REPORTING
1122(d)(3)(i) Reports to investors, including those to be filed with the X
Commission, are maintained in accordance with the transaction
agreements and applicable Commission requirements.
Specifically, such reports (A) are prepared in accordance
with timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance
with the terms specified in the transaction agreements; (C)
are filed with the Commission as required by its rules and
regulations; and (D) agree with investors' or the trustee's
records as to the total unpaid principal balance and number
of mortgage loans serviced by the Servicer.
1122(d)(3)(ii) Amounts due to investors are allocated and remitted in X
accordance with timeframes, distribution priority and other
terms set forth in the transaction agreements.
1122(d)(3)(iii) Disbursements made to an investor are posted within two (2) X
business days to the Servicer's investor records, or such
other number of days specified in the transaction agreements.
1122(d)(3)(iv) Amounts remitted to investors per the investor reports agree X
with cancelled checks, or other form of payment, or custodial
bank statements.
POOL ASSET ADMINISTRATION
1122(d)(4)(i) Collateral or security on mortgage loans is maintained as X
required by the transaction agreements or related mortgage
loan documents.
1122(d)(4)(ii) Mortgage loan and related documents are safeguarded as X
required by the transaction agreements
1122(d)(4)(iii) Any additions, removals or substitutions to the asset pool X
are made, reviewed and approved in accordance with any
conditions or requirements in the transaction agreements.
2
APPLICABLE
SERVICING
SERVICING CRITERIA CRITERIA
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REFERENCE CRITERIA
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1122(d)(4)(iv) Payments on mortgage loans, including any payoffs, made in X
accordance with the related mortgage loan documents are
posted to the Servicer's obligor records maintained no more
than two (2) business days after receipt, or such other
number of days specified in the transaction agreements, and
allocated to principal, interest or other items (e.g.,
escrow) in accordance with the related mortgage loan
documents.
1122(d)(4)(v) The Servicer's records regarding the mortgage loans agree X
with the Servicer's records with respect to an obligor's
unpaid principal balance.
1122(d)(4)(vi) Changes with respect to the terms or status of an obligor's X
mortgage loans (e.g., loan modifications or re-agings) are
made, reviewed and approved by authorized personnel in
accordance with the transaction agreements and related pool
asset documents.
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., forbearance plans, X
modifications and deeds in lieu of foreclosure, foreclosures
and repossessions, as applicable) are initiated, conducted
and concluded in accordance with the timeframes or other
requirements established by the transaction agreements.
1122(d)(4)(viii) Records documenting collection efforts are maintained during X
the period a mortgage loan is delinquent in accordance with
the transaction agreements. Such records are maintained on at
least a monthly basis, or such other period specified in the
transaction agreements, and describe the entity's activities
in monitoring delinquent mortgage loans including, for
example, phone calls, letters and payment rescheduling plans
in cases where delinquency is deemed temporary (e.g., illness
or unemployment).
1122(d)(4)(ix) Adjustments to interest rates or rates of return for mortgage X
loans with variable rates are computed based on the related
mortgage loan documents.
1122(d)(4)(x) Regarding any funds held in trust for an obligor (such as X
escrow accounts): (A) such funds are analyzed, in accordance
with the obligor's mortgage loan documents, on at least an
annual basis, or such other period specified in the
transaction agreements; (B) interest on such funds is paid,
or credited, to obligors in accordance with applicable
mortgage loan documents and state laws; and (C) such funds
are returned to the obligor within 30 calendar days of full
repayment of the related mortgage loans, or such other number
of days specified in the transaction agreements.
1122(d)(4)(xi) Payments made on behalf of an obligor (such as tax or X
insurance payments) are made on or before the related penalty
or expiration dates, as indicated on the appropriate bills or
notices for such payments, provided that such support has
been received by the servicer at least 30 calendar days prior
to these dates, or such other number of days specified in the
transaction agreements.
3
APPLICABLE
SERVICING
SERVICING CRITERIA CRITERIA
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REFERENCE CRITERIA
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1122(d)(4)(xii) Any late payment penalties in connection with any payment to X
be made on behalf of an obligor are paid from the servicer's
funds and not charged to the obligor, unless the late payment
was due to the obligor's error or omission.
1122(d)(4)(xiii) Disbursements made on behalf of an obligor are posted within X
two (2) business days to the obligor's records maintained by
the servicer, or such other number of days specified in the
transaction agreements.
1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible accounts are X
recognized and recorded in accordance with the transaction
agreements.
1122(d)(4)(xv) Any external enhancement or other support, identified in Item X
1114(a)(1) through (3) or Item 1115 of Regulation AB, is
maintained as set forth in the transaction agreements.
[NAME OF COMPANY / SUBSERVICER]
By:
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Name:
Title:
Date:
4
EXHIBIT L
FORM OF SPECIAL FORECLOSURE RIGHTS SECTION
1. The Servicer shall not commence foreclosure proceedings or any
alternative to foreclosure proceedings with respect to a Mortgage Loan that has
become 60 days or more delinquent unless (i) no later than five Business Days
prior to its commencement of such foreclosure proceedings, it notifies both the
Master Servicer and the sole holder of the most subordinate class of
certificates (the "Subordinate Holder") of its intention to do so, and (ii) the
Subordinate Holder does not, within such five Business Day period, affirmatively
object to such action.
2. In the event that the Servicer determines not to proceed with
foreclosure proceedings or any alternative to foreclosure proceedings with
respect to a Mortgage Loan and the Servicer has determined that it is unable to
collect payments due under such Mortgage Loan in accordance with the Agreement,
the Servicer shall, prior to taking any action with respect to such Mortgage
Loan, promptly provide both the Master Servicer and the Subordinate Holder with
notice of such determination and a description of such other action as it
intends to take with respect to such Mortgage Loan; provided, that the Servicer
shall not be permitted to proceed with any such action unless the Subordinate
Holder does not, within such five Business Day period, affirmatively object to
such action.
(a) If the Subordinate Holder timely and affirmatively objects to an
action or contemplated action of the Servicer pursuant to section 1 or 2 above,
then the Subordinate Holder shall instruct the Master Servicer in writing (with
a copy to the Servicer) to hire three appraisal firms selected by the Master
Servicer in its reasonable discretion, to compute the fair value of the
Mortgaged Property securing the related Mortgage Loan utilizing the ▇▇▇▇▇▇ ▇▇▇
Form 2055 Exterior-Only Inspection Residential Appraisal Report (each such
appraisal-firm computation, a "Fair Value Price"), in each case no later than 30
days from the date of such Subordinate Holder objection. The Servicer shall be
obligated to provide the Master Servicer with contact information for no less
than five local appraisal firms within three Business Days of receiving the
affirmative objection of the Subordinate Holder. All costs relating to the
computation of the Fair Value Prices shall be for the account of the Subordinate
Holder and shall be paid by the Subordinate Holder at the time that such
Mortgage Loan is purchased by the Subordinate Holder.
(i) If the Master Servicer shall have received three Fair Value
Prices by the end of such 30-day period, then the Subordinate Holder
shall, no later than five Business Days after the expiration of such
30-day period, purchase such Mortgage Loan for an amount equal to the
lesser of (i) the unpaid principal balance of the related Mortgage
Loan (the "Unpaid Principal Balance") and (ii) the average of such
three Fair Value Prices respectively determined by such appraisal
firms; and shall deliver such amount to the Servicer against the
assignment of the related Mortgage Loan and the delivery of the
related documents on the purchase date.
(ii) If the Master Servicer shall not have received three Fair
Value Prices by the end of the 30-day period set forth in clause
(1)(c) above, then:
(A) If the Master Servicer shall have received only two Fair
Value Prices by the end of such 30-day period, then the Master
Servicer shall determine, in its reasonable discretion, the fair
value of the Mortgaged Property and other collateral relating to
such Mortgage Loan (such fair value, the "Master Servicer's Fair
Value Price") and the Subordinate Holder shall, no later than
five Business Days after the expiration of such 30-day period,
purchase such Mortgage Loan for an amount equal to the least of
(1) the Unpaid Principal Balance thereof, (2) the average of such
Fair Value Prices determined by such appraisal firms and (3) the
Master Servicer's Fair Value Price; and shall deliver such amount
to the Servicer against the assignment of the related Mortgage
Loan and the delivery of the related documents on the purchase
date.
(B) If the Master Servicer shall have received only one Fair
Value Price by the end of such 30-day period, then the Master
Servicer will determine the Master Servicer Fair Value Price of
the Mortgaged Property related to such Mortgage Loan and the
Subordinate Holder shall, no later than five Business Days after
the expiration of such 30-day period, purchase such Mortgage Loan
for an amount equal to the least of (1) the Unpaid Principal
Balance thereof, (2) the Fair Value Price determined by such
appraisal firm and (3) the Master Servicer's Fair Value Price;
and shall deliver such amount to the Servicer against the
assignment of the related Mortgage Loan and the delivery of the
related documents on the purchase date.
(C) If the Master Servicer shall not have received any such
Fair Value Prices by the end of such 30-day period, then the
Master Servicer will determine the Master Servicer Fair Value
Price of the Mortgaged Property related to such Mortgage Loan and
the Subordinate Holder shall, no later than five Business Days
after the expiration of such 30-day period, purchase such
Mortgage Loan for an amount equal to the lesser of (1) the Unpaid
Principal Balance thereof and (2) the Master Servicer's Fair
Value Price; and shall deliver such amount to the Servicer
against the assignment of the related Mortgage Loan and the
delivery of the related documents on the purchase date.
(D) If the Master Servicer has not received three Fair Value
Prices by the end of such 30-day period, it shall continue for
the next 30 days to try to obtain three Fair Value Prices. Upon
the earlier of the date that it obtains the three Fair Value
Prices, or the end of the 30-day extension, the Master Servicer
shall recalculate the price payable pursuant to this Letter
Agreement and, within five Business Days thereafter, (i) the
Subordinate Holder shall pay the Servicer the positive difference
between the recalculated purchase price, and the price actually
paid by it, or (ii) the
Servicer shall refund to the Subordinate Holder the positive
difference between the purchase price actually paid by the
Subordinate Holder, and the recalculated purchase price.
