EXHIBIT 10.1.3
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MASTER SELLER'S WARRANTY AND SERVICING AGREEMENT
Dated as of _____________, 199__
(Purchaser)
and
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(Company)
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Agreement................................................ 1
Appraised Value.......................................... 1
Assignment of Mortgage................................... 1
Business Day............................................. 1
Company.................................................. 1
Custodial Account........................................ 1
Cut-off Date............................................. 2
Determination Date....................................... 2
Due Date................................................. 2
Due Period............................................... 2
Escrow Account........................................... 2
Escrow Payments.......................................... 2
Event of Default......................................... 2
FDIC..................................................... 2
FHLMC.................................................... 2
Fidelity Bond............................................ 2
First Boston Offering System............................. 2
Flood Insurance Policy................................... 3
FNMA..................................................... 3
FSLIC.................................................... 3
Funding Date............................................. 3
Hazard Insurance Policy.................................. 3
Liquidation Proceeds..................................... 3
Loan Data................................................ 3
Loan-to-value Ratio or Ltv............................... 3
Monthly Payment.......................................... 3
Mortgage................................................. 3
Mortgage File............................................ 3
Mortgage Interest Rate................................... 3
Mortgage Loan............................................ 3
Mortgage Loan Remittance Rate............................ 4
Mortgage Loan Schedule................................... 4
Mortgage Note............................................ 5
Mortgagor................................................ 5
Natural Person........................................... 5
Officers' Certificate.................................... 5
Opinion of Counsel....................................... 5
Person................................................... 5
Pooling Transaction...................................... 5
Primary Mortgage Insurance Policy........................ 5
Principal Prepayment..................................... 5
Purchase Agreement....................................... 5
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Purchaser................................................ 6
Remittance Date.......................................... 6
Servicing Advances....................................... 6
Servicing Fee............................................ 6
Servicing Fee Rate....................................... 6
Servicing Officer........................................ 6
Stated Principal Balance................................. 6
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS
2.01 Conveyance of Mortgage Loans; Possession of
Mortgage Files.................................... 7
2.02 Books and Records................................... 7
2.03 Delivery of Mortgage Loan Documents................. 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY;
REPURCHASE OF MORTGAGE LOANS
3.01 Individual Mortgage Loans........................... 10
3.02 Company Representations............................. 18
3.03 Repurchase.......................................... 21
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
4.01 Company to Act as Servicer.......................... 23
4.02 Liquidation of Mortgage Loans....................... 24
4.03 Collection of Mortgage Loan Payments................ 24
4.04 Establishment of Custodial Account; Deposits in
Custodial Account................................. 24
4.05 Permitted Withdrawals From the Custodial Account.... 26
4.06 Establishment of Escrow Account; Deposits in
Escrow Account.................................... 27
4.07 Permitted Withdrawals From Escrow Account........... 28
4.08 Payment of Taxes, Insurance and Other Charges....... 29
4.09 Transfer of Accounts................................ 29
4.10 Maintenance of Hazard Insurance..................... 29
4.11 Fidelity Bond; Errors and Omissions Insurance....... 31
4.12 Application of Proceeds of Insurance to Repair or
Restoration....................................... 31
4.13 Maintenance of Primary Mortgage Insurance
Policies.......................................... 32
4.14 Inspections......................................... 32
4.15 Delinquency and Foreclosure......................... 33
4.16 Property Management................................. 34
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ARTICLE V
PAYMENTS TO THE MASTER SERVICER
5.01 Distributions....................................... 36
5.02 Statements to the Purchaser......................... 37
5.03 Advances by the Company............................. 38
ARTICLE VI
GENERAL SERVICING PROCEDURE
6.01 Assumption and Substitution of Liability
Agreements........................................ 39
6.02 Satisfaction of Mortgages and Release of Mortgage
Files............................................. 40
6.03 Servicing Compensation.............................. 40
6.04 Annual Statement as to Compliance................... 40
6.05 Annual Independent Public Accountants' Servicing
Report............................................ 41
6.06 Purchaser's Right to Examine Company Records........ 41
ARTICLE VII
REPORTS TO BE PREPARED BY COMPANY
7.01 Company Shall Provide Information as Reasonably
Required.......................................... 42
ARTICLE VIII
THE COMPANY
8.01 Indemnification; Third Party Claims................. 43
8.02 Merger or Consolidation of the Company.............. 43
8.03 Limitation on Liability of the Company and Others... 44
8.04 Company Not to Resign............................... 44
ARTICLE IX
DEFAULT
9.01 Events of Default................................... 45
9.02 Waiver of Defaults.................................. 46
ARTICLE X
TERMINATION
10.01 Termination........................................ 47
10.02 Termination Without Cause.......................... 47
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ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01 Successor to the Company........................... 48
11.02 Amendment.......................................... 49
11.03 Recordation of Agreement........................... 49
11.04 Recordation of Assignment of Mortgages............. 49
11.05 Duration of Agreement.............................. 50
11.06 Governing Law...................................... 50
11.07 Notices............................................ 50
11.08 Severability of Provisions......................... 50
11.09 No Partnership..................................... 50
11.10 Execution; Successors and Assigns.................. 50
EXHIBITS
EXHIBIT A Contents of Mortgage Files.........................A-1
EXHIBIT B Custodial Account Certification....................B-1
EXHIBIT C Custodial Account Letter Agreement.................C-1
EXHIBIT D Escrow Account Certification.......................D-1
EXHIBIT E Escrow Account Letter Agreement....................E-1
EXHIBIT F Mortgage Loan Schedule.............................F-1
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This is a Master Seller's Warranty and Servicing Agreement for
conventional mortgage loans, dated as of ________________, 199__, and is
executed between ________________, as Purchaser (hereinafter, "Purchaser"), and
________________ ______________________, as seller and servicer (hereinafter,
"Company").
The Purchaser and Company have entered into an Origination and
Purchase Agreement, dated as of the date hereof, pursuant to which the Purchaser
may from time to time purchase Mortgage Loans from the Company.
All of the Mortgage Loans will be secured by first mortgages or deeds
of trust on residential dwellings situated within the State(s) indicated on the
related Mortgage Loan Schedule.
The Purchaser and Company wish to prescribe the manner of purchase by
the Purchaser of the Mortgage Loans and the management, servicing and control of
the Mortgage Loans.
In consideration of the premises and the mutual agreements hereinafter
set forth, the Purchaser and the Company agree as follows:
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ARTICLE I
DEFINITIONS
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Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
AGREEMENT: This Master Seller's Warranty and Servicing Agreement,
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including all exhibits hereto, and all amendments hereof and supplements hereto
entered into in accordance with the provisions hereof.
APPRAISED VALUE: The appraised value of the property subject to a
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Mortgage based upon the appraisal made for the Company, as originator of the
related Mortgage Loan, at the time of the origination of such Mortgage Loan
pursuant to guidelines approved by FNMA, or the sale price of the property
subject to such Mortgage in the transaction giving rise to such Mortgage,
whichever is less; provided, that if the proceeds of such Mortgage Loan were
used to refinance an outstanding mortgage loan, the term "Appraised Value" shall
mean the appraised value of the property subject to such Mortgage Loan based
upon the appraisal made for the Company at the time of such refinancing pursuant
to the guidelines referred to above.
ASSIGNMENT OF MORTGAGE: As to each Mortgage Loan, a separate
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assignment of such Mortgage Loan and related Mortgage, from the Company to the
Purchaser, conveying all right, title and interest of the Company in and to such
Mortgage Loan and related Mortgage to the Purchaser.
BUSINESS DAY: Any day other that (i) a Saturday or Sunday, or (ii) a
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day on which banking or savings and loan institutions in the State of __________
or the State of ___________ are authorized or obligated by law or executive
order to be closed.
COMPANY: _______________________________________, or its successor
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in interest or any successor to the Company under this Agreement appointed as
herein provided.
CUSTODIAL ACCOUNT: The separate account or accounts created and
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maintained pursuant to Section 4.04, which may be interest bearing, which shall
bear a designation clearly indicating that the funds deposited therein are held
in trust for the benefit of the Purchaser, and which shall be either (i)
maintained with a bank having debt obligations rated not lower that AA by
Standard & Poor's Corporation, or (ii) an account or accounts the deposits in
which are fully insured by either FDIC or FSLIC. Funds deposited in the
Custodial Account shall be held in trust for the Purchaser, for the uses and
purposes set forth in Sections 4.04 and 4.05.
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CUT-OFF DATE: With respect to each Mortgage Loan, the first day of
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the month in which the related Funding Date occurs.
DETERMINATION DATE: The 15th day (or, if such 15th day is not a
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Business Day, the Business Day immediately Preceding such 15th day) of the month
of the related Remittance Date.
DUE DATE: The day of the month of the related Remittance Date on
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which each Monthly Payment is due, exclusive of any days of grace, which, for
the Mortgage Loans, is the first day of the month.
DUE PERIOD: With respect to each Remittance Date, the applicable Due
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Period shall be the period beginning 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.
ESCROW ACCOUNT: The separate account or accounts created and
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maintained pursuant to Section 4.06, which may be interest bearing, which shall
bear a designation clearly indicating that the funds deposited therein are held
in trust for the benefit of the related Mortgagors and the Purchaser, and which
shall be either (i) maintained with a bank having debt obligations rated not
lower than AA by Standard & Poor's Corporation, or (ii) an account or accounts
the deposits in which are fully insured by either FDIC or FSLIC. Funds
deposited in the Escrow Account shall be held in trust for the related
Mortgagors and for the Purchaser, for the uses and purposes set forth in
Sections 4.06 and 4.07.
ESCROW PAYMENTS: The amounts constituting ground rents, taxes,
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assessments, water rates, premiums on any Primary Mortgage Insurance Policy,
premiums on flood, fire and other hazard insurance required to be kept in force
pursuant to this Agreement and other payments required to be escrowed by the
Mortgagor with the mortgagee pursuant to any Mortgage Loan and this Agreement.
EVENT OF DEFAULT: Any one of the conditions or circumstances
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enumerated as such in Section 9.01.
FDIC: The Federal Deposit Insurance Corporation or any successor.
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FHLMC: The Federal Home Loan Mortgage Corporation or any successor.
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FIDELITY BOND: A fidelity bond to be obtained by the Company
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pursuant to Section 4.11.
FIRST BOSTON OFFERING SYSTEM: As defined in the Purchase Agreement.
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FLOOD INSURANCE POLICY: Each policy of flood insurance required to
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be caused to be maintained by the Company Pursuant to section 4.10.
FNMA: The Federal National Mortgage Association or any successor.
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FSLIC: The Federal Savings and Loan Insurance Corporation or any
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successor.
FUNDING DATE: With respect to each Mortgage Loan, the date on which
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such Mortgage Loan is purchased.
HAZARD INSURANCE POLICY: Each insurance policy (other than the Flood
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Insurance Policy) required to be caused to be maintained by the Company pursuant
to Section 4.10.
LIQUIDATION PROCEEDS: Cash received in connection with the
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liquidation of a defaulted Mortgage Loan, whether through the sale or assignment
of the Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale
of the Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage.
LOAN DATA: As defined in the Purchase Agreement.
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LOAN-TO-VALUE RATIO or LTV: With respect to any Mortgage Loan, as of
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any date, the fraction, expressed as a percentage, the numerator of which is the
original principal balance of the Mortgage Loan and the denominator of which is
the Appraised Value of the related Mortgaged Property.
MONTHLY PAYMENT: The scheduled monthly payment of principal and
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interest on a Mortgage Loan which is payable by a Mortgagor under the related
Mortgage Note.
MORTGAGE: The mortgage, deed of trust or other instrument creating a
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first lien on or first priority ownership interest in an estate in fee simple in
real property securing a Mortgage Note.
MORTGAGE FILE: The items referred to in Exhibit A annexed hereto
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pertaining to a particular Mortgage Loan (and any additional documents required
to be added to the Mortgage File pursuant to this Agreement).
MORTGAGE INTEREST RATE: The annual rate at which interest accrues
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on any Mortgage Loan.
MORTGAGE LOAN: An individual Mortgage Loan which is the subject of
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this Agreement, each Mortgage Loan subject to this Agreement being identified on
the Mortgage Loan Schedule in effect from time to time.
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MORTGAGE LOAN REMITTANCE RATE: As to each Mortgage Loan, the rate of
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interest remitted to Purchaser, which shall be the Mortgage Interest Rate less
the Servicing Fee Rate.
MORTGAGE LOAN SCHEDULE: The list of Mortgage Loans which are subject
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to this Agreement, attached hereto as Exhibit F, which list shall set forth the
following information for each Mortgage Loan:
1. Loan number
2. Mortgagor's name
3. Street address (including ZIP code) of the Mortgaged Property
4. Owner-occupancy code (indicating that the property is either (a)
owner-occupied, (b) a vacation home, or (c) investment property)
5. Property type code (indicating that the property is either (a) a
fully detached single-family residence, (b) a two- to four-family
residence, (c) an individual condominium unit, or (d) a townhouse)
6. Origination date
7. Mortgage Interest Rate
8. Servicing Fee Rate
9. Original term and stated maturity
10. Original principal balance
11. First payment due date
12. Monthly Payment
13. Stated Principal Balance as of the Cut-off Date
14. Loan-to-Value Ratio at origination
15. Appraised Value of the related Mortgaged Property
16. The actual principal balance as of the fifteenth day of the
calendar month in which the Funding Date occurs
17. Paid-to date
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18. The identity of the housing development or condominium project,
as applicable, in which the property is located
19. Whether the proceeds of the Mortgage Loan were used to refinance
an existing loan
Such schedule shall also set forth the total of the amounts described under 10
and 13 above for all of the Mortgage Loans.
MORTGAGE NOTE: The Note or other evidence of indebtedness evidencing
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the indebtedness of Mortgagor secured under a Mortgage Loan.
MORTGAGOR: The obligor an a Mortgage Note.
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NATURAL PERSON: Any human being.
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OFFICERS' CERTIFICATE: A certificate signed by the Chairman of the
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Board, the Vice Chairman of the Board, the President or a Vice President and by
the Treasurer, the Secretary or one of the Assistant Treasurers or Assistant
Secretaries of the Company, and delivered to the Purchaser as required by this
Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may be
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counsel for the Company, acceptable to the Purchaser.
PERSON: Any individual, corporation, partnership, joint venture,
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association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
POOLING TRANSACTION: As defined in the Purchase Agreement.
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PRIMARY MORTGAGE INSURANCE POLICY: Each primary policy of mortgage
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guaranty insurance, or any replacement policy therefor, required to be
maintained pursuant to Section 4.13.
PRINCIPAL PREPAYMENT: Any payment or other recovery of all or any
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portion of the outstanding principal on a Mortgage Loan which is received in
advance of its scheduled Due Date and is not accompanied by an amount as to
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment.
PURCHASE AGREEMENT: The Origination and Purchase Agreement, dated
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_______, 199__ between the Purchaser, as purchaser, and the Company, as seller,
including all amendments thereof and supplements thereto entered into in
accordance with the provisions thereof.
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PURCHASER: and its successors
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and assigns.
REMITTANCE DATE: The 18th day of any month, or, if such 18th day is
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not a Business Day, the first Business Day immediately preceding, commencing,
with respect to each Mortgage Loan, on the 18th day of the month following the
month in which the related Cut-off Date occurs.
SERVICING ADVANCES: All customary, reasonable and necessary "out of
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pocket" costs and expenses 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 the Mortgaged Property if the Mortgaged Property is acquired
in satisfaction of the Mortgage, and (d) compliance with the obligations under
Section 4.08.
SERVICING FEE: With respect to each Mortgage Loan, the amount of the
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annual fee Purchaser shall pay to the Company, calculated as (i) the Servicing
Fee Rate, multiplied by (ii) the outstanding principal amount thereof. Such fee
shall be payable monthly, computed on the basis of the same principal amount 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 (including recoveries
with respect to interest from Liquidation Proceeds, to the extent permitted by
Section 4.05) of such Monthly Payments collected by the Company, or as otherwise
provided under Section 4.05.
SERVICING FEE RATE: As to each Mortgage Loan, the rate identified
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as such on the Mortgage Loan Schedule.
SERVICING OFFICER: Any officer of the Company involved in, or
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responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished to the Purchaser by the
Company, as such list may from time to time be amended.
STATED PRINCIPAL BALANCE: As to each Mortgage Loan, (i) the
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principal balance of the Mortgage Loan at the Cut-off Date after giving effect
to payments of principal due on or before such date, whether or not received,
minus (ii) the aggregate of all amounts previously distributed to the Purchaser
with respect to the Mortgage Loan representing payments or recoveries of
principal, or advances in lieu thereof.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
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BOOKS AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS
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Section 2.01 Conveyance of Mortgage Loans; Possession of Mortgage
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Files.
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The Company does hereby sell, transfer, assign, set over and convey to
the Purchaser, without recourse, but subject to the terms of this Agreement, all
the right, title and interest of the Company in and to each Mortgage Loan
purchased by the Purchaser pursuant to the Purchase Agreement, effective on the
applicable Funding Date. The contents of each Mortgage File not delivered to
the Purchaser are and shall be held in trust by the Company for the benefit of
the Purchaser as the owner thereof and the Company's possession of the portion
of each Mortgage File so retained 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 purchase of
any Mortgage Loan, the ownership of the related Mortgage Note, Mortgage and
Mortgage File is vested in the Purchaser, and the ownership of all records and
documents with respect to each Mortgage Loan prepared by or which come into the
possession of the Company shall immediately vest in the Purchaser and shall be
retained and maintained, in trust, by the Company at the will of the Purchaser
in such custodial capacity only. The portion of each Mortgage File so retained
shall be segregated from the other books and records of the Company and shall be
appropriately marked to clearly reflect the sale of the related Mortgage Loan to
the Purchaser. The Company shall release from its custody the contents of any
Mortgage 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.
Section 2.02 Books and Records.
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All rights arising out of the Mortgage Loans, including, but not
limited to, all funds received on or in connection with a Mortgage Loan, shall
be held by the Company in trust for the benefit of the Purchaser as the owner of
the Mortgage Loans.
The Sale of each Mortgage Loan by the Company to the Purchaser shall
be reflected on the Company's balance sheet and other financial statements as a
sale of assets by the Company. The Company shall be responsible for maintaining,
and shall maintain, a complete set of books and records for each Mortgage
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Loan which shall be clearly marked to reflect the ownership of each Mortgage
Loan by the Purchaser.
Section 2.03 Delivery of Mortgage Loan Documents.
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The Company will deliver to the Purchaser, or to such Person as
Purchaser shall designate in writing, each of the following documents for each
Mortgage Loan on or before the applicable Funding Date:
(a) The original Mortgage Note endorsed "Pay to the order of
___________________________ without recourse," and signed in the name
of the Company by an authorized officer;
(b) The original Mortgage, with evidence of recording indicated thereon or
a certified true copy of the original Mortgage in those instances where
the public recorder's office retains the original, certified by the
relevant recorder's office, together with the registration copy of the
Mortgage (if the Mortgaged Property is registered under a Torrens
System) with a proper endorsement of transfer thereon, or, if the
Mortgage Loan was originated within 90 days prior to the Funding Date,
then a true copy of the Mortgage, together with a recorder's receipt
evidencing delivery of such Mortgage to the appropriate public
recorder's office for recordation or, if such office does not issue
such recorder's receipts, with a certificate of a Servicing Officer
certifying that such Mortgage has been delivered to such office for
recordation. In any event, the original Mortgage with evidence of
recording indicated thereon, shall be delivered to the Purchaser within
60 days after the Funding Date;
(c) The original of the Assignment of Mortgage with respect to each
Mortgage, to and signed in the name of the Company by an authorized
officer, which assignment is in form and substance acceptable for
recording;
(d) The original Primary Mortgage Insurance Policy, if required under
Section 3.01(ee);
(e) The original policy of title insurance, or a binder of commitment for
title insurance dated and certified as of the date the Mortgage Loan
was funded, together with an Opinion of Counsel addressed to the
Company and its successors and assigns that such binder or commitment
insures the priority of the lien of the related Mortgage
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during the period between the date of the funding of the related
Mortgage Loan and the date of the related title policy. In any event,
the original policy of the title insurance, dated the date of recording
of the related Mortgage, shall be delivered to the Purchaser within 60
days after the Funding Date;
(f) Originals of each assumption or modification agreement, written
assurance or substitution agreement;
(g) The original appraisal made by an appraiser meeting the requirements of
Section 3.01(n);
(h) Survey or plat map of the Mortgaged Property, including legal
description if title insurance policy contains an exception as to
boundary and building line restrictions;
(i) A copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy,
e.g., map or plat restrictions, easements, sewer agreements, home
association declarations, etc.;
(j) The original of the final residential loan application (executed by the
Mortgagor);
(k) Verification of employment and income;
(l) Credit report on the Mortgagor;
(m) Photographs of the Mortgaged Property, including front, side, rear and
street views, together with photographs of the comparables contained in
the appraisal;
(n) A copy of the purchase agreement with respect to the Mortgaged Property
(unless the Mortgage Loan constitutes a refinancing of an outstanding
mortgage loan); and
(o) Payment history as of the Funding Date.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY;
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REPURCHASE OF MORTGAGE LOANS
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Section 3.01 Individual Mortgage Loans.
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The Company hereby represents and warrants to the Purchaser that, as
to each Mortgage Loan, as of the Funding Date with respect to such Mortgage
Loan:
(a) The information set forth on the Mortgage Loan Schedule is complete,
true and correct in all material respects as of the date or dates
respecting which such information is furnished;
(b) The Mortgage Note and the Mortgage have not been assigned or pledged
(provided, that the Company may have pledged such Mortgage Note or
Mortgage to a lender under a warehouse line of credit, in which event
such pledge was released prior to such sale of the Mortgage Loan to the
Purchaser); and the Company has good and marketable title thereto, and
the Company is the sole owner and holder of the Mortgage Loan free and
clear of any and all liens, claims, encumbrances, participation
interests, equities, pledges, charges or security interests of any
nature and has full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and
assign the same pursuant to this Agreement;
(c) The Mortgage is a valid and subsisting first lien on the related
Mortgaged Property subject only to (a) the lien of current real
property taxes and assessments, (b) covenants, conditions and
restrictions, rights of way, easements and other matters of public
record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal or appraisals made
in connection with the origination of the Mortgage Loan, and (c) other
matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by such Mortgage. Any security agreement, chattel mortgage or
equivalent document related to the Mortgage and delivered to the
Purchaser or its designee establishes in the Company, a valid and
subsisting first lien on the property described therein and the Company
has full right to sell the same to the
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Purchaser and to assign the same to the Purchaser or to its order;
(d) The terms of the Mortgage Note and the Mortgage have not been impaired,
altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to protect the interest of the
holder of the Mortgage Note and the mortgagee under the Mortgage and
which the Company acknowledges has been delivered to the Purchaser or
its designee. The substance of any such alteration or modification has
been approved by the insurer under the Primary Mortgage Insurance
Policy, if any;
(e) No instrument of release or waiver has been executed in connection with
the Mortgage Loan, and no Mortgagor has been released, in whole or in
part, except in connection with an assumption agreement which has been
approved by the insurer under the Primary Mortgage Insurance Policy, if
any, and which has been delivered to the Purchaser or its designee;
(f) There are no defaults in complying with the terms of the Mortgage, and
all taxes, governmental assessments insurance premiums, water, sewer
and municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, or an escrow of funds
has been established in an amount sufficient to pay for every such item
which remains unpaid and which has been assessed but is not yet due and
payable. The Company has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the
Mortgagor, directly or indirectly, for the payment of any amount
required by the Mortgage, except for interest accruing from the date of
the Mortgage Note or date of disbursement of the Mortgage proceeds,
whichever is greater, to the day which precedes by one month the Due
Date of the first installment of principal and interest;
(g) There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property, nor has any notice of any such
pending or threatened proceeding been received or is such a proceeding
currently occurring, and such property is free of damage and in good
repair;
(h) There are no mechanics' or similar liens or claims for work, labor or
material (and no rights are outstanding that under law could give rise
to such a lien) affecting the Mortgaged Property or the Mortgage which
are, or may be, a lien prior or equal to, or coordinate with, the lien
of the Mortgage, and there are no
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delinquent tax or assessments liens against the Mortgaged Property;
(i) All of the improvements which were included for the purpose of
determining the appraised value of the Mortgaged Property lie wholly
within the boundaries and building restriction lines of such property,
and no improvements on adjoining properties encroach upon the Mortgaged
Property;
(j) There do not exist any circumstances or conditions with respect to the
Mortgage, the Mortgaged Property, the Mortgagor or the Mortgagor's
credit standing that can be reasonably 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;
(k) No improvement located on or being part of the Mortgaged Property is in
violation of any applicable zoning law or regulation. 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 and the Mortgaged
Property is lawfully occupied under applicable law;
(l) All parties which have had any interest in the Mortgage, 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)
(A) organized under the laws of such State, (B) qualified to do
business in such State, or (C) federal savings and loan associations or
national banks having principal offices in such State, or (D) not doing
business in such State;
(m) All payments required to be made up to the Cut-off Date for the
Mortgage Loan under the terms of the Mortgage Note have been made. The
Mortgage Loan is not 30 or more days delinquent in payment on the
Funding Date and has not been 30 or more days delinquent in payment
more than once in the 12-month period ending on the Funding Date;
(n) The Mortgage File contains each of the documents and instruments
specified to be included therein duly
-12-
executed and in due and proper form, and each such document or
instrument is in form acceptable to FNMA and FHLMC. Each appraisal of
the Mortgaged Property was made by an appraiser experienced in the
appraisal of one- to four-family residences and actively engaged in
such appraisal work, who is a member of the SRA, the RM, the MAI, the
SRPA or the SREA. The Mortgage Note, Mortgage and each appraisal are on
forms approved by FNMA or FHLMC with such riders as have been approved
by FNMA or FHLMC, as the case may be;
(o) The Mortgage Note and the Mortgage 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 execute the Mortgage Note and the
Mortgage and each Mortgage Note and Mortgage have been duly and
properly executed by such parties;
(p) The Mortgage Loan, at the time it was originated and on the Funding
Date, complied in all material respects with any and all applicable
requirements of federal, state and local law, including, without
limitation, usury, truth-in-lending, real estate settlement procedures,
consumer credit protection, equal credit opportunity and disclosure
laws, and the Company shall maintain in its possession, available for
the Purchaser's inspection, and shall deliver to the Purchaser or its
designee, upon demand, evidence of compliance with all such
requirements, and the consummation of the transactions contemplated by
this Agreement will not involve the violation of any such laws;
(q) The proceeds of the Mortgage Loan have been fully disbursed, there is
no requirement for future advances thereunder and any and all
requirements as to completion of any on-site or off-site improvements
and as to disbursements of any escrow funds therefor have been complied
with. All costs, fees and expenses incurred in making, closing or
recording the Mortgage Loan were paid;
(r) The Assignment of Mortgage validly assigns, transfers and conveys the
Mortgage Loan and Mortgage to the Purchaser free and clear of any
pledge, lien, encumbrance or security interest, and is in recordable
form and sufficient under the laws of the jurisdiction wherein the
Mortgaged Property is located to reflect such assignment, transfer and
conveyance;
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(s) The Mortgage Loan is covered by an ALTA mortgage title insurance policy
(1970 Form), or such other generally acceptable form of policy of title
insurance acceptable to FNMA or FHLMC, issued by and the valid and
binding obligation of a title insurer acceptable to FNMA and FHLMC and
qualified to do business in the jurisdiction where the Mortgaged
Property securing such Mortgage Loan 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. The
Company and its successors and assigns are the sole named insureds
under such mortgage title insurance policy; the assignment to the
Purchaser of the Company's interest in such mortgage title insurance
policy in each case does not require the consent of or notification to
the insurer; and such mortgage title insurance policy was valid and in
full force and effect at the origination of the Mortgage Loan, is valid
and remains in full force and effect and will be in full force and
effect and inure to the benefit of the Purchaser and any subsequent
owners of the Mortgage Loans, including a trustee acting on their
behalf, upon the consummation of the transactions contemplated by this
Agreement. No claims have been made under such mortgage 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 mortgage title insurance policy;
(t) All improvements upon the Mortgaged Property are insured against loss
by flood, fire, hazards of extended coverage and such other hazards as
are customary in the area where the Mortgaged Property is located,
pursuant to insurance policies conforming to the requirements of
Section 4.10 hereof. Each Hazard Insurance Policy and Flood Insurance
Policy contains a standard mortgagee clause naming the Company and its
successors and assigns as mortgagee and loss payee and all premiums
thereon have been paid. Each Hazard Insurance Policy and Flood
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 and any subsequent owners of the
Mortgage Loans, including a trustee acting on their behalf, upon the
consummation of the transactions contemplated by this Agreement.
Neither the Company nor any Mortgagor has engaged in any act or
omission which would impair the coverage of any policy or the validity
and binding effect thereof. The Mortgage obligates the Mortgagor
thereunder to maintain all such insurance at Mortgagor's cost and
expense, and, upon the Mortgagor's failure to do so, authorizes the
mortgagee under the Mortgage to obtain
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and maintain such insurance at Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor. The Company has not acted or
failed to act so as to impair the coverage of any such insurance
policy;
(u) 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 such a default, breach, violation or
event of acceleration; and the Company has not waived any such default,
breach, violation or event of acceleration;
(v) The Mortgage Loan, the Mortgage and the Mortgage Note, including the
obligation of the Mortgagor to pay the unpaid principal of and interest
on such Mortgage Note, are each not subject to any right of rescission,
set-off, counterclaim or defense, including 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 the defense of usury, and no such right of rescission, set-
off, counterclaim or defense has been asserted with respect thereto;
(w) The Mortgage Loan was originated by the Company in its own name, and
has not been sold to any Person other than the Purchaser; provided,
that the Company may have pledged such Mortgage Loan to a lender under
a warehouse line of credit, in which event such pledge was released
prior to the sale of such Mortgage Loan to the Purchaser;
(x) The Mortgage Loan is a conventional mortgage loan having an original
term as set forth on the Mortgage Loan Schedule, with interest payable
in arrears on the first day of each month. The Mortgage Loan is payable
in self-amortizing, equal monthly installments of principal and
interest and bears a fixed Mortgage Interest Rate for the term of the
Mortgage Loan. The Mortgage Loan is not subject to any buydown or
subsidy agreement or similar arrangement providing for a temporary
reduction in the cash payment made by the Mortgagor each month. The
Mortgage Loan is not subject to negative amortization;
(y) The Mortgage Loan contains an enforceable provision for the
acceleration by the mortgage under the Mortgage of
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the payment of the unpaid principal balance of the Mortgage Loan in the
event the related Mortgaged Property is sold without the prior consent
of such mortgagee ;
(z) As indicated on the Mortgage Loan Schedule, at the time that the
Mortgage Loan was originated the Mortgagor represented that the
Mortgaged Property would be (i) an owner-occupied primary residence,
or, in the case of a two-to-four-family residence, that at least one of
the units would be so occupied, (ii) a vacation home that will not be
part of a mandatory rental pool and will be suitable for year-round
occupancy, or (iii) an investment property, and, if such Mortgaged
Property is a unit in condominium, that such unit would be owner-
occupied and not a part of a mandatory rental pool; and the Company has
no reason to believe that such representations of the Mortgagor are no
longer true. The Mortgagor is a Natural Person. The Mortgaged Property
is lawfully occupied under applicable law;
(aa) The Mortgage Note is not and has not been secured by any collateral
except the lien of the Mortgage and the security interest of any
applicable security agreement or chattel mortgage referred to in
Section 3.01(c);
(bb) The Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the
security, 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 not homestead or other exemption available to
the Mortgagor which would interfere with the right to sell the
Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage;
(cc) With respect to each Mortgage constituting a deed or trust, a trustee,
duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such
Mortgage, and no fees or expenses are or will become payable by the
Purchaser, or any subsequent owners of the Mortgage Loans or a trustee
acting on their behalf, to the trustee under the deed of trust, except
in connection with a trustee's sale after default by the Mortgagor;
(dd) The Mortgaged Property is located in the State identified in the
Mortgage Loan Schedule and consists of (i) a single parcel of real
property with a fully detached single-family residence erected
thereon, (ii) a two to four-family residence, (iii) an individual
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condominium unit located in a building consisting of not more than
four stories in a project as described below or (iv) a townhouse
located in a building consisting of not more than four stories;
provided that each condominium unit described above is located within
a project that has been approved, or is eligible for approval, by FNMA
and that no residence or dwelling is (a) a unit in a cooperative
apartment or related capital shares, (b) a property constituting part
of a syndication, (c) a time share unit, (d) a property held in trust,
(e) a property the Mortgagor's ownership interest in which consists of
a leasehold estate, (f) a mobile home, or (g) a manufactured dwelling;
(ee) No Mortgage Loan had a Loan-to-Value Ratio at origination in excess of
95%. There has been issued with respect to each Mortgage Loan with a
Loan-to Value Ratio at origination in excess of 75% a Primary Mortgage
Insurance Policy, issued by a mortgage insurance company licensed to
do business in the State in which the related Mortgaged Property is
located, approved by FHLMC and FNMA and having a rating not lower than
AA by Standard & Poor's Corporation. As to each such Mortgage Loan,
such policy insures the named insured and its successors and assigns,
and provides coverage in an amount equal to the excess of the
outstanding principal balance of the related Mortgage Loan plus
accrued interest thereon and related foreclosure expenses over 75% of
the Appraised Value of the Mortgaged Property. All provisions of such
Primary Mortgage Insurance Policy have been and are being complied
with, such policy is in full force and effect and all premiums due
thereunder have been paid. Any Mortgage subject to any such Primary
Mortgage Insurance Policy obligates the Mortgagor thereunder to
maintain such insurance and pay all premiums and charges in connection
therewith. The Mortgage Interest Rate for the Mortgage Loans as set
forth on the Mortgage Loan Schedule is net of any such insurance
premium. No Mortgage Loan is secured by a Mortgaged Property which was
subject to secondary financing at origination. No Mortgage Loan
secured by a Mortgaged Property used as a vacation home or
constituting an investment property had a Loan-to-Value Ratio at
origination in excess of 80% or an original principal balance in
excess of $250,000. No Mortgage Loan the proceeds of which were used
to refinance an existing loan had a Loan-to-Value Ratio at origination
in excess of 90%. If the Loan-to-Value Ratio of such loan exceeded
80%, all of the proceeds of the Mortgage Loan were used to repay the
prior loan. Each Mortgage Loan secured by a Mortgaged Property used as
a vacation home or constituting an investment property is covered by a
12% Primary
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Mortgage Insurance Policy for the life of such Mortgage Loan. As to
each Mortgage Loan originated more than 12 months prior to the Funding
Date, the current Appraised Value is not less than the Appraised Value
at the origination of the Mortgage Loan, as evidenced by an appraisal
made by an appraiser meeting the requirements of Section 3.01 (n),
dated no earlier that 12 months prior to the Funding Date;
(ff) The Mortgage Loan was underwritten in accordance with FNMA
underwriting standards in effect at the time the Mortgage Loan was
originated except that the original principal balance of the Mortgage
Loan may exceed such standards;
(gg) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or
payments of other charges or payments due the Company have been
capitalized under the Mortgage or the Mortgage Note;
(hh) The Mortgage Loan contains no early ownership provision;
(ii) The Mortgage Loan is not secured by Mortgaged Property located in any
of the following Locations: (i) Dade or Broward Counties in the State
of Florida; (ii) ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ or Fort Bend Counties in the State
of Texas; (iii) the State of Hawaii; or (iv) the State of Alaska; and
(jj) Any future advances made prior to the 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. 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 FNMA and FHLMC. The
consolidated principal amount does not exceed the original principal
amount of the Mortgage Loan. The Company shall not make future
advances after the Cut-off Date.
Section 3.02 Company Representations.
-----------------------
The Company hereby represents and warrants to the Purchaser as of each
Funding Date:
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(a) The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of its incorporation and has
all licenses necessary to carry on its business as now being conducted
and is licensed, qualified and in good standing in the States where the
Mortgaged Property is located if the laws of such State require
licensing or qualification in order to enable the Company to perform
its obligation under this Agreement; the Company has 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) At all relevant times, the Company had power and authority to execute
and deliver the Purchase Agreement and to perform in accordance
therewith; the execution, delivery and performance of such agreements
(including all instruments of transfer delivered pursuant thereto) by
the Company and the consummation of the transactions contemplated
thereby were duly and validly authorized; such agreements evidence the
valid, binding and enforceable obligations of the Company; and all
requisite corporate action was taken by the Company to make such
agreements valid and binding upon the Company in accordance with their
terms;
(c) No approval of the transactions contemplated by this Agreement or the
Purchase Agreement from the Federal Home Loan Bank Board, the FSLIC,
the FDIC or any similar State regulatory authority having jurisdiction
over the Company is or was required or, if required, such approval has
been obtained;
(d) The consummation of the transactions contemplated by this Agreement and
the Purchase Agreement are or were in the ordinary course of business
of the Company and will not and did not result in the breach of any
term or provision of the charter or by-laws of the Company or result in
the breach of any term or provision of, or conflict with or constitute
a default under or result in the acceleration of any obligation under,
any agreement, indenture or loan or credit agreement or other
instrument to which the Company or its property is subject, or result
in the violation of any law,
-19-
rule, regulation, order, judgment or decree to which the Company or its
property is subject;
(e) Neither this Agreement nor any statement, report or other document
furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any
untrue statement of fact or omits to state a fact necessary to make the
statements contained herein or therein not misleading;
(f) The origination and collection practices used by the Company with
respect to each Mortgage Note and Mortgage have been in all respects
legal, proper, prudent and customary in the mortgage servicing
business;
(g) The Mortgage Note, the Mortgage, the Assignment of Mortgage and any
other documents described in Section 2.03 or otherwise required to be
delivered under this Agreement on or prior to the Funding Date for each
Mortgage Loan have been delivered to the Purchaser or its designee and
all documents described in Section 2.03 required to be delivered within
60 days after the Funding Date will be delivered within such 60 days.
With respect to each Mortgage Loan the Company is in possession of such
copies or originals of the documents comprising the Mortgage File as
are necessary to enable the Company to service such Mortgage Loan under
this Agreement, and there are no agreements in effect adversely
affecting the right or ability of the Company to make the deliveries
required under this Agreement. The transfer, assignment and conveyance
of the Mortgage Notes and the Mortgages by the Company pursuant to the
Purchase Agreement and the Assignment of Mortgage are not subject to
the bulk transfer or any similar statutory provisions in effect in any
applicable jurisdiction;
(h) There is no action, suit, proceeding or investigation pending or
threatened against the Company which, either in any one instance or in
the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of the
Company, or in any material impairment of the right or ability of the
Company to carry on its business substantially as now conducted, or in
any material liability on the part of the Company, or which would draw
into question the validly of this Agreement or the Mortgage Loans or of
any action taken or to be taken in connection with the obligations of
the Company contemplated herein, or which would be likely to impair
materially the ability of the Company to perform under the terms of
this Agreement;
-20-
(i) 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; and
(j) The Company is an approved seller/servicer of conventional mortgage
loans for FNMA or FHLMC in good standing and the Company's deposits are
insured by the FDIC or FSLIC to the maximum extent permitted by law.
Section 3.03 Repurchase.
----------
Is understood and agreed that, with respect to each Mortgage Loan, the
representations and warranties set forth in Sections 3.01 and 3.02 shall survive
delivery of such Mortgage Loan to the Purchaser and shall inure to the benefit
of the Purchaser, notwithstanding any restrictive or qualified endorsement on
any Mortgage File. Upon discovery by either the Company or the Purchaser of a
breach of any of the foregoing representations and warranties which materially
and adversely affects the value of the related Mortgage Loan or the interest of
the Purchaser or any subsequent owners of the Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other. Within
60 days of the earlier of either discovery by or notice to the Company of any
breach of a representation or warranty, the Company shall promptly cure such
breach in all material respects or, if such breach cannot be cured, at the
option of the Purchaser the Company shall repurchase such Mortgage Loan at a
price equal to (i) 100% of the Stated Principal Balance of the Mortgage Loan as
of the date of repurchase, plus (ii) interest on such Stated Principal Balance
at the Mortgage Loan Remittance Rate from the date to which interest has last
been paid and distributed to Purchaser to the date of repurchase. In the event
that a breach shall involve any representation or warranty set forth in section
3.02, and such breach is not cured within 60 days of the earlier of either
discovery by or notice to the Company of such breach, all the Mortgage Loans
shall, at the option of the Purchaser, be repurchased by the Company at the
price computed as provided above. Any such repurchase shall be accomplished by
deposit in the Custodial Account of the amount of the purchase price (after
deducting therefrom any amounts received in respect of such repurchased Mortgage
Loan or Loans and being held in the Custodial Account for future distribution).
In addition to such repurchase obligation, the Company shall indemnify
and hold harmless the Purchaser against any loss, damages, penalties, fines,
forfeitures, legal fees and related costs, judgments and other costs and
expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of the Company's representations and
warranties contained in this Agreement. The Company shall undertake the defense
or prosecution of any claim, demand, defense or assertion based on or grounded
upon, or resulting
-21-
from, a breach of the Company's representations and warranties contained in
Section 3.01 or Section 3.02. It is understood and agreed that the obligations
of the Company set forth in this Section 3.03 to cure 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 Section 3.01 or 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 all amounts payable in
respect of such Mortgage Loan.
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ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
----------------------------------------------
Section 4.01 Company to Act as Servicer.
--------------------------
In performance of its duties under this Agreement, the Company shall
be acting as an independent contract servicer and shall Service and administer
the Mortgage Loans consistent with the terms of this Agreement and the First
Boston Offering System Seller/Servicer Guide, as such Seller/Servicer Guide may
be amended from time to time. The Company acknowledges that it has received
such Seller/Servicer Guide as in effect on the date of this Agreement. The
Company shall have no authority, express or implied, to act in any manner or by
any means for or on behalf of the Purchaser in any capacity other than that of
an independent contractor, and no authority to act in any manner except as
herein expressly set forth or as it may from time to time be requested in
writing by the Purchaser. The Company is not authorized or empowered to waive,
release or vary the terms of any Mortgage Loan, waive any prepayment penalty, or
waive or consent to the postponement of strict compliance on the part of any
Mortgagor with any term, provision or covenant or to permit the assumption of
any Mortgage Loan or in any other manner grant indulgence to any Mortgage
without the express written consent of the Purchaser. In the event that any
such modification of a Mortgage Loan with the consent of the Purchaser permits
the deferral of interest or principal payments on any Mortgage Loan, the Company
shall include in each remittance for any month in which any such principal or
interest payment has been deferred an amount equal to, as the case may be, such
month's principal and one month's interest at the Mortgage Loan Remittance Rate
on the Stated Principal Balance of such Mortgage Loan and shall be entitled to
reimbursement for such advance only to the same extent as for all other advances
made pursuant to Section 5.03.
The Company shall service and administer the Mortgage Loans in
accordance with applicable State and federal laws and shall provide to each
Mortgagor any reports required to be provided to such Mortgagor thereby. In
servicing and administering the Mortgage Loans, the Company shall employ
procedures (including collection procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering mortgage loans
for it own account and in accordance with the highest standard of accepted
mortgage servicing practices of prudent lending institutions in the respective
States where the Mortgaged Properties are located and giving due consideration
to the Purchaser's reliance on the Company.
-23-
Section 4.02 Liquidation of Mortgage Loans.
-----------------------------
In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 4.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Company shall take such action as it shall deem to
be in the best interest of Purchaser. Prior to commencing foreclosure
proceedings, the Company shall notify Purchaser in writing of the Company's
intention to so do, and the Company will not commence foreclosure proceedings
unless and until directed to do so by the Purchaser, all as more particularly
set forth in Section 4.15. In such connection, the Company shall from its own
funds make all necessary and proper Servicing Advances in accordance with the
provisions of Section 4.15.
Section 4.03 Collection of Mortgage Loan Payments.
------------------------------------
Continuously from the date hereof until termination of this Agreement,
the Company will proceed diligently to collect all payments due under each of
the Mortgage Loans when the same shall become due and payable and will take
special care in ascertaining and estimating annual ground rents, taxes,
assessments, water rates, premiums on any Primary Mortgage Insurance Policy and
all flood, fire and other hazard insurance required to be kept in force pursuant
to this Agreement and all other charges that, as provided in any Mortgage, will
become due and payable to the end that the installments payable by the
Mortgagors will be sufficient to pay such charges as and when they become due
and payable.
Section 4.04 Establishment of Custodial Account; Deposits in
----------------------------------- -----------
Custodial Account.
-----------------
The Company shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan (other than any such funds which constitute
Escrow Payments, which are to be held in the Escrow Account) separate and apart
from any of its own funds and general assets and shall establish and maintain
one or more Custodial Accounts (collectively, the "Custodial Account"), which
shall comply with the requirements set forth in the definition of "Custodial
Account" in Article I and shall be established in a depository acceptable to the
Purchaser. The creation of any Custodial Account shall be evidenced by (a) a
certification in the form of Exhibit B hereto, in the case of an account
established with the Company, or (b) a letter agreement in the form of Exhibit C
hereto, in the case of an account held by a depository other than the Company.
In either case, a copy of such certification or letter agreement shall be
furnished to the Purchaser. If a Custodial Account is maintained with a bank
the rating on whose debt obligations by Standard & Poor's Corporation falls
below AA, and if the deposits in such Custodial
-24-
Account are not fully insured by either FDIC or FSLIC, all funds held in such
Custodial Account shall be immediately withdrawn by the Company and remitted to
the Purchaser, and the Company shall thereafter establish and maintain a new
Custodial Account or Accounts meeting the requirements of the first sentence of
this Paragraph with one or more new depositories.
In the event of the insolvency of the depository institution holding
the Custodial Account, the Company shall establish a new Custodial Account in
accordance with this Agreement, but not with the depository institution holding
the Custodial Account so long as such institution holding the Custodial Account
is insolvent.
With respect to each Mortgage Loan, the Company shall deposit in the
Custodial Account on a daily basis, and retain therein the following payments
and collections received or made by it subsequent to the related Cut-off Date
(other than in respect of principal and interest on the related Mortgage Loan
due on or before the Cut-off Date):
(i) all payments on account of principal, including Principal Prepayments,
on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans adjusted to
the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all proceeds received by the Company under any title, hazard or other
insurance policy 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 4.12;
(v) all awards or settlements in respect of condemnation proceedings or
eminent domain affecting any Mortgaged Property which are not released to the
Mortgagor in accordance with the Purchaser's normal servicing procedures;
(vi) any amount required to be deposited in the Custodial Account pursuant
to Section 5.03, 6.01 or 6.02;
(vii) any amounts payable by the Company in connection with the repurchase
of any Mortgage Loan pursuant to Section 3.03; and
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(viii) with respect to each Principal Prepayment, an amount (to be
paid by the Company out of its own 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 for the month
of prepayment at the applicable Mortgage Loan Remittance Rate.
The foregoing requirements for deposit in the Custodial Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges and
assumption fees, to the extent permitted by Section 6.01, need not be deposited
by the Company in the Custodial Account.
Section 4.05 Permitted Withdrawals From the Custodial Account.
------------------------------------------------
The Company may, 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 advances of Company funds made pursuant to
Section 5.03, the Company's right to reimburse itself pursuant to this clause
(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;
(iii) to reimburse itself for unreimbursed Servicing Advances and for
unreimbursed advances of Company funds made pursuant to Section 5.03, the
Company's right to reimburse itself pursuant to this clause (iii) with respect
to any Mortgage Loan being limited to related Liquidation Proceeds, condemnation
proceeds, amounts representing proceeds of insurance policies covering the
related Mortgaged Property and such other amounts as may be collected by the
Company from the Mortgagor or otherwise relating to the Mortgage Loan, it being
understood that, in the case of any such reimbursement, the Company's right
thereto shall be prior to the rights of Purchaser unless the Company is required
to repurchase a Mortgage Loan pursuant to Section 3.03, 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 Section 3.03 and all other amounts
required to be paid to the Purchaser with respect to such Mortgage Loan;
-26-
(iv) to pay to itself any unpaid Servicing Fees with respect to a
Mortgage Loan, but only to the extent that the related Liquidation Proceeds,
condemnation proceeds, amounts representing proceeds of insurance policies
covering the related Mortgaged Property and other amounts collected by the
Company from the Mortgagor or otherwise relating to the Mortgage Loan exceed the
sum of (A) the unpaid principal balance of such Mortgage Loan plus accrued
interest at the Mortgage Loan Remittance Rate through the first day of the month
following the month in which such proceeds are to be remitted to the Purchaser
plus (B) all amounts reimbursed to the Company pursuant to clause (iii) above;
(v) to reimburse itself for expenses incurred by and reimbursable to it
pursuant to Section 8.01; and
(vi) to clear and terminate the Custodial Account upon the termination of
this Agreement.
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 pursuant to clauses (ii) through (vi), inclusive.
Section 4.06 Establishment of Escrow Account; Deposits in Escrow
---------------------------------------------------
Account.
-------
The Company shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments or the proceeds
of flood, fire or other hazard insurance which, pursuant to Section 4.12, are to
be applied to the restoration or repair of the Mortgaged Property or released
general assets and shall establish and maintain one or more Escrow Accounts
(collectively, the "Escrow Account"), which shall comply with the requirements
set forth in the definition of "Escrow Account" in Article I and shall be
established in a depository acceptable to the Purchaser. The creation of any
Escrow Account shall be evidenced by (a) a certification in the form of Exhibit
D hereto, in the case of an account established with the Company, or (b) a
letter agreement in the form of Exhibit E hereto, in the case of an account held
by a depository other than the Company. In either case, a copy of such
certification or letter agreement shall be furnished to the Purchaser. If an
Escrow Account is maintained with a bank the rating on whose debt obligations by
Standard & Poor's Corporation falls below AA, and if the deposits in such Escrow
Account are not fully insured by either FDIC or FSLIC, all funds held in such
Escrow Account shall be immediately withdrawn by the Company and remitted to the
Purchaser, and the Company shall thereafter establish and maintain a new Escrow
Account or Accounts meeting
-27-
the requirements of the first sentence of this paragraph with one or more new
depositories.
In the event of the insolvency of the depository institution holding
the Escrow Account, the Company shall establish a new Escrow Account in
accordance with this Agreement, but not with the depository institution holding
the Escrow Account so long as such institution holding the Escrow Account is
insolvent.
The Company shall deposit in the Escrow Account on a daily basis, and
retain therein: (i) all Escrow Payments collected on account of any Mortgage
Loans, for the purpose of effecting timely payment of any such items as required
under the terms of this Agreement, and (ii) all amounts representing proceeds of
any flood, fire or other hazard insurance policy which are to be applied to the
restoration or repair of any Mortgaged Property or released to the Mortgagor in
accordance with the provisions of Section 4.12. The Company shall make
withdrawals therefrom only in accordance with Section 4.07 hereof. To the
extent required by law, the Company shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may not bear interest.
Section 4.07 Permitted Withdrawals From Escrow Account.
-----------------------------------------
Withdrawals from the Escrow Account may be made by the Company only
(a) to effect timely payments of ground rents, taxes, assessments, water rates,
premiums on any Primary Mortgage Insurance Policy, premiums on all flood, fire
and other hazard insurance required to be kept in force pursuant to this
Agreement or other items constituting Escrow Payments for the related Mortgage,
(b) to reimburse the Company for any Servicing Advance made by the Company
pursuant to Section 4.08 hereof with respect to a related Mortgage Loan, but
only from amounts received on the related Mortgage Loan which represent late
payments or collections of Escrow Payments thereunder, (c) to refund to any
Mortgagor any funds found to be in excess of the amounts required under the
terms of the related Mortgage Loan, (d) for transfer to the Custodial Account in
accordance with the terms of the related Mortgage Loan, (e) for application to
restoration or repair of the Mortgaged Property or release to the Mortgagor, but
only in accordance with the provisions of Section 4.12 hereof, (f) to pay to the
Mortgagor, to the extent required by law, any interest to be paid on the funds
deposited in the Escrow Account, or (g) to clear and terminate the Escrow
Account upon the termination of the Agreement. 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 Escrow Account.
-28-
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 and other charges which are or may become a lien upon the Mortgaged
Property and the status of premiums on any Primary Mortgage Insurance Policy and
on all flood, fire and other hazard insurance required to be kept in force
pursuant to this Agreement 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 and at a
time appropriate for securing maximum discounts allowable, 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. To the extent that a
Mortgage does not provide for Escrow Payments, the Company shall determine that
any such payments are made by the Mortgagor at the time they first become due.
The Company assumes full responsibility for the timely payment of all such bills
and shall effect timely payments of all such bills irrespective of each
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments.
The Company shall furnish to the Purchaser as of December 31st of each
year an Officer's Certificate certifying that all ground rents, taxes,
assessments, water rates and other charges which are or may become a lien upon
the Mortgaged Property relating to any Mortgage Loan, together with the premiums
on any Primary Mortgage Insurance Policy and on all flood, fire and other hazard
insurance required to be kept in force pursuant to this Agreement, have been
paid.
Section 4.09 Transfer of Accounts.
--------------------
The Company may transfer the Custodial Account or the Escrow Account
to a different depository institution, provided such transferred account
continues to meet the requirements set forth in Sections 4.04 and 4.06, as
applicable. Such transfer shall be made only upon obtaining the consent of the
Purchaser.
SECTION 4.10 Maintenance of Hazard Insurance.
-------------------------------
The Company shall cause to be maintained for each Mortgage Loan
Insurance on all buildings on the related Mortgaged Property against fire,
hazards of extended coverage and such other hazards as are customary in the area
where the Mortgaged Property is located, in an amount which is at least equal to
the maximum insurable value of the improvements of the Stated Principal Balance
of the Mortgage Loan, whichever is less, but in any event in an amount not less
than that which is necessary to
-29-
avoid the application of any coinsurance provision. If the Mortgaged Property
is in an area identified in the Federal Register by the Flood Emergency
Management Agency as having special flood hazards (and such flood insurance has
been made available) the Company will cause to be maintained a flood insurance
policy meeting the requirements of the current guidelines of the Federal
Insurance Administration with a generally acceptable insurance carrier, in an
amount representing coverage not less than the least of (i) the Stated Principal
Balance of the Mortgage Loan, (ii) the full insurable value of the improvements,
or (iii) the maximum amount of insurance available under the Flood Disaster
Protection Act of 1968, as amended. The Company shall also maintain such flood,
fire and other hazard insurance, together with liability insurance, on property
acquired upon foreclosure, or by deed in lieu of foreclosure, of any Mortgage
Loan. Any amounts collected by the Company under any such policies (other than
amounts to be deposited in the Escrow Account and to be (a) applied to the
restoration or repair of the property subject to the related Mortgage or
property acquired in liquidation of the Mortgage Loan, or (b) released to the
Mortgagor, any such amounts to be so applied or released only in accordance with
the provisions of Section 4.12) shall be deposited in the Custodial Account,
subject to withdrawal pursuant to Section 4.05. It is understood and agreed
that no earthquake or other additional insurance need be required by the Company
of any Mortgagor or maintained on property acquired in respect of a Mortgage
Loan, other than pursuant to such applicable laws and regulations as shall at
any time be in force and as shall require such additional insurance. All
policies required hereunder shall be endorsed with standard mortgagee clauses
with loss payable to the Company and its successors and assigns, and shall
provide for at least 30 days prior written notice of any cancellation, reduction
in amount or material change in coverage to the Company. The Company shall not
interfere with the Mortgagor's freedom of choice in selecting either his
insurance carrier or agent, provided, however, that the Company shall not accept
any such insurance policies from insurance companies unless such companies
currently reflect a General Policy Rating of A:VI or better in Best's Key Rating
Guide and are licensed to do business in the State wherein the property subject
to the policy is located. The Company and its successors and assigns will be
named the loss payee under any Hazard Insurance Policy and Flood Insurance
Policy. The Company, on behalf of itself and the Purchaser, shall present
claims to the insurer under any Hazard Insurance Policy or Flood Insurance
Policy in a timely fashion in accordance with the provisions of such policy.
The Company shall retain in its custody and safekeeping the originals of all
policies of insurance required by the Section 4.10 as may be designated by the
Purchaser and shall fully service all policies so retained.
-30-
SECTION 4.11 Fidelity Bond; 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 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 shall also 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 4.11 requiring such fidelity bond
and errors and omissions insurance shall diminish or relieve the Company from
its duties and obligations as set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be at least equal to the
corresponding amounts required by FNMA in Section 1.02 of the FNMA Guaranteed
Mortgage-Backed Securities Program Selling and Servicing Guide or by FHLMC in
Sections 6402 and 6403 of the FHLMC Purchasers' & Servicers' Guide. Upon the
request of Purchaser, the Company shall cause to be delivered to Purchaser a
certified true copy of such fidelity bond and insurance policy and a statement
from the surety and the insurer that such fidelity bond and insurance policy
shall in no event be terminated or materially modified without 30 days prior
written notice to Purchaser.
SECTION 4.12 Application of Proceeds of Insurance to Repair or
-------------------------------------------------
Restoration.
-----------
The Company shall collect the proceeds from all policies of insurance
required to be maintained pursuant to Section 4.10 with respect to all losses
that may occur. Any such proceeds may be remitted to the Mortgagor toward the
restoration or repair of the related property only upon the written consent of
the Purchaser unless such proceeds aggregate less than $5,000 or relate to
personal property. In such event, the Company shall supervise all such repairs
and, in general, shall do all things reasonably necessary to protect the
interest of the Purchaser.
The Company shall promptly notify the Purchaser of any loss or damage
by fire, or from any other cause, to the property which results in a claim for
$5,000 or more, and will not make any agreement with respect to the
rehabilitation of the property without the written consent of the Purchaser.
The Company shall render such services as are requested by the Purchaser in
adjusting the loss or supervising the repair of the damage. The
-31-
Company's notification shall include a recommendation as to the proposed nature
and cost of repairs. If necessary, the Company shall notify the insured under
the applicable policy and the insurer under any applicable Primary Mortgage
Insurance Policy, and shall determine that all required inspections have been
made and that the necessary determinations of the adequacy of the proposed
repairs shall be obtained before repair work commences. The Company shall send
the Purchaser, to the extent available, copies of all inspection reports and
other reports with respect thereto.
SECTION 4.13 Maintenance of Primary Mortgage Insurance Policies.
--------------------------------------------------
The Company covenants and agrees to maintain or cause to be maintained
in full force and effect each Primary Mortgage Insurance Policy represented to
be in effect pursuant to Section 3.01(ee). The Company shall cause the premiums
on each such Primary Mortgage Insurance Policy to be paid as they become due.
The Company shall not take or omit to take any action which would result in non-
coverage under any applicable Primary Mortgage Insurance Policy of any loss
which, but for the actions of the Company, would have been covered thereunder.
The Company shall not cancel or refuse or renew any such Primary Mortgage
Insurance Policy unless the replacement Primary Mortgage Insurance Policy for
such cancelled or non-renewed policy is maintained with an insurer whose claims-
paying ability is acceptable to Standard & Poor's Corporation for mortgage pass-
through certificates rated not lower than AA. The Company shall, promptly after
the Funding Date, submit to the insurer under each Primary Mortgage Insurance
Policy a loan sale notice indicating the sale of the related Mortgage Loan to
the Purchaser.
In connection with its activities as Servicer of the Mortgage Loans,
the Company agrees to present, on behalf of itself and the Purchaser, claims to
the insurers under any Primary Mortgage Insurance Policies in a timely fashion
in accordance with such policies and, in this regard, to take such reasonable
action as shall be necessary to permit recovery under any Primary Mortgage
Insurance Policies respecting defaulted Mortgage Loans. The Company also shall
promptly deliver to the Purchaser copies of all claims that are so presented.
Upon receipt of a check or other form of payment on a claim under a Primary
Mortgage Insurance Policy, the Company shall immediately deposit such check or
other form of payment in the Custodial Account.
SECTION 4.14 Inspections.
-----------
The Company shall promptly notify the Purchaser of any knowledge on
the part of the Company of any vacancy in a Mortgaged Property or abandonment
thereof, of any change in the condition or value of a Mortgaged Property, or any
waste
-32-
committed thereon or any failure on the part of the Mortgagor to keep a
Mortgaged Property in good condition and repair, or of any permanent or
substantial injury to a Mortgaged Property caused by unreasonable use, resulting
in the diminution of the security for the Mortgage Loan. The Company shall also
promptly notify the Purchaser upon learning of any State insolvency or federal
bankruptcy proceedings in which any Mortgagor is seeking relief or is a
defendant debtor, or of the death or incapacity of any Mortgagor or guarantor.
The Company shall service such Mortgage Loans in accordance with the Purchaser's
instructions.
If any Mortgage Loan is more than 60 days delinquent the Company shall
inspect the related Mortgaged Property within not more than 30 days after such
Mortgage Loan has become 60 days delinquent. Inspection of properties shall be
made at more frequent intervals as reasonably required by the Purchaser. The
Company shall determine upon each such inspection the existence of any of the
facts set forth in the preceding paragraph.
The Company shall make a written report of each such inspection.
Written reports that reveal any unsatisfactory conditions shall be forwarded to
the Purchaser. Written reports that reveal a satisfactory condition shall be
retained in the Company's files and made available to the Purchaser upon
request. The Company shall furnish to the Purchaser a certification that all
properties have been inspected within the required period.
SECTION 4.15 Delinquency and Foreclosure.
---------------------------
The Company shall, upon request, advise the Purchaser as to the status
of any Mortgage Loan, and particularly as to the status of all payments required
to be made by the Mortgagor thereunder. Any arrears or defaults by the
Mortgagor on a Mortgage Loan shall be reported to the Purchaser in accordance
with the Purchaser's required procedures. The Company shall also promptly
notify the Purchaser of any failure by a Mortgagor to perform any other of its
material covenants or obligations under the related Mortgage.
The Company shall give to any insurer under a Primary Mortgage
Insurance Policy all notices of default required to be given to maintain in full
force and effect such policy of insurance. Copies of all notices, identified by
the Purchaser's loan number, shall be forwarded by the Company to the Purchaser
for its files.
After any default by a Mortgagor under the related Mortgage and during
any foreclosure or other proceedings affecting such Mortgage, the Company shall
continue to perform all the requirements of the Company to maintain insurance
thereon and to inspect the Mortgaged Property as hereinabove provided, and to
pay any ground rents, taxes, assessments, water rates, other charges and
insurance premiums with respect to the related
-33-
insurance before any penalty or late charge accrues, and in discharging such
duties shall comply with all applicable provisions of the applicable Primary
Mortgage Insurance Policy. The Company shall, with the approval of the
Purchaser, also make all other necessary reasonable expenditures to preserve the
Mortgaged Property.
After any default under a Mortgage, the Company shall, to the extent
requested by the Purchaser, diligently assist in the instituting and conducting
of collection actions and foreclosure proceedings, or proceed to acquire the
property by other means, such as a deed in lieu of foreclosure, and take title
to the property, as designated by the Purchaser, and take possession of the
property, all in accordance with the instructions of the Purchaser and the
requirements of the related Primary Mortgage Insurance Policy and shall protect
and conserve the property until the property is disposed of. The Company shall
assist in exercising any assignment of rents given by any Mortgagor and pursuant
to the Mortgage Loan and shall take such action in connection therewith as may
be requested by the Purchaser.
In connection with any such transfer of the Mortgage or of the
Mortgaged Property, to the insurer under a mortgage pool insurance policy or the
insurer under a Primary Mortgage Insurance Policy, as the case may be, the
Company shall also turn over to such grantee or to the Purchaser for delivery to
such grantee all items relating to the Mortgage transaction requested by such
grantee, including any funds, documents, books, papers and accounts, and in
connection therewith the Company shall, upon request by the Purchaser, certify
to such grantee or to the Purchaser by affidavit or otherwise as to all matters
within the knowledge of the Company with respect to the Mortgage and the
Mortgaged Property.
The Company shall engage an attorney to conduct foreclosure or other
proceedings who is acceptable to the Purchaser and who has agreed to accept fees
therefor in amounts acceptable to the Purchaser. Any amount bid by the Company
or its attorney at any foreclosure sale or at any judicial proceeding must be
approved by the Purchaser in writing.
Notwithstanding anything in this Agreement to the contrary, the
Company shall not be entitled to recover legal expenses incurred in connection
with foreclosure proceedings where the Mortgage Loan is reinstated and such
foreclosure proceedings are terminated prior to completion, other than sums
received from the Mortgagor for such expenses.
SECTION 4.16 Property Management.
-------------------
The Company shall be responsible for managing the acquired property
after completion of foreclosure of a Mortgage
-34-
Loan until its conveyance to any insurer, or for as long as the Purchaser, its
designee or a successor in interest holds title to the property. Such
management shall be conducted in accordance with the Purchaser's instructions
and shall include the collection of rents, attending to insurance on the
premises, management and supervision of repairs, maintenance of the premises,
and the rendering to the Purchaser of such reports as the Purchaser may require.
If the Purchaser or any insurer under the mortgage pool insurance
policy or under any Primary Mortgage Insurance Policy shall from time to time
direct the Company with respect to the manner or procedure of the performance of
any of the duties and services referred to in this Section 4.16, the Company
will perform such duties and services in accordance with such direction,
anything herein to the contrary notwithstanding.
-35-
ARTICLE V
PAYMENTS TO THE MASTER SERVICER
-------------------------------
SECTION 5.01 Distributions.
-------------
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser or its designee an amount equal to
(a) all amounts deposited in the Custodial Account as of the close of business
on the preceding 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 last day of
the calendar month preceding the month of the Remittance Date, 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), and minus (d)
any amounts attributable to Monthly Payments collected but due on a Due Date or
Dates subsequent to the Due Period ending on the first day of the month of the
Remittance Date, 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
first Business Day following the Business Day on which such payment was due, the
Company shall pay to the Purchaser interest on any such late remittance, until
made, at an annual rate equal to (i) the highest quoted prime rate printed in
The Wall Street Journal in its regular column entitled "Money Rates" on the
-----------------------
first business day of the calendar month in which such remittance was due, plus
(ii) 3%, but in no event greater than the highest rate permitted by applicable
law. In the event such remittance is not made during the month in which it was
due, the interest payable with respect to subsequent periods shall continue to
be computed in accordance with the preceding formula notwithstanding any change
in the quoted prime rates. Such interest shall be deposited in the Custodial
Account by the Company on the date such late remittance is made and shall cover
the period commencing with the day following such first Business Day and ending
with the Business Day on which such payment is made, both inclusive. Such
interest shall be remitted along with the distribution payable on the next
succeeding Remittance Date. The payment by the 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.
-36-
SECTION 5.02 Statements to the Purchaser.
---------------------------
Promptly, and in no event later than the fifth Business Day of the
month following the month in which a remittance occurs, the Company will furnish
to the Purchaser or its designee a statement setting forth the following
information:
(i) the amount of such remittance allocable to principal (including a
separate breakdown of any Principal Prepayments, including the date of such
prepayment, and any prepayment penalties or premiums);
(ii) the amount of such distribution allocable to interest and assumption
fees;
(iii) the amount of servicing compensation received by the Company during
the prior distribution period;
(iv) the aggregate principal balance of the Mortgage Loans covered by this
Agreement at the close of business on the applicable Determination Date after
giving effect to payments on such Mortgage Loans due on the Due Date and
distributed either as collections or advances;
(v) the aggregate of any expenses reimbursed to the Company during the
prior distribution period pursuant to Section 8.01; and
(vi) the number and aggregate Stated Principal Balances of Mortgage Loans
delinquent (a) 30 days, (b) 60 days, and (c) 90 days or more, as of the close of
business on the applicable Determination Date.
Together with the statement described above, the Company shall also
deliver to the Purchaser (a) computer generated reports and wire calculation
remittance reports, in form and substance reasonably required by the Purchaser
from time to time, detailing all activity since the Remittance Date for the
previous calendar month, and (b) a delinquency report specifying all Mortgage
Loans 30 or more days delinquent, including all Mortgage Loans in foreclosure,
or, if no Mortgage Loans are delinquent, a report indicating that there are no
delinquencies.
The Company shall prepare and file any and all tax returns,
information statements or other filings required to be delivered to any
governmental taxing authority pursuant to any applicable law with respect to the
Mortgage Loans and the transactions contemplated hereby. In addition, the
Company shall provide Purchaser with such information concerning the Mortgage
-37-
Loans as is necessary for income tax purposes, as Purchaser may reasonably
request from time to time.
SECTION 5.03 Advances by the Company.
-----------------------
On the Business Day immediately preceding each Remittance Date, the
Company shall deposit in the Custodial Account an amount equal to all Monthly
Payments (with interest adjusted to the Mortgage Loan Remittance Rate) which
were due on the Mortgage Loans covered by this Agreement during the applicable
Due Period and which were delinquent at the close of business on the immediately
preceding Determination Date or deferred pursuant to Section 4.01. The
Company's obligation to make such advances as to any Mortgage Loan will continue
through the last Monthly Payment due prior to the payment in full of the
Mortgage Loan, or through the last Remittance Date prior to the Remittance Date
for the distribution of all Liquidation Proceeds and other payments of
recoveries (including proceeds under any title, hazard or other insurance
policy, or condemnation awards) with respect to the Mortgage Loan.
-38-
ARTICLE VI
GENERAL SERVICING PROCEDURE
---------------------------
SECTION 6.01 Assumption and Substitution of Liability Agreements.
---------------------------------------------------
The Company shall promptly notify the Purchaser of the prospective
conveyance of any Mortgaged Property of which the Company becomes aware. Unless
instructed otherwise by the Purchaser, 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 is conveyed or is about to be conveyed by the
Mortgagor, the Company shall, to the extent it has knowledge of such conveyance
or prospective 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 Primary Mortgage Insurance Policy, if any.
If the Company reasonably believes it is unable under applicable law to enforce
such "due-on-sale" clause, the Company shall promptly so notify the Purchaser
and assist the Purchaser in entering into (a) 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, to the extent
permitted by applicable law, the Mortgagor remains liable thereon, or (b) a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Mortgage Note; provided that, in either
case, the Mortgage Loan shall continue to be covered (if so covered before the
Purchaser enters into such agreement) by any related Primary Mortgage Insurance
Policy. In connection with any such assumption or substitution of liability
agreement, the Mortgage Interest Rate, the amount of the Monthly Payment and the
maturity of the Mortgage Note shall not be changed. If an assumption fee is
collected by the Company for entering into an assumption or substitution of
liability agreement, a portion of such fee, up to an amount equal to one percent
(1%) of the outstanding principal balance of the related Mortgage Loan, will be
retained by the Company as additional servicing compensation, and any portion
thereof in excess of one percent (1%) will be deposited in the Custodial Account
for the benefit of the Purchaser. If an assumption or substitution of liability
is allowed pursuant to this Section 6.01, the Company, with the prior consent of
the
-39-
insurer under the primary Mortgage Insurance Policy, if any, is authorized to
prepare an assumption or substitution of liability agreement as provided in
clause (a) or (b) above, as appropriate, to be entered into by the Purchaser
with the purchaser of the Mortgaged Property.
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 will notify the Purchaser as provided
in Section 5.02 and will prepare a satisfaction or release of the Mortgage for
execution by the mortgagee thereunder.
In the event the Company delivers a satisfaction or release of any
Mortgage without having obtained payment in full of the indebtedness secured by
such Mortgage or should the Company otherwise prejudice any right the Purchaser
may have under the Mortgage or any related instruments, the Company, upon
written demand of Purchaser, shall remit to the Purchaser the Stated Principal
Balance of the related Mortgage Loan by deposit thereof in the Custodial
Account. The Company shall maintain the Fidelity Bond as provided for in
Section 4.11 insuring the Company against any loss it may sustain with respect
to any Mortgage Loan not satisfied in accordance with the procedures set forth
herein.
SECTION 6.03 Servicing Compensation.
----------------------
As compensation for its services hereunder, the Company shall be
entitled to withdraw from the Custodial Account or to retain from interest
payments on each Mortgage Loan the Company's Servicing Fee with respect to such
Mortgage Loan. Additional servicing compensation in the form of assumption
fees, to the extent permitted under Section 6.01 hereof, and late payment
charges shall be retained by the Company to the extent not required to be
deposited in the Custodial Account. The Company shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement therefor except as specifically
provided for herein.
SECTION 6.04 Annual Statement as to Compliance.
---------------------------------
The Company will deliver to Purchaser, on or before March 31 of each
year beginning March 31, 199__, an Officers Certificate stating that (i) the
Company has fully complied with the provision of Article IV, (ii) a review of
the activities of the Company during the preceding calendar year and of
performance under this Agreement has been made under such officer's supervision,
and (iii) to the best of such officer's knowledge,
-40-
based on such review, the Company has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and the action being taken by the
Company to cure such default.
SECTION 6.05 Annual Independent Public Accountants' Servicing
------------------------------------------------
Report.
------
On or before March 31 of each year beginning March 31, 199__, the
Company at its expenses shall cause a firm of independent public accountants,
which firm is a member of the American Institute of Certified Public
Accountants, to furnish a statement to Purchaser to the effect that such firm
has examined certain documents and records relating to the servicing of the
Mortgage Loans and this Agreement and that such firm is of the opinion that the
provisions of Article IV have been complied with, and that, on the basis of such
examination conducted in compliance with Uniform Single Audit Program for
Mortgage Bankers, such servicing has been conducted in compliance with the
provisions of this Agreement, except for (i) such exceptions as such firm shall
believe to be immaterial, and (ii) such other exceptions as shall be set forth
in such statement, which shall include all such significant exceptions or errors
in records which, in the opinion of such firm, paragraph 4 of the Uniform Single
Audit Program for Mortgage Bankers required it to report.
SECTION 6.06 Purchaser's Right to Examine Company Records.
--------------------------------------------
Purchaser or its designee shall have the right, at all reasonable
times and as often as reasonably required, to examine and audit any and all of
the books, records or other information of the Company whether held by the
Company or by another on behalf of the Company, which may be relevant to the
performance or observance by the Company of the terms, covenants or conditions
of this Agreement.
-41-
ARTICLE VII
REPORTS TO BE PREPARED BY COMPANY
---------------------------------
SECTION 7.01 Company Shall Provide Information as Reasonably
-----------------------------------------------
Required.
--------
The Company shall furnish to Purchaser, if Purchaser so requests,
during the term of this Agreement, such periodic, special or other reports or
information, reasonable or appropriate with respect to the purposes of this
Agreement. All such reports or information shall be provided by and in
accordance with all reasonable instructions and directions the Purchaser may
require. The Company agrees to execute and deliver all such instruments and
take all such action as the Purchaser, from time to time, may reasonably request
in order to effectuate the purposes and carry out the terms of this Agreement.
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ARTICLE VIII
THE COMPANY
-----------
SECTION 8.01 Indemnification; Third Party Claims.
-----------------------------------
The Company agrees to indemnify and hold harmless Purchaser against
any and all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses that Purchaser
may sustain in any way related to the failure of the Company to perform its
duties and service any of the Mortgage Loans in strict compliance with the terms
of this Agreement. The Company shall immediately notify Purchaser if a claim is
made by a third party with respect to this Agreement or any of the Mortgage
Loans, and the Company shall assume 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 the
Company or the Purchaser in respect of such claim. Purchaser shall promptly
reimburse the Company for all amounts advanced by it pursuant to the preceding
sentence except when the claim in any way relates to the Company's
indemnification pursuant to Section 3.03 or to the failure of the Company to
service and administer any of the Mortgage Loans in strict compliance with the
terms of this Agreement.
SECTION 8.02 Merger or Consolidation of the Company.
--------------------------------------
The Company will keep in full effect its existence, rights and
franchises as a corporation, and will obtain and preserve its qualification to
do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform its
duties under this Agreement.
Any Person into which the Company may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company hereunder, without the execution
or filing of any paper or any further act on the part notwithstanding; provided,
however, that the successor or surviving Person shall be an institution the
deposits of which are insured by the FDIC or FSLIC and shall satisfy the
requirements of Section 11.01 with respect to the qualifications of a successor
to the Company.
-43-
SECTION 8.03 Limitation on Liability of the Company and Others.
-------------------------------------------------
The Company and any director, officer, employee or agent of the
Company may rely on any document of any kind which it in good faith reasonably
believes to be genuine and to have been adopted or signed by the proper
authorities respecting any matters arising hereunder. Subject to the terms of
Section 3.03 and 8.01, the Company shall have no obligations to appear with
respect to, prosecute or defend any legal action which is not incidental to the
Company's duty to service any of the Mortgage Loans in accordance with this
Agreement.
SECTION 8.04 Company Not to Resign.
---------------------
The Company shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Company and the Purchaser or upon the determination that the Company's duties
hereunder are no longer permissible under applicable law and such incapacity
cannot be cured by the Company. Any such determination permitting the
resignation of the Company shall be evidenced by an Opinion of Counsel to such
effect delivered to the Purchaser, which Opinion of Counsel shall be in form and
substance acceptable to the Purchaser. No such resignation shall become
effective until a successor has assumed the Company's responsibilities and
obligations hereunder in accordance with Section 11.01.
-44-
ARTICLE IX
DEFAULT
-------
SECTION 9.01 Events of Default.
-----------------
In case one or more of the following Events of Default by the Company
shall occur and be continuing, that is to say:
(i) any failure by the Company to remit to Purchaser any payment required
to be made under the terms of this Agreement which continues unremedied for a
period of 5 days after the date upon which written notice of such failure,
requiring the same to be remedied, shall have been given to the Company by
Purchaser; or
(ii) failure by the Company to duly observe or perform, in any material
respect, any other covenants, obligations or agreements of the Company as set
forth in this Agreement which failure 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 Purchaser; or
(iii) 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, marshalling 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
(iv) the Company shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Company or
relating to all or substantially all of the Company's property; or
(v) the Company shall admit in writing its inability to pay its debts as
they become due, file a petition to take advantage of any applicable insolvency
or reorganization statute, make an assignment for the benefit of its creditors,
or voluntarily suspend payment of its obligations; or
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(vi) an Event of Default shall have occurred under the Purchase Agreement.
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, Purchaser, by notice in writing to the Company, may, in
addition to whatever rights Purchaser may have at law or equity to damages,
including injunctive relief and specific performance, terminate all the rights
and obligations of the Company under this Agreement and in and to any of the
Mortgage Loans and the proceeds thereof. Upon receipt by the Company of such
written notice from the Purchaser, 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 11.01.
Upon written request from the Purchaser, the Company shall prepare, execute and
deliver to a successor 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 to the
successor at the Company's sole expense. The Company agrees to 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 amounts which shall
at the time be credited by the Company to the Custodial Account or Escrow
Account or thereafter received with respect to any of the Mortgage Loans.
SECTION 9.02 Waiver of Defaults.
------------------
The Purchaser may waive any default by the Company in the performance
of its obligations hereunder and its consequences. Upon any waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto except to the extent expressly so waived.
-46-
ARTICLE X
TERMINATION
-----------
SECTION 10.01 Termination.
-----------
This Agreement shall terminate upon either: (i) the later of the
distribution to the Purchaser of final payment or liquidation with respect to
the last Mortgage Loan (or advances of same by the Company), or the disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure with
respect to the last Mortgage Loan and the remittance of all funds due hereunder;
or (ii) mutual consent of the Company and the Purchaser in writing.
SECTION 10.02 Termination Without Cause.
-------------------------
The Purchaser may, at its sole option, terminate with respect to any
or all of the Mortgage Loans any rights the Company may have hereunder, without
cause, upon 30 days' written notice. Any such notice of termination shall be in
writing and delivered to the Company by registered mail as provided in Section
11.06 of this Agreement. In connection with any such termination as to any or
all of the Mortgage Loans, the Purchaser will pay to the Company an amount equal
to the fair market value of the rights to service such Mortgage Loans in
accordance with the terms of this Agreement, such fair market value being equal
to the average of the prices bid for such servicing rights by three mortgage
servicing institutions selected by the Purchaser and reasonably acceptable to
the Company, each of which shall be a FNMA approved seller/servicer with a
servicing portfolio of not less than $2,000,000,000. If three bids from
qualified mortgage servicing institutions are not received within 30 days after
notice of termination, the Purchaser shall pay to the Company a sum, as
liquidated damages, equal to 2% of the then current aggregate Stated Principal
Balances of the Mortgage Loans.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
SECTION 11.01 Successor to the Company.
------------------------
Prior to termination of Company's responsibilities and duties under
this Agreement pursuant to Section 8.04, 9.01, 10.01(ii) or 10.02, 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
a net worth of not less than $15,000,000 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 one of the
aforementioned Sections, the Company shall discharge such duties and
responsibilities during the period from the date it acquires knowledge of such
termination until the effective date thereof with the same degree of diligence
and prudence which it is obligated to exercise under this Agreement, and shall
take no action whatsoever that might impair or prejudice the rights or financial
condition of its successor. The resignation or removal of Company pursuant to
the aforementioned Section shall not become effective until the Purchaser
assumes the Company's responsibilities, rights, duties and obligations under
this Agreement or a successor shall be appointed pursuant to this Section 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 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, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of
Company, with like effect as if originally named as a party to this Agreement.
Any termination of this Agreement or resignation of the Company pursuant to
Section 8.04, 9.01, 10.01 or 10.02 shall not affect any claims that the
Purchaser may have against the Company arising prior to any such termination or
resignation.
-48-
The Company shall promptly deliver to the Purchaser or any appointed
successor, as the case may be, the funds in the Custodial Account and the Escrow
Account (and any other funds collected and held by it pursuant to this Agreement
or any other agreement, letter or arrangement relating to the Mortgage Loans)
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. In addition, the
Company shall promptly deliver to the Purchaser a full accounting, including a
statement showing the monthly payments collected by it and a statement of moneys
held in trust by it for the payment of ground rents, taxes, assessments, water
rates, insurance premiums or other charges in respect to the Mortgage Loans.
Upon a successor's acceptance of appointment as such, the Company
shall notify the Purchaser by mail of such appointment.
SECTION 11.02 Amendment.
---------
This Agreement may be amended from time to time by the Company and the
Purchaser by written agreement signed by the Company and Purchaser.
SECTION 11.03 Recordation of Agreement.
------------------------
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices or real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Company at the Company's expense upon direction of the Purchaser, but only when
such direction is accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the Purchaser
or is necessary for the administration or servicing of any of the Mortgage
Loans.
SECTION 11.04 Recordation of Assignment of Mortgages.
--------------------------------------
As provided in this Agreement, each Assignment of Mortgage shall be in
a form acceptable for recording in all appropriate public offices for real
property records in the jurisdiction in which the Mortgaged Property recited in
each such Assignment of Mortgage is situated, and shall be submitted for
recording by the Purchaser or upon Purchaser's instructions upon sale of the
Mortgage Loan to Purchaser at any time at its option.
-49-
SECTION 11.05 Duration of Agreement.
---------------------
This Agreement shall continue in existence and effect until terminated
as herein provided.
SECTION 11.06 Governing Law.
-------------
This Agreement shall be construed in accordance with the laws of the
State of ___________ and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
SECTION 11.07 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, to (a) in the case of the Company,
__________________, Attention: ________________ or such other address as may
hereafter be furnished to Purchaser in writing by the Company, (b) in the case
of the Purchaser, __________________, Attention: _________________, Telephone
_________________.
SECTION 11.08 Severability of Provisions.
--------------------------
If any one or more of the covenants, agreements, provisions or terms
of this Agreements 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 Agreements and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement.
SECTION 11.09 No Partnership.
--------------
Nothing herein contained shall be deemed or construed to create a co-
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
Purchaser.
SECTION 11.10 Execution; Successors and Assigns.
---------------------------------
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Section 8.04, this Agreement
shall inure to the benefit of and be binding upon the Company and the Purchaser
and their respective successors and assigns.
The Purchaser shall have the right, without the consent of the
Company, to assign, in whole or in part, its interest under this Agreement with
respect to some or all of the Mortgage
-50-
Loans, 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 shall be deemed to include its assignee or designee.
The Company understands and agrees that in connection with a Pooling
Transaction, the Purchaser or another entity designated by the Purchaser may
become the master servicer of the pooled Mortgage Loans. In such connection,
the Purchaser may, pursuant to the preceding paragraph, assign its interest with
respect to some or all of the Mortgage Loans. If the Purchaser, or such
assignee of the Purchaser, as master servicer, shall for any reason cease to be
the master servicer of the Mortgage Loans, the owners of such Mortgage Loans or
any trustee acting on their behalf, or a designee of any such persons, may,
without the Company's consent, assume all of the rights and obligations of the
Purchaser under this Agreement with respect to those Mortgage Loans as to which
the Purchaser has ceased to be master servicer. Such owners or trustee (i) shall
notify the Company in writing of any such assumption and of the identity of the
assuming party, and (ii) shall demonstrate such owners' ownership of the
Mortgage Loans by making available to the Company for inspection the original
Mortgage Notes relating to the Mortgage Loans, which evidence shall be
conclusive as to such ownership. In such event, such assuming party shall be
deemed to have assumed all the Purchaser's interest in this Agreement with
respect to those Mortgage Loans as to which the Purchaser has ceased to be
master servicer and to have replaced the Purchaser as a party to this Agreement
to the same extent as if this Agreement had been assigned to such assuming
party.
-51-
IN WITNESS WHEREOF, the Company and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the day and year first above written.
_____________________________
Company
By:__________________________
Name:________________________
Title:_______________________
By:__________________________
Name:________________________
Title:_______________________
-52-
State of _____________)
) SS.
County of ____________)
On the ___ day of ___________, 199__ before me, a Notary Public in and
for said State, personally appeared ________________ known to me to be
_________________________ of ______________________, one of the corporations
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_____________________________
Notary Public
My Commission expires _______
-53-
State of _____________)
) SS.
County of ____________)
On the ___ day of ___________, 199__ before me, a Notary Public in and
for said State, personally appeared ________________ known to me to be
_________________________ of ______________________, one of the corporations
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_____________________________
Notary Public
My Commission expires _______
-54-
EXHIBIT A
CONTENTS OF MORTGAGE FILES
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, all of which shall be available for inspection by
the Purchaser. With respect to any original document required to be delivered
to the Purchaser pursuant to Section 2.03 hereof, the Mortgage File shall
include a copy of the original so delivered.
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;
2. The original Mortgage, with evidence of recording indicated thereon or
a certified true copy of the original Mortgage in those instances where the
public recorder's office retains the original, certified by the relevant
recorder's office, together with the registration copy of the Mortgage (if the
Mortgaged Property is registered under a Torrens System) with a proper
endorsement of transfer thereon, or, if the Mortgage Loan was originated within
90 days prior to the Funding Date, then a true copy of the Mortgage, together
with a recorder's receipt evidencing delivery of such Mortgage to the
appropriate public recorder's office for recordation or, if such office does not
issue such recorder's receipts, with a certificate of a Servicing Officer
certifying that such Mortgage has been delivered to such office for recordation.
In any event, the original Mortgage, with evidence of recording indicated
thereon, shall be delivered to the Purchaser within 60 days after the Funding
Date;
3. The original of the Assignment of Mortgage with respect to each
Mortgage, to and signed in the name of the
Company by an authorized officer, which assignment is in form and substance
acceptable for recording;
4. The original Primary Mortgage Insurance Policy, if required under
Section 3.01(ee);
5. The original Policy of title insurance, or a binder or commitment for
title insurance dated and certified as of the date the Mortgage Loan was funded,
together with an Opinion of Counsel addressed to the Company and its successors
and assigns that such binder or commitment insures the priority of the lien of
the related
A-1
Mortgage during the period between the date of the funding of the related
Mortgage Loan and the date of the related title policy. In any event, the
original policy of title insurance, dated the date of recording of the related
Mortgage, shall be delivered to the Purchaser within 60 days after the Funding
Date;
6. Originals of each assumption or modification agreement, written
assurance or substitution agreement;
7. A copy of each Hazard Insurance Policy, as described in Section
3.01(t), or a binder or commitment for such insurance;
8. The original appraisal made by an appraiser meeting the requirements
of Section 3.01(n);
9. Survey or plat map of the Mortgaged Property, including legal
description if title insurance policy contains an exception as to boundary and
building line restrictions;
10. Original intermediate assignments of Mortgage, with recording
information thereon, including warehousing assignments;
11. A copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy, e.g., map or
plat restrictions, easements, sewer agreements, home association declarations,
etc.;
12. Mortgage Loan closing statement (HUD-1 Settlement Statement);
13. The original of the final residential loan application (executed by
the Mortgagor);
14. Verification of employment and income;
15. Verification of acceptable evidence of source and amount of
downpayment;
16. Credit report on the Mortgagor;
17. Photographs of the Mortgaged Property, including front, side, rear and
street views, together with photographs of the comparables contained in the
appraisal;
18. Amortization schedule;
19. To the extent available, tax receipts, insurance premium receipts,
ledger sheets, insurance claim files
A-2
and correspondence, correspondence, current and historical computerized data
file, and all other papers and records developed or originated by the Company or
others, required to document the Mortgage Loan or to service the Mortgage Loan;
20. A certification of a Servicing Officer that the Company has determined
whether the provisions of the Flood Disaster Protection Act of 1968, as amended,
apply to the Mortgaged Property and a copy of each Flood Insurance Policy as
described in Section 3.01(t), if required;
21. The original of the federal truth-in-lending statement;
22. The original document setting forth the Mortgagor's right of
rescission (executed by the Mortgagor);
23. A copy of the purchase agreement with respect to the Mortgaged
Property (unless the Mortgage Loan constitutes a refinancing of an outstanding
mortgage loan);
24. Payment history as of the Funding Date; and
25. Evidence of compliance with the Equal Credit Opportunity Act.
A-3
EXHIBIT B
CUSTODIAL ACCOUNT CERTIFICATION
(date)
_________________________________________________ (the "Company")
hereby certifies that it has established the account described below as a
Custodial Account pursuant to Section 4.04 of the Master Seller's Warranty and
Servicing Agreement, dated as of _________ , 199__, between the Company
and
Title of Account: " _____________________ in trust for
_____________________"
Account Number: ___________________________
Address of office or
branch of the Company
at which Account is
maintained: ___________________________
___________________________
_________________________________
By:______________________________
Name:____________________________
Title:___________________________
B-1
EXHIBIT C
CUSTODIAL ACCOUNT LETTER AGREEMENT
(date)
To: _________________________________________
_________________________________________
_________________________________________
(the "Depository")
As "Company" under the Master Seller's Warranty and Servicing
Agreement, dated as of ____________________, 199__ (the "Agreement"), between
[Company] and , we hereby authorize and
request you to establish an account, as a Custodial Account pursuant to Section
4.04 of the Agreement, to be designated as "[Company], in trust for
." All deposits in the account shall be subject to withdrawal therefrom by
order signed by the Company. You may refuse any deposit which would result in
violation of the requirement that the account be fully insured as described
below. This letter is submitted to you in duplicate. Please execute and return
one original to us.
_________________________________
(name of Company)
By:______________________________
Name:____________________________
Title:___________________________
The undersigned, as "Depository", hereby certifies that the above
described account has been established under Account Number _________________,
at the office of the depository indicated above, and agrees to honor withdrawals
on such account as provided above.
_________________________________
(name of Depository)
By:______________________________
Name:____________________________
Title:___________________________
C-1
EXHIBIT D
ESCROW ACCOUNT CERTIFICATION
(date)
________________________________________________ (the "Company")
hereby certifies that it has established the account described below as an
Escrow Account pursuant to Section 4.06 of the Master Seller's Warranty and
Servicing Agreement, dated as of __________________, 199__, between the Company
and .
Title of Account: " ________________________, in trust for
and various
Mortgagors"
Account Number: ___________________________
Address of office or
branch of the Company
at which Account is
maintained: __________________________________
__________________________________
_________________________________
By:______________________________
Name:____________________________
Title:___________________________
D-1
EXHIBIT E
ESCROW ACCOUNT LETTER AGREEMENT
(date)
To: ________________________________________
________________________________________
________________________________________
(the "Depository")
As "Company" under the Master Seller's Warranty and Servicing
Agreement, dated as of _____________________, 199___ (the "Agreement"), between
[Company] and ., we hereby authorize and
request you to establish an account, as an Escrow Account pursuant to Section
4.06 of the Agreement, to be designated as "[Company], in trust for
as various Mortgagors." All deposits in the account shall be subject to
withdrawal therefrom by order signed by the Company. You may refuse any deposit
which would result in violation of the requirement that the account be fully
insured as described below. This letter is submitted to you in duplicate.
Please execute and return one original to us.
_________________________________
(name of Company)
By:______________________________
Name:____________________________
Title:___________________________
The undersigned, as "Depository", hereby certifies that the above
described account has been established under Account Number ____________________
at the office of the depository indicated above, and agrees to honor withdrawals
on such account as provided above.
_________________________________
(name of Depository)
By:______________________________
Name:____________________________
Title:___________________________
E-1
EXHIBIT F
MORTGAGE LOAN SCHEDULE
F-1