Exhibit 99.1
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CWABS, INC.
Depositor
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
CWABS REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2004-R
the Trust
JPMORGAN CHASE BANK, N.A.
Indenture Trustee
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SALE AND SERVICING AGREEMENT
Dated as of December 22, 2004
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REVOLVING HOME EQUITY LOAN ASSET BACKED NOTES
SERIES 2004-R
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Table of Contents
Page
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions. ............................................................................1
Section 1.02. Other Terms. ............................................................................1
Section 1.03. Rules of Construction. ..................................................................1
Section 1.04. Interest Calculations. ..................................................................1
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to Fund Advances Under
Credit Line Agreements. ..................................................3
Section 2.02. Acceptance by Indenture Trustee. ........................................................6
Section 2.03. Representations, Warranties, and Covenants Regarding the Master Servicer. ...............8
Section 2.04. Representations and Warranties of the Sponsor Regarding the Mortgage Loans;
Retransfer of Certain Mortgage Loans. ....................................9
Section 2.05. Covenants of the Depositor. ............................................................12
Section 2.06. Transfers of Mortgage Loans at Election of Transferor. .................................12
Section 2.07. Tax Treatment. .........................................................................14
Section 2.08. Representations and Warranties of the Depositor. .......................................14
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. The Master Servicer. ...................................................................14
Section 3.02. Collection of Certain Mortgage Loan Payments; Establishment of Accounts. ...............17
Section 3.03. Deposits to Payment Account. ...........................................................19
Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses. .........................19
Section 3.05. Assumption and Modification Agreements. ................................................20
Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage Loans. .......20
Section 3.07. Indenture Trustee to Cooperate. ........................................................21
Section 3.08. Servicing Compensation; Payment of Certain Expenses by Master Servicer. ................23
Section 3.09. Annual Statement as to Compliance. .....................................................23
Section 3.10. Annual Servicing Report. ...............................................................23
Section 3.11. Access to Certain Documentation and Information Regarding the Mortgage Loans. ..........24
Section 3.12. Maintenance of Certain Servicing Insurance Policies. ...................................24
Section 3.13. Reports to the Securities and Exchange Commission. .....................................24
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Section 3.14. Tax Treatment. .........................................................................25
Section 3.15. Information Required by the Internal Revenue Service Generally and Reports of
Foreclosures and Abandonments of Mortgaged Property. ....................25
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01. Servicing Certificate. .................................................................25
Section 4.02. Acknowledgement and Cooperation. .......................................................28
Section 4.03. Optional Advances of the Master Servicer. ..............................................28
Section 4.04. Statements to Noteholders. .............................................................28
ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01. Liability of the Sponsor, the Master Servicer, and the Depositor. ......................30
Section 5.02. Merger or Consolidation of, or Assumption of the Obligations of, the Master
Servicer or the Depositor. ..............................................31
Section 5.03. Limitation on Liability of the Master Servicer and Others. .............................31
Section 5.04. Master Servicer Not to Resign. .........................................................31
Section 5.05. Delegation of Duties. ..................................................................32
Section 5.06. Indemnification by the Master Servicer. ................................................33
ARTICLE VI
SERVICING TERMINATION
Section 6.01. Events of Servicing Termination. .......................................................33
Section 6.02. Indenture Trustee to Act; Appointment of Successor. ....................................35
Section 6.03. Notification to Noteholders and the Transferor. ........................................36
ARTICLE VII
TERMINATION
Section 7.01. Termination. ...........................................................................36
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment. .............................................................................37
Section 8.02. Governing Law. .........................................................................38
Section 8.03. Notices. ...............................................................................38
Section 8.04. Severability of Provisions. ............................................................39
Section 8.05. Assignment. ............................................................................40
Section 8.06. Third-Party Beneficiaries. .............................................................40
Section 8.07. Counterparts. .........................................................................40
Section 8.08. Effect of Headings and Table of Contents. ..............................................40
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EXHIBIT A - MORTGAGE LOAN SCHEDULE...................................................................A-1
EXHIBIT B - LETTER OF REPRESENTATIONS................................................................B-1
EXHIBIT C - FORM OF REQUEST FOR RELEASE..............................................................C-1
ANNEX 1 DEFINITIONS.......................................................................▇▇▇-1-1
ANNEX 2 ADOPTION ANNEX....................................................................▇▇▇-2-1
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This SALE AND SERVICING AGREEMENT, dated as of December 22, 2004,
among CWABS, INC., as depositor, COUNTRYWIDE HOME LOANS, INC., as sponsor and
master servicer, CWABS REVOLVING HOME EQUITY LOAN TRUST, SERIES 2004-R, and
JPMORGAN CHASE BANK, N.A., as Indenture Trustee,
WITNESSETH THAT
The parties agree as follows.
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
Unless the context requires a different meaning, capitalized terms are
used in this Agreement as defined in Annex 1.
Section 1.02. Other Terms.
Capitalized terms used in this Agreement that are not otherwise
defined have the meanings given to them in the Indenture. Defined terms that
are used only in one section or only in another definition may be omitted from
the list of defined terms in Annex 1. Defined terms used in this Agreement are
sometimes defined after their first use without a reference such as "(as
hereinafter defined)."
Section 1.03. Rules of Construction.
Except as otherwise expressly provided in this Agreement or unless
the context clearly requires otherwise:
(a) Defined terms include, as appropriate, all genders and the plural
as well as the singular.
(b) References to designated articles, sections, subsections,
exhibits, and other subdivisions of this Agreement, such as "Section 6.12
(a)," refer to the designated article, section, subsection, exhibit, or other
subdivision of this Agreement as a whole and to all subdivisions of the
designated article, section, subsection, exhibit, or other subdivision. The
exhibits and other attachments to this Agreement are a part of this Agreement.
The words "herein," "hereof," "hereto," "hereunder," and other words of
similar import refer to this Agreement as a whole and not to any particular
article, section, exhibit, or other subdivision of this Agreement.
(c) Any term that relates to a document or a statute, rule, or
regulation includes any amendments, modifications, supplements, or any other
changes that may have occurred since the document, statute, rule, or
regulation came into being, including changes that occur after the date of
this Agreement. References to law are not limited to statutes. References to
statutes include any rules or regulations promulgated under them by a
governmental authority charged
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with the administration of the statute. Any reference to any person includes
references to its successors and assigns.
(d) Any party may execute any of the requirements under this
Agreement either directly or through others, and the right to cause something
to be done rather than doing it directly shall be implicit in every
requirement under this Agreement. Unless a provision is restricted as to time
or limited as to frequency, all provisions under this Agreement are implicitly
available from time to time.
(e) The term "including" and all its variations mean "including but
not limited to." Except when used in conjunction with the word "either," the
word "or" is always used inclusively (for example, the phrase "A or B" means
"A or B or both," not "either A or B but not both").
(f) A reference to "a [thing]" or "any [of a thing]" does not imply
the existence or occurrence of the thing referred to even though not followed
by "if any," and "any [of a thing]" is any and all of it. A reference to the
plural of anything as to which there could be either one or more than one does
not imply the existence of more than one (for instance, the phrase "the
obligors on a note" means "the obligor or obligors on a note"). "Until
[something occurs]" does not imply that it must occur, and will not be
modified by the word "unless." The word "due" and the word "payable" are each
used in the sense that the stated time for payment has passed. The word
"accrued" is used in its accounting sense, i.e., an amount paid is no longer
accrued. In the calculation of amounts of things, differences and sums may
generally result in negative numbers, but when the calculation of the excess
of one thing over another results in zero or a negative number, the
calculation is disregarded and an "excess" does not exist. Portions of things
may be expressed as fractions or percentages interchangeably. The word "shall"
is used in its imperative sense, as for instance meaning a party agrees to
something or something must occur or exist.
(g) All accounting terms used in an accounting context and not
otherwise defined, and accounting terms partly defined in this Agreement, to
the extent not completely defined, shall be construed in accordance with
generally accepted accounting principles in the United States. To the extent
that the definitions of accounting terms in this Agreement are inconsistent
with their meanings under generally accepted accounting principles, the
definitions in this Agreement shall control. Capitalized terms used in this
Agreement without definition that are defined in the Uniform Commercial Code
of the relevant jurisdiction are used in this Agreement as defined in that
Uniform Commercial Code.
(h) In the computation of a period of time from a specified date to a
later specified date or an open-ended period, the words "from" and "beginning"
mean "from and including," the word "after" means "from but excluding," the
words "to" and "until" mean "to but excluding," and the word "through" means
"to and including." Likewise, in setting deadlines or other periods, "by"
means "on or before." The words "preceding," "following," and words of similar
import, mean immediately preceding or following. References to a month or a
year refer to calendar months and calendar years.
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(i) Any reference to the enforceability of any agreement against a
party means that it is enforceable against the party in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, and other
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
Section 1.04. Interest Calculations.
All calculations of interest on the Asset Balance of a Mortgage Loan
under this Agreement are on a daily basis using a 365-day year. All
calculations of interest on the Notes are on the basis of the actual number of
days in an Interest Period and a year of 360 days. The calculation of the
Servicing Fee is on the basis of a 360-day year consisting of twelve 30-day
months. All dollar amounts calculated under this Agreement are rounded to the
nearest cent with one-half of one cent being rounded down.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation
to Fund Advances Under Credit Line Agreements.
(a) Concurrently with the execution and delivery of this Agreement,
the Depositor hereby transfers to the Trust without recourse (subject to
Sections 2.02 and 2.04) all of its right, title, and interest in
(i) each Mortgage Loan, including its Asset Balance
(including all Additional Balances), the related Mortgage File, all
property that secures the Mortgage Loan, and all collections received
on it after the Cut-off Date (excluding payments due by the Cut-off
Date);
(ii) property that secured a Mortgage Loan that is acquired
by foreclosure or deed in lieu of foreclosure;
(iii) the Depositor's rights under the Purchase Agreement;
(iv) the Depositor's rights under the hazard insurance
policies;
(v) all rights under any guaranty executed in connection
with a Mortgage Loan;
(vi) all other assets included or to be included in the
Trust for the benefit of the Noteholders and the Credit Enhancer; and
(vii) all proceeds of the foregoing.
This transfer to the Trust is to the Owner Trustee, on behalf of the Trust,
and each reference in this Agreement to this transfer shall be construed
accordingly. In addition, by the Closing Date, the Depositor shall cause the
Credit Enhancer to deliver the Policy to the Indenture Trustee for the benefit
of the Noteholders.
(b) Reserved.
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(c) Additional Balances; Future Fundings. Additional Balances shall
be part of the Asset Balance and are hereby transferred to the Trust on the
Closing Date pursuant to this Section 2.01, and therefore are part of the
Trust property. Neither the Owner Trustee nor the Trust nor the Indenture
Trustee assumes the obligation under any Credit Line Agreement that provides
for the funding of future advances to the mortgagor under it, and neither the
Trust nor the Owner Trustee nor the Indenture Trustee may fund these future
advances.
(d) Delayed Delivery. In connection with the transfer under Section
2.01(a) by the Depositor, the Depositor shall effect delivery of the Mortgage
Loan Schedule to the Trust and the Indenture Trustee by the Closing Date and
delivery of the Mortgage Files to the Trust, and the Trust shall deliver them
to the Indenture Trustee,
(i) no later than the Closing Date, with respect to no less
than 50% of the Mortgage Loans in each Loan Group,
(ii) no later than the twentieth day after the Closing Date,
with respect to no less than 40% of the Mortgage Loans in each Loan
Group in addition to those delivered on the Closing Date, and
(iii) within thirty days following the Closing Date, with
respect to the remaining Mortgage Loans.
In lieu of delivery of original documentation, the Depositor may
deliver documents that have been imaged optically on delivery of an opinion of
counsel to the Indenture Trustee and the Credit Enhancer that the imaged
documents are enforceable to the same extent as the originals and do not
impair the enforceability of the transfer to the Trust of the Mortgage Loans,
if the retention of the imaged documents in the delivered format will not
result in a reduction in the then current rating of the Notes without regard
to the Policy.
(e) Substitution and Repurchase. If the Indenture Trustee does not
receive the Mortgage File for any Mortgage Loan as required by Section
2.01(d), that Mortgage Loan shall automatically be retransferred to the
Sponsor, subject to the conditions in Section 2.02(b) (as if that Mortgage
Loan were otherwise subject to these provisions). If a Transfer Deficiency
results, the Sponsor shall substitute an Eligible Substitute Mortgage Loan for
the related Mortgage Loan within five Business Days of notification of the
Transfer Deficiency by the Indenture Trustee or, if unable to effect this
substitution, deposit into the Collection Account the Transfer Deposit Amount
in immediately available funds equal to the Transfer Deficiency (or effect a
combination of substitution and deposit). This substitution or deposit shall
be accomplished in the manner specified in, and have the effect specified in,
Section 2.02(b) (as if the related Mortgage Loan were otherwise subject to
these provisions).
(f) Mark Records. The Sponsor hereby confirms to the Owner Trustee
and the Indenture Trustee that it has caused the portions of the Electronic
Ledgers relating to the Mortgage Loans to be clearly and unambiguously marked,
and has made the appropriate entries in its general accounting records, to
indicate that the Mortgage Loans have been transferred to the Trust at the
direction of the Depositor. The Master Servicer hereby confirms to the Owner
Trustee and the Indenture Trustee that it has clearly and unambiguously made
appropriate
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entries in its general accounting records indicating that those Mortgage Loans
constitute part of the Trust and are serviced by it on behalf of the Trust in
accordance with this Agreement.
(g) UCC Filings. The Depositor and the Trust agree (subject to
paragraph (i) below) to effect any actions and execute any documents necessary
to perfect and protect the Trust's, the Indenture Trustee's, the Noteholders',
and the Credit Enhancer's interests in each Cut-off Date Asset Balance and
Additional Balances and their proceeds, including filing all necessary
Continuation Statements for the UCC1 Financing Statements filed in the State
of Delaware (which shall have been filed by the Closing Date) describing the
Cut-off Date Asset Balances and Additional Balances and naming the Depositor
as debtor and the Trust as secured party or naming the Trust as debtor and the
Indenture Trustee as secured party and any amendments to UCC1 Financing
Statements required to reflect a change in the UCC or in the name or
organizational structure of the Depositor or the Trust or the filing of any
additional UCC1 Financing Statements due to the change in the state of
organization of the Depositor or the Trust (within 30 days of any event
necessitating the filing).
(h) Sponsor Rating Downgrade. If the long term senior unsecured
corporate debt rating of Countrywide Home Loans, Inc. falls below "BBB" by
Standard & Poor's or "Baa2" by ▇▇▇▇▇'▇, as promptly as practicable but in any
case within 90 days of the event, or if an unwaived Event of Servicing
Termination exists the Master Servicer shall, at its expense, either
(x) request that the Indenture Trustee deliver to it the
original Assignment of Mortgage previously delivered to the Indenture
Trustee pursuant to Section 2.01(e) and then record the Assignment of
Mortgage in favor of the Indenture Trustee (which may be a blanket
assignment if permitted by applicable law) in the appropriate real
property or other records,
(y) deliver to the Indenture Trustee an Opinion of Counsel
addressed to the Indenture Trustee and the Credit Enhancer to the
effect that recording is not required to protect the Indenture
Trustee's interest in the related Mortgage Loan or, in case a court
should recharacterize the sale of the Mortgage Loans as a financing,
to perfect a first priority Security Interest in favor of the
Indenture Trustee in the related Mortgage Loan, which Opinion of
Counsel also shall be reasonably acceptable to each of the Rating
Agencies (as evidenced in writing) and the Credit Enhancer, or
(z) cause the MERS(R) System to indicate (and provide
evidence to the Indenture Trustee that it has done so) that the
Mortgage Loans have been assigned by the Trust to the Indenture
Trustee in accordance with this Agreement for the benefit of the
Noteholders and the Credit Enhancer by including (or deleting, in the
case of Mortgage Loans that are repurchased in accordance with this
Agreement) in the MERS computer files (a) the appropriate code that
identifies the Indenture Trustee in the field for identifying the
assignee and (b) the appropriate code that has been assigned to
identify the Notes to the MERS(R) System in the field "Pool Field"
identifying the Notes issued in connection with the Mortgage Loans.
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(i) Sale Treatment. Notwithstanding the characterization of
the Notes as debt of the Transferor for federal, state, and local
income and franchise tax purposes, the transfer of the Mortgage Loans
is a sale by the Sponsor to the Depositor and by the Depositor to the
Trust of all the Sponsor's and then all the Depositor's interest in
the Mortgage Loans and other property described above. From the time
the Notes are issued until such time as all or a portion of the Notes
are sold to one or more unaffiliated parties, the Sponsor will report
the transfer of the Mortgage Loans and the related Additional
Balances to the Depositor as a transfer of assets in exchange for
beneficial interests in the form of asset-backed securities and
servicing rights. If the transfer were to be characterized as a
transfer for security and not as a sale, however, then the Depositor
hereby grants to the Trust a Security Interest in all of the
Depositor's right, title, and interest in the Mortgage Loans whether
existing now or in the future, all monies due or to become due on the
Mortgage Loans, and all their proceeds; and this Agreement shall
constitute a Security Agreement under applicable law.
Section 2.02. Acceptance by Indenture Trustee.
(a) On the Closing Date, the Custodian shall execute and deliver to
the Depositor, the Master Servicer, and the Sponsor (with a copy to the Credit
Enhancer) the Initial Certification pursuant to the Custodial Agreement. If
Mortgage Loans have been delivered after the Closing Date pursuant to Section
2.01(e), the Custodian shall execute and deliver to the Depositor, the Master
Servicer, and the Sponsor (with a copy to the Credit Enhancer) a Delay
Delivery Certification pursuant to the Custodial Agreement within the period
specified in the Custodial Agreement. Within 180 days after the Closing Date,
Custodian shall deliver to the Depositor, the Master Servicer, and the Sponsor
(with a copy to the Credit Enhancer) a Final Certification pursuant to the
Custodial Agreement. The Sponsor shall correct any defect noted in the Final
Certification within 90 days of its receipt.
(b) All interest of the Trust in the Mortgage Loan shall be
retransferred without recourse, representation, or warranty to the Sponsor and
the Asset Balance of the Mortgage Loan shall be deducted from the Loan Group
Balance of the related Loan Group on the next Business Day after the Transfer
Deposit Amount is deposited to the Collection Account and any other applicable
requirements are satisfied if
(i) the time to correct any defect in any Mortgage Loan
noted on the Final Certification has expired,
(ii) the Trust ever incurs any loss on any Mortgage Loan
because any document in its Mortgage File is defective, or
(iii) an Assignment of Mortgage to the Indenture Trustee has
not been recorded in accordance with Section 2.01(h) and the Mortgage
Loan is not registered on the MERS(R) System.
Interest accrued on the Asset Balance of the Mortgage Loan to the end of the
related Collection Period shall be the property of the Trust.
The Indenture Trustee shall determine if reducing the relevant Loan
Group Balance by the Asset Balance of the retransferred Mortgage Loan would
cause a Transfer Deficiency for the
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related Loan Group. If so, the Indenture Trustee shall notify the Sponsor of
the deficiency, and within five Business Days after the retransfer the Sponsor
shall either
(x) substitute an Eligible Substitute Mortgage Loan,
(y) deposit into the Collection Account an amount (the
"Transfer Deposit Amount") in immediately available funds equal to
the Transfer Deficiency, or
(z) do a combination of both (x) and (y) above.
The reduction or substitution and the actual payment of any Transfer Deposit
Amount shall be payment in full for the Mortgage Loan.
The Owner Trustee shall execute any documents of transfer presented
by the Sponsor, without recourse, representation, or warranty, and take any
other actions reasonably requested by the Sponsor to effect the transfer by
the Trust of the Defective Mortgage Loan pursuant to this Section on receipt
of any Eligible Substitute Mortgage Loan or notice from a Servicing Officer to
the effect that the Transfer Deposit Amount for a Defective Mortgage Loan has
been deposited into the Collection Account or, if the related Allocated
Transferor Interest is not reduced below the greater of the related Minimum
Transferor Interest and the related Required Transferor Subordinated Amount as
a result of the retransfer of a Defective Mortgage Loan, as promptly as
practicable following the transfer. The sole remedy of the Noteholders, the
Transferor, the Owner Trustee, the Indenture Trustee, and the Credit Enhancer
against the Sponsor for the transfer of a Defective Mortgage Loan to the Trust
is the Sponsor's obligation to accept a transfer of a Defective Mortgage Loan
and to either convey an Eligible Substitute Mortgage Loan or to make a deposit
of any Transfer Deposit Amount into the Collection Account.
Promptly following the transfer of any Defective Mortgage Loan or
Eligible Substitute Mortgage Loan from or to the Trust pursuant to this
Section, the Master Servicer shall amend the Mortgage Loan Schedule, deliver
the amended Mortgage Loan Schedule to the Indenture Trustee, and make
appropriate entries in its general account records to reflect the transfer.
Following the retransfer, the Master Servicer shall appropriately mark its
records to indicate that it is no longer servicing the Mortgage Loan on behalf
of the Trust. The Sponsor shall appropriately mark its Electronic Ledger and
make appropriate entries in its general account records to reflect the
transfer promptly following the transfer.
Notwithstanding any other provision of this Section, a retransfer of
a Defective Mortgage Loan to the Sponsor pursuant to this Section that would
cause the Allocated Transferor Interest for the related Loan Group to be less
than the greater of the Minimum Transferor Interest for the related Loan Group
and the Required Transferor Subordinated Amount for the related Loan Group
shall not occur if either the Sponsor fails to convey an Eligible Substitute
Mortgage Loan or to deposit into the Collection Account any Transfer Deposit
Amount required by this Section with respect to the transfer of the Defective
Mortgage Loan.
(c) The Sponsor shall deliver to the Indenture Trustee any documents
required to be held by the Indenture Trustee in accordance with Section 2.01
with respect to any Eligible
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Substitute Mortgage Loans. The Master Servicer shall determine the Transfer
Deposit Amount in any Collection Period during which the Sponsor substitutes
Eligible Substitute Mortgage Loans and the Sponsor shall deposit that amount
in the Collection Account at the time of substitution. All amounts received on
the Eligible Substitute Mortgage Loans during the Collection Period in which
the circumstances giving rise to the substitution occur shall not be a part of
the Trust and shall not be deposited by the Master Servicer in the Collection
Account. All amounts received on a removed Defective Mortgage Loan during the
Collection Period in which the circumstances giving rise to the substitution
occur shall be a part of the Trust and shall be deposited by the Master
Servicer in the Collection Account. An Eligible Substitute Mortgage Loan will
be subject to the terms of this Agreement in all respects when transferred to
the Trust, and the Sponsor hereby makes the representations, warranties, and
covenants in Section 2.04 with respect to the Eligible Substitute Mortgage
Loan as of the date of substitution. The procedures applied by the Sponsor in
selecting each Eligible Substitute Mortgage Loan shall not be materially
adverse to the interests of the Indenture Trustee, the Transferor, the
Noteholders, or the Credit Enhancer.
(d) The Custodian shall retain possession of each Mortgage File on
behalf of the Indenture Trustee in accordance with the Custodial Agreement.
The Master Servicer shall promptly deliver to the Indenture Trustee the
originals of any other documents constituting the Mortgage File coming into
its possession on their execution or receipt. Any documents to be delivered to
the Indenture Trustee under this Agreement may be delivered to the Custodian
acting on behalf of the Indenture Trustee.
Section 2.03. Representations, Warranties, and Covenants Regarding
the Master Servicer.
The Master Servicer represents and warrants to the Indenture Trustee
and the Credit Enhancer that as of the Closing Date:
(i) The Master Servicer is a New York corporation, validly
existing and in good standing under the laws of the State of New
York, and has the corporate power to own its assets and to transact
the business in which it is currently engaged. The Master Servicer is
duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of its business
or any properties owned or leased by it requires such qualification
and in which the failure so to qualify would have a material adverse
effect on the business, properties, assets, or condition (financial
or other) of the Master Servicer.
(ii) The Master Servicer has the power and authority to
make, execute, deliver, and perform this Agreement and all of the
transactions contemplated under this Agreement, and has taken all
necessary corporate action to authorize the execution, delivery, and
performance of this Agreement. When executed and delivered, this
Agreement will constitute a valid and legally binding obligation of
the Master Servicer enforceable in accordance with its terms.
(iii) The Master Servicer is not required to obtain the
consent of any other party or any consent, license, approval or
authorization from, or registration or
8
declaration with, any governmental authority, bureau, or agency in
connection with the execution, delivery, performance, validity, or
enforceability of this Agreement, except for consents, licenses,
approvals or authorizations, or registrations or declarations that
have been obtained or filed, as the case may be, before the Closing
Date.
(iv) The execution, delivery, and performance of this
Agreement by the Master Servicer will not violate any existing law or
regulation or any order or decree of any court applicable to the
Master Servicer or the certificate of incorporation or bylaws of the
Master Servicer, or constitute a material breach of any mortgage,
indenture, contract, or other agreement to which the Master Servicer
is a party or by which the Master Servicer may be bound.
(v) No litigation or administrative proceeding of or before
any court, tribunal, or governmental body is currently pending, or to
the knowledge of the Master Servicer threatened, against the Master
Servicer or any of its properties or with respect to this Agreement,
the Indenture, or the Notes that in the opinion of the Master
Servicer has a reasonable likelihood of resulting in a material
adverse effect on the transactions contemplated by the Transaction
Documents.
(vi) If any Mortgage Loan has been registered on the MERS(R)
System, the Master Servicer is a member of MERS in good standing.
The Master Servicer covenants that it will fully furnish, in
accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (i.e., favorable and
unfavorable) on its credit files for the related Mortgagor for each Mortgage
Loan to Equifax, Experian, and Trans Union Credit Information Company on a
monthly basis.
The representations, warranties, and covenants in this Section shall
survive the transfer of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representation, warranty, or covenant that materially and
adversely affects the interests of the Transferor, the Noteholders, or the
Credit Enhancer, the person discovering the breach shall give prompt notice to
the other parties and to the Credit Enhancer. The Master Servicer shall cure
in all material respects any breach of any representation, warranty, or
covenant within 90 days of becoming aware of it or, with the consent of a
Responsible Officer of the Indenture Trustee, any longer period specified in
the consent.
Section 2.04. Representations and Warranties of the Sponsor Regarding
the Mortgage Loans; Retransfer of Certain Mortgage Loans.
(a) The Sponsor by this reference repeats each representation and
warranty made by it (as Seller) in Section 3.02(a) of the Purchase Agreement
(other than Section 3.02(a)(1) and (2)) to the Indenture Trustee, the Trust,
and the Credit Enhancer and, in addition, represents and warrants to the
Indenture Trustee, the Trust, and the Credit Enhancer that as of the Cut-off
Date, unless specifically stated otherwise:
(i) As of the Closing Date (or, with respect to any Eligible
Substitute Mortgage Loan, the applicable date of substitution) this
Agreement constitutes a valid
9
and legally binding obligation of the Sponsor, enforceable against
the Sponsor in accordance with its terms.
(ii) As of the Closing Date (or, with respect to any
Eligible Substitute Mortgage Loan, the applicable date of
substitution), either
(A) the Purchase Agreement constitutes a valid
transfer to the Depositor of all right, title, and interest
of the Sponsor in the Mortgage Loans, all collections
received from the Mortgage Loans after the Cut-off Date
(excluding payments due by the Cut-off Date), all proceeds
of the Mortgage Loans, and any funds from time to time
deposited in the Collection Account and in the Payment
Account and all other property specified in Section 2.01(a)
or (b), as applicable, and this Agreement constitutes a
valid transfer to the Trust of the foregoing property such
that, on execution of this Agreement, it is owned by the
Trust free of all liens and other encumbrances, and is part
of the corpus of the Trust conveyed to the Trust by the
Sponsor, and upon payment for the Additional Balances, the
Purchase Agreement and this Agreement will constitute a
valid transfer to the Trust of all right, title, and
interest of the Sponsor in the Additional Balances, all
monies due or to become due on them, all proceeds of the
Additional Balances, and all other property specified in
Section 2.01(a) relating to the Additional Balances free of
all liens and other encumbrances, or
(B) the Purchase Agreement or this Agreement, as
appropriate, constitutes a Grant of a Security Interest to
the Owner Trustee on behalf of the Trust in the property
described in clause (A) above and the Indenture constitutes
a Grant of a Security Interest to the Indenture Trustee in
the Collateral. The Indenture Trustee has a first priority
perfected Security Interest in the Collateral, subject to
the effect of Section 9-315 of the UCC with respect to
collections on the Mortgage Loans that are deposited in the
Collection Account in accordance with the next to last
paragraph of Section 3.02(b), and if this Agreement
constitutes the Grant of a Security Interest in the property
described in clause (A) above to the Trust, the Trust has a
first priority perfected Security Interest in the property,
subject to the same limitations. This Security Interest is
enforceable as such against creditors of and purchasers from
the Trust, the Depositor, and the Sponsor.
(b) If the substance of any representation and warranty in this
Section made to the best of the Sponsor's knowledge or as to which the Sponsor
has no knowledge is inaccurate and the inaccuracy materially and adversely
affects the interest of the Trust, the Noteholders, or the Credit Enhancer in
the related Mortgage Loan then, notwithstanding that the Sponsor did not know
the substance of the representation and warranty was inaccurate at the time
the representation or warranty was made, the inaccuracy shall be a breach of
the applicable representation or warranty.
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(c) The representations and warranties in this Section shall survive
delivery of the respective Mortgage Files to the Custodian pursuant to the
Custodial Agreement and the termination of the rights and obligations of the
Master Servicer pursuant to Section 5.04 or 6.02. If the Sponsor, the
Depositor, the Master Servicer, the Credit Enhancer, or a Responsible Officer
of the Indenture Trustee discovers a breach of any of the foregoing
representations and warranties, without regard to any limitation concerning
the knowledge of the Sponsor, that materially and adversely affects the
interests of the Trust, the Indenture Trustee under the Indenture, the
Noteholders, or the Credit Enhancer in the Mortgage Loan, the party
discovering the breach shall give prompt notice to the other parties and the
Credit Enhancer.
(d) The Sponsor shall use all reasonable efforts to cure in all
material respects any breach (other than a breach of the representation and
warranty in Section 2.04 by virtue of the repetition of Section 3.02(a)(5) of
the Purchase Agreement) within 90 days of becoming aware of it or shall, not
later than the Business Day before the Payment Date in the month following the
Collection Period in which the cure period expired (or any later date that the
Indenture Trustee and the Credit Enhancer consent to), either (1) accept a
transfer of the Mortgage Loan from the Trust or (2) substitute an Eligible
Substitute Mortgage Loan in accordance with Section 2.02. The cure for any
breach of a representation and warranty relating to the characteristics of the
Mortgage Loans in the related Loan Group in the aggregate shall be a
repurchase of or substitution for only the Mortgage Loans necessary to cause
the characteristics to comply with the related representation and warranty.
Upon accepting the transfer and making any required deposit into the
Collection Account or substitution of an Eligible Substitute Mortgage Loan, as
the case may be, the Owner Trustee shall execute any documents of transfer
presented by the Sponsor, without recourse, representation, or warranty, and
take any other actions reasonably requested by the Sponsor to effect the
transfer by the Trust of the Mortgage Loans.
(e) The sole remedy of the Noteholders, the Indenture Trustee on
behalf of Noteholders, the Owner Trustee, and the Credit Enhancer against the
Sponsor for the breach of a representation or warranty other than the
representation and warranty in Section 2.04 by virtue of the repetition of
Section 3.02(a)(5) of the Purchase Agreement is the Sponsor's obligation to
accept a transfer of a Mortgage Loan as to which a breach has occurred and is
continuing and to make any required deposit in the Collection Account or to
substitute an Eligible Substitute Mortgage Loan. If the representation and
warranty in Section 2.04 by virtue of the repetition of Section 3.02(a)(5) of
the Purchase Agreement is breached, the transfer of the affected Mortgage
Loans to the Trust shall be void and the Sponsor shall pay to the Trust the
sum of (i) the amount of the related Asset Balances, plus accrued interest on
each Asset Balance at the applicable Loan Rate to the date of payment and (ii)
the amount of any loss or expense incurred by the Transferor, the Noteholders,
the Trust, or the Credit Enhancer with respect to the affected Mortgage Loans.
The Indenture Trustee may enforce the Sponsor's obligations under this Section
in its own right or as the owner of the Trust's right to seek enforcement as
the assignee of the Trust's rights under this Agreement pursuant to the
Indenture.
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(f) A breach of any one of the representations in Sections
3.02(a)(59) to (65) of the Purchase Agreement will be considered to materially
adversely affect the interests of the Noteholders.
(g) The Sponsor shall defend and indemnify the Indenture Trustee, the
Owner Trustee, the Credit Enhancer, and the Noteholders against all reasonable
costs and expenses, and all losses, damages, claims, and liabilities,
including reasonable fees and expenses of counsel and the amount of any
settlement entered into with the consent of the Sponsor (this consent not to
be unreasonably withheld), that may be asserted against or incurred by any of
them as a result of any third-party action arising out of any breach of a
representation and warranty.
Section 2.05. Covenants of the Depositor.
The Depositor covenants that:
(a) Security Interests. Except for the transfer under this Agreement,
the Depositor will not transfer any Mortgage Loan to any other person, or
create or suffer to exist any Lien on any Mortgage Loan or any interest in
one, whether existing now or in the future; the Depositor will notify the
Indenture Trustee of the existence of any Lien on any Mortgage Loan
immediately on its discovery; and the Depositor will defend the right, title,
and interest of the Trust in the Mortgage Loans, whether existing now or in
the future, against all claims of third parties claiming through the
Depositor. Nothing in this Section shall prohibit the Depositor from suffering
to exist on any Mortgage Loan any Liens for municipal or other local taxes and
other governmental charges if the taxes or governmental charges are not due at
the time or if the Depositor is contesting their validity in good faith by
appropriate proceedings and has set aside on its books adequate reserves with
respect to them.
(b) Negative Pledge. The Depositor shall not transfer or grant a
Security Interest in the Transferor Certificates except in accordance with
Section 3.10 of the Trust Agreement.
(c) Additional Indebtedness. So long as the Notes are outstanding the
Depositor will not incur any debt other than debt that (i) is non-recourse to
the assets of the Depositor other than the mortgage loans specifically pledged
as security for the debt, (ii) is subordinated in right of payment to the
rights of the Noteholders, or (iii) is assigned a rating by each of the Rating
Agencies that is the same as the then current rating of the Notes.
(d) Downgrading. The Depositor will not engage in any activity that
would result in a downgrading of the Notes without regard to the Policy.
(e) Amendment to Certificate of Incorporation. The Depositor will not
amend its Certificate of Incorporation or state of incorporation without prior
notice to the Rating Agencies, the Indenture Trustee, and the Credit Enhancer.
Section 2.06. Transfers of Mortgage Loans at Election of Transferor.
Subject to the conditions below, the Transferor may require the
transfer of Mortgage Loans in a Loan Group from the Trust to the Transferor as
of the close of business on a Payment Date (the "Transfer Date"). In
connection with any transfer, the related Allocated Transferor Interest shall
be reduced by the aggregate Asset Balances as of their Transfer Date of
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the Mortgage Loans transferred. On the fifth Business Day (the "Transfer
Notice Date") before the Transfer Date designated in the notice, the
Transferor shall give the Owner Trustee, the Indenture Trustee, the Master
Servicer, and the Credit Enhancer a notice of the proposed transfer that
contains a list of the Mortgage Loans to be transferred. These transfers of
Mortgage Loans shall be permitted if the following conditions are satisfied:
(i) No Rapid Amortization Event has occurred.
(ii) On the Transfer Date the Allocated Transferor Interest
with respect to the related Loan Group (after giving effect to the
removal of the Mortgage Loans proposed to be transferred) exceeds the
greater of the related Minimum Transferor Interest and the related
Required Transferor Subordinated Amount.
(iii) The transfer of any Mortgage Loans from either Loan
Group on any Transfer Date during the Managed Amortization Period
shall not, in the reasonable belief of the Transferor, cause a Rapid
Amortization Event to occur or an event that with notice or lapse of
time or both would constitute a Rapid Amortization Event.
(iv) By the Transfer Date, the Transferor shall have
delivered to the Indenture Trustee a revised Mortgage Loan Schedule,
reflecting the proposed transfer and the Transfer Date, and the
Master Servicer shall have marked the Electronic Ledger to show that
the Mortgage Loans transferred to the Transferor are no longer owned
by the Trust.
(v) The Transferor shall represent and warrant that the
Mortgage Loans to be removed from the Trust were selected randomly.
(vi) In connection with each transfer of Mortgage Loans
pursuant to this Section, each Rating Agency and the Credit Enhancer
shall have received by the related Transfer Notice Date notice of the
proposed transfer of Mortgage Loans and, before the Transfer Date,
each Rating Agency shall have notified in writing the Transferor, the
Indenture Trustee, and the Credit Enhancer that the transfer of
Mortgage Loans would not result in a reduction or withdrawal of its
then current rating of the Notes without regard to the Policy.
(vii) The Transferor shall have delivered to the Owner
Trustee, the Indenture Trustee, and the Credit Enhancer an Officer's
Certificate certifying that the items in subparagraphs (i) through
(vi), inclusive, have been performed or are true, as the case may be.
The Owner Trustee and the Indenture Trustee may conclusively rely on
the Officer's Certificate, shall have no duty to make inquiries with
regard to the matters in it, and shall incur no liability in so
relying.
Upon receiving the requisite information from the Transferor, the
Master Servicer shall perform in a timely manner those acts required of it, as
specified above. Upon satisfaction of the above conditions, on the Transfer
Date the Indenture Trustee shall effect delivery to the Transferor the
Mortgage File for each Mortgage Loan being so transferred, and the Indenture
Trustee shall execute and deliver to the Transferor any other documents
prepared by the Transferor reasonably necessary to transfer the Mortgage Loans
to the Transferor. This transfer
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of the Trust's interest in Mortgage Loans shall be without recourse,
representation, or warranty by the Indenture Trustee or the Trust to the
Transferor.
Section 2.07. Tax Treatment.
The Depositor and the Transferor intend that the Notes will be
indebtedness of the Transferor for federal, state, and local income and
franchise tax purposes and for purposes of any other tax imposed on or
measured by income. The Transferor and the Depositor agree to treat the Notes
for purposes of federal, state, and local income or franchise taxes and any
other tax imposed on or measured by income, as indebtedness of the Transferor
secured by the assets of the Trust and to report the transactions contemplated
by this Agreement on all applicable tax returns in a manner consistent with
this treatment. The Administrator pursuant to the Administration Agreement
will prepare and file all tax reports required under this Agreement on behalf
of the Trust.
Section 2.08. Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Indenture Trustee on
behalf of the Noteholders and the Credit Enhancer as follows:
(i) This Agreement constitutes a valid and legally binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms.
(ii) Immediately before the sale and assignment by the
Depositor to the Trust of each Mortgage Loan, the Depositor was the
sole beneficial owner of each Mortgage Loan (insofar as the title was
conveyed to it by the Sponsor) subject to no prior lien, claim,
participation interest, mortgage, Security Interest, pledge, charge,
or other encumbrance or other interest of any nature.
(iii) As of the Closing Date, the Depositor has transferred
all right, title, and interest in the Mortgage Loans to the Trust
and, as of each applicable date of substitution, the Depositor has
transferred all right, title, and interest in the Eligible Substitute
Mortgage Loan to the Trust.
(iv) The Depositor has not transferred the Mortgage Loans to
the Trust with any intent to hinder, delay, or defraud any of its
creditors.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. The Master Servicer.
The Master Servicer shall service and administer the Mortgage Loans
in a manner consistent with the terms of this Agreement and with general
industry practice and shall have full power and authority, acting alone or
through a subservicer, (i) to execute and deliver, on behalf of the
Noteholders, the Trust, and the Indenture Trustee, customary consents or
waivers and other instruments and documents, (ii) to consent to transfers of
any Mortgaged Property and assumptions of the Mortgage Notes and related
Mortgages (but only in the manner provided in
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this Agreement), (iii) to collect any Insurance Proceeds and other Liquidation
Proceeds, and (iv) to effectuate foreclosure or other conversion of the
ownership of the Mortgaged Property securing any Mortgage Loan. The Master
Servicer shall remain responsible to the parties to this Agreement and the
Credit Enhancer for its obligations under this Agreement. Any amounts received
by any subservicer on a Mortgage Loan shall be considered to have been
received by the Master Servicer whether or not actually received by it.
Without limiting the generality of the foregoing, the Master Servicer may
execute and deliver, on behalf of itself, the Noteholders, and the Indenture
Trustee, or any of them, any instruments of satisfaction or cancellation, or
of partial or full release or discharge, and all other comparable instruments,
with respect to the Mortgage Loans and with respect to the Mortgaged
Properties, in each case to the extent not inconsistent with this Agreement.
At the request of a Servicing Officer, the Indenture Trustee shall
furnish the Master Servicer with any powers of attorney and other documents
appropriate to enable the Master Servicer to carry out its servicing and
administrative duties under this Agreement. The Master Servicer in this
capacity may also consent to the placing of a lien senior to that of any
mortgage on the related Mortgaged Property, if
(i) the new senior lien secures a mortgage loan that
refinances an existing first mortgage loan and
(ii) either
(a) the Loan-to-Value Ratio of the new mortgage
loan (without taking into account any closing costs that may
be financed by the new mortgage loan) is equal to or less
than the Loan-to-Value Ratio of the first mortgage loan to
be replaced (for purposes of calculating the Loan-to-Value
Ratio, the Valuation of the Mortgaged Property will be
measured by the lesser of (A) the Valuation of the Mortgaged
Property as of the Cut-off Date and (B) the Valuation of the
Mortgaged Property as of the date of the refinancing
referenced in clause (i)) or
(b) the Combined Loan-to-Value Ratio of the new
mortgage loan (without taking into account any closing costs
that may be financed by the new mortgage loan) and the
existing Mortgage Loan is equal to less than 70% (for
purposes of calculating the Combined Loan-to-Value Ratio,
the Valuation of the Mortgaged Property will be measured as
the lesser of (A) the Valuation of the Mortgage Loan as of
the Cut-off Date and (B) the Valuation of the Mortgage Loan
as of the date of the refinancing referenced in clause (i)).
The aggregate Asset Balance of all the Mortgage Loans with respect to which
the senior lien may be so modified may not exceed 50% of the Original Note
Principal Balance.
The Master Servicer may also, without approval from the Rating
Agencies or the Credit Enhancer, increase the Credit Limits on Mortgage Loans
if
(i) new appraisals are obtained and the weighted average
Combined Loan-to-Value Ratios of the Mortgage Loans after giving
effect to the increase are less than or equal to the weighted average
Combined Loan-to-Value Ratios of the Mortgage Loans as of the Cut-off
Date and
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(ii) the increases are consistent with the Master Servicer's
underwriting policies.
In addition, the Master Servicer may increase the Credit Limits on Mortgage
Loans having aggregate Asset Balances of up to an additional 5.0% of the
Original Note Principal Balance, if
(w) the increase does not cause the Combined
Loan-to-Value Ratio of the Mortgage Loans in the related
Loan Group to exceed 80%,
(x) the increase in the Credit Limit of a Mortgage
Loan does not cause the Combined Loan-to-Value Ratio of the
Mortgage Loan to exceed 100%,
(y) the increase in the Credit Limit of a Mortgage
Loan does not cause the Combined Loan-to-Value Ratio of the
Mortgage Loan to increase by more than 25% (for example, a
Combined Loan-to-Value Ratio of 50% can be increased to 75%,
a Combined Loan-to-Value Ratio of 60% can be increased to
85%, and so forth), and
(z) the increase is consistent with the Master
Servicer's underwriting policies.
Furthermore, the Originator, without prior approval from the Rating
Agencies or the Credit Enhancer, may solicit mortgagors for a reduction in
Loan Rates. Loan Rates of Mortgage Loans in a Loan Group having Asset Balances
at the time of the proposed modification that aggregate over time not more
than 5.0% of the related Original Note Principal Balance may be subject to
reduction. If a mortgagor notifies the Originator or the Master Servicer that
it wants a reduction in Loan Rate, the Originator shall purchase the Mortgage
Loan from the Trust as described below. Effective immediately on the same
Business Day on which the Originator delivers the Purchase Price for the
relevant Mortgage Loan to the Master Servicer, all interest of the Trust in
the relevant Mortgage Loan shall automatically be transferred and assigned to
the Originator and all benefits and burdens of ownership of the relevant
Mortgage Loan, including the right to accrued interest on it from the date of
purchase and the risk of default on the Mortgage Loan, shall pass to the
Originator.
The Master Servicer shall promptly deliver to the Indenture Trustee a
certification signed by a Servicing Officer to the effect that all of the
requirements for a purchase of a Mortgage Loan in connection with a request by
a mortgagor for a reduction in Loan Rate have been satisfied with respect to
the relevant Mortgage Loan. The Originator shall deliver the Purchase Price
for the relevant Mortgage Loan to the Master Servicer promptly after a
mortgagor notifies the Originator or the Master Servicer that it wants a
reduction in Loan Rate, and the Master Servicer shall deposit it in the
Collection Account pursuant to Section 3.02 within one Business Day. Upon
receipt by the Indenture Trustee of written notification of the deposit signed
by a Servicing Officer, the Indenture Trustee shall release to the Originator
the related Mortgage File and shall execute and deliver any instruments of
transfer or assignment delivered to it for execution and reasonably acceptable
to it, in each case without recourse, representation, or warranty, necessary
to release the Mortgage Loan from the lien of the Indenture and vest in the
Originator the Mortgage Loan previously transferred and assigned
16
pursuant to this provision. The certification and written notification of the
deposit each from a Servicing Officer may be delivered to the Indenture
Trustee electronically, and to the extent the transmission originates on its
face from a Servicing Officer, need not be manually signed.
In addition, the Master Servicer may agree to changes in the terms of
a Mortgage Loan at the request of the mortgagor if the changes (i) do not
materially and adversely affect the interests of Noteholders, the Transferor,
or the Credit Enhancer and (ii) are consistent with prudent and customary
business practice as evidenced by a certificate signed by a Servicing Officer
delivered to the Indenture Trustee and the Credit Enhancer.
In addition, the Master Servicer may solicit mortgagors to change any
other terms of the related Mortgage Loans if the changes (i) do not materially
and adversely affect the interests of the Noteholders, the Transferor, or the
Credit Enhancer and (ii) are consistent with prudent and customary business
practice as evidenced by a certificate signed by a Servicing Officer delivered
to the Indenture Trustee and the Credit Enhancer. Nothing in this Agreement
shall limit the right of the Master Servicer to solicit mortgagors with
respect to new loans (including mortgage loans) that are not Mortgage Loans.
The Master Servicer may register any Mortgage Loan on the MERS(R)
System, or cause the removal from registration of any Mortgage Loan on the
MERS(R) System, and execute and deliver, on behalf of the Owner Trustee, any
instruments of assignment and other comparable instruments with respect to the
assignment or re-recording of a mortgage in the name of MERS, solely as
nominee for the Owner Trustee and its successors and assigns.
For so long as any Mortgage Loan is registered on the MERS(R) System,
the Master Servicer shall maintain in good standing its membership in MERS and
shall comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with
MERS. If any Mortgage Loans are registered on the MERS(R) System, the Master
Servicer may cause MERS to execute and deliver an assignment of mortgage in
recordable form to transfer any of the Mortgage Loans registered on the
MERS(R) System from MERS to the Owner Trustee. The Master Servicer shall
promptly notify MERS of any transfer of beneficial ownership or release of any
Security Interest in any MOM Loan.
The relationship of the Master Servicer to the Trust and the
Indenture Trustee under this Agreement is intended by the parties to be that
of an independent contractor and not that of a joint venturer, partner, or
agent of the Trust or the Indenture Trustee.
(b) If the rights and obligations of the Master Servicer are
terminated under this Agreement, any successor to the Master Servicer in its
sole discretion may terminate the existing subservicer arrangements with any
subservicer or assume the terminated Master Servicer's rights under those
subservicing arrangements to the extent permitted by applicable law and the
subservicing agreements.
Section 3.02. Collection of Certain Mortgage Loan Payments;
Establishment of Accounts.
(a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the Mortgage Loans, and shall follow the collection
procedures it follows for
17
mortgage loans in its servicing portfolio comparable to the Mortgage Loans, to
the extent consistent with this Agreement. Consistent with the foregoing, and
without limiting the generality of the foregoing, the Master Servicer may in
its discretion (i) waive any late payment charge or any assumption fees or
other fees that may be collected in the ordinary course of servicing the
Mortgage Loans and (ii) arrange with a mortgagor a schedule for the payment of
interest due and unpaid if the arrangement is consistent with the Master
Servicer's policies with respect to the mortgage loans it owns or services.
Notwithstanding any arrangement, the Mortgage Loans will be included in the
information regarding delinquent Mortgage Loans in the Servicing Certificate
and monthly statement to Noteholders pursuant to Section 7.04 of the
Indenture.
(b) The Master Servicer shall establish and maintain a trust account
(the "Collection Account") with the title specified in the Adoption Annex. The
Collection Account shall be an Eligible Account. The Master Servicer or the
Sponsor, as the case may be, shall deposit or cause to be deposited within two
Business Days following its receipt the following payments and collections
received or made by it (without duplication):
(1) all collections on the Mortgage Loans;
(2) the amounts deposited to the Collection Account
pursuant to Section 4.03;
(3) Net Liquidation Proceeds net of any related
Foreclosure Profit;
(4) Insurance Proceeds; and
(5) any amounts required to be deposited pursuant
to Section 7.01.
No other amounts are to be deposited to the Collection Account,
including amounts representing Foreclosure Profits, fees (including annual
fees) or late charge penalties payable by mortgagors, or amounts received by
the Master Servicer for the accounts of mortgagors for application towards the
payment of taxes, insurance premiums, assessments, excess pay off amounts, and
similar items. The Master Servicer shall remit all Foreclosure Profits to the
Sponsor. The Master Servicer may retain, from payments of interest on the
Mortgage Loans in each Loan Group in each Collection Period, the related
Servicing Fee for the Collection Period and any unreimbursed optional advance
with respect to the related Loan Group made by the Master Servicer pursuant to
Section 4.03.
The Master Servicer may make a net deposit in the Collection Account
of the amounts required by this Section.
On the Business Day before each Payment Date to the extent on deposit
in the Collection Account, the Master Servicer shall withdraw from the
Collection Account and remit to the Indenture Trustee, the amount to be
applied on the next Payment Date by the Indenture Trustee pursuant to Section
8.03 of the Indenture, and the Indenture Trustee will deposit that amount in
the Payment Account pursuant to the Indenture.
The Indenture Trustee shall hold amounts deposited in the Payment
Account as trustee for the Noteholders, the Transferor, and the Credit
Enhancer. In addition, the Master Servicer shall notify the Indenture Trustee
and the Credit Enhancer on each Determination Date of the
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amount of collections in the Collection Account to be transferred to the
Payment Account and their allocation to Interest Collections and Principal
Collections for the Mortgage Loans in each Loan Group for the related Payment
Date. Following this notification, the Master Servicer may withdraw from the
Collection Account and retain any amounts that constitute income realized from
the investment of the collections. The Master Servicer will be entitled to
receive, as additional servicing compensation, income earned on the
collections in the Payment Account.
Amounts on deposit in the Collection Account will be invested in
Eligible Investments maturing no later than the day before the next Payment
Date at the direction of the Master Servicer. All income realized from any
investment in Eligible Investments of funds in the Collection Account shall be
the property of the Master Servicer and may be withdrawn from time to time
from the Collection Account. Any losses incurred on these investments that
reduce their principal amount shall be deposited in the Collection Account by
the Master Servicer out of its own funds immediately as realized.
Section 3.03. Deposits to Payment Account.
The Master Servicer shall
(i) on the Business Day before each of the first three
Payment Dates, deposit in the Payment Account any shortfall in the
amount required to pay the Note Interest on those Payment Dates for
each Class of Notes resulting solely from the failure of certain
Mortgage Loans to be fully indexed and
(ii) on the Business Day before the first Payment Date,
deposit in the Payment Account for each Loan Group any amounts
representing payments on, and any collections in respect of, the
Mortgage Loans in each Loan Group received after the Cut-off Date and
before the Closing Date (exclusive of payments of accrued interest
due by the Cut-off Date).
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses.
The Master Servicer shall cause to be maintained for each Mortgage
Loan hazard insurance naming the Master Servicer or the related subservicer as
loss payee under it providing extended coverage in an amount that is at least
equal to the lesser of (i) the maximum insurable value of the improvements
securing the Mortgage Loan from time to time or (ii) the combined principal
balance owing on the Mortgage Loan and any mortgage loan senior to the
Mortgage Loan from time to time. The Master Servicer shall also maintain on
property acquired through foreclosure, or by deed in lieu of foreclosure,
hazard insurance with extended coverage in an amount which is at least equal
to the lesser of (i) the maximum insurable value from time to time of the
improvements that are a part of the property or (ii) the combined principal
balance owing on the Mortgage Loan and any mortgage loan senior to the
Mortgage Loan at the time of the foreclosure or deed in lieu of foreclosure
plus accrued interest and the good-faith estimate of the Master Servicer of
related Liquidation Expenses to be incurred.
Amounts collected by the Master Servicer under these policies shall
be deposited in the Collection Account to the extent called for by Section
3.02. The hazard insurance to be maintained for the related Mortgage Loan
shall include flood insurance when the Mortgaged
19
Property is located in a federally designated flood area. The flood insurance
shall be in the amount required under applicable guidelines of the Federal
Flood Emergency Act. No other insurance need be carried on any Mortgaged
Properties pursuant to this Agreement.
Section 3.05. Assumption and Modification Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
mortgagor, the Master Servicer shall exercise its right to accelerate the
maturity of the Mortgage Loan consistent with the then current practice of the
Master Servicer and without regard to the inclusion of the Mortgage Loan in
the Trust. If it elects not to enforce its right to accelerate or if it is
prevented from doing so by applicable law, the Master Servicer (so long as its
action conforms with the underwriting standards generally acceptable in the
industry at the time for new origination) may enter into an assumption and
modification agreement with the person to whom the Mortgaged Property has been
or is about to be conveyed, pursuant to which that person becomes liable under
the Credit Line Agreement and, to the extent permitted by applicable law, the
mortgagor remains liable on it. The Master Servicer shall notify the Indenture
Trustee that any assumption and modification agreement has been completed by
delivering to the Indenture Trustee an Officer's Certificate certifying that
the agreement is in compliance with this Section and by forwarding the
original copy of the assumption and modification agreement to the Indenture
Trustee. Any assumption and modification agreement shall be a part of the
related Mortgage File. No change in the terms of the related Credit Line
Agreement may be made by the Master Servicer in connection with the assumption
to the extent that the change would not be permitted to be made in the
original Credit Line Agreement pursuant to Section 3.01(a). Any fee collected
by the Master Servicer for entering into the assumption and modification
agreement will be retained by the Master Servicer as additional servicing
compensation.
Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase
of Certain Mortgage Loans.
The Master Servicer shall foreclose or otherwise comparably convert
to ownership Mortgaged Properties securing defaulted Mortgage Loans when, in
the opinion of the Master Servicer based on normal and usual practices and
procedures, no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.02. Alternatively, the Master
Servicer may forego foreclosure and charge off a defaulted Mortgage Loan if in
the Master Servicer's opinion the proceeds of foreclosure and liquidation are
likely to produce an amount less than the unpaid principal balance of senior
liens on the Mortgaged Property. If the Master Servicer has actual knowledge
or reasonably believes that any Mortgaged Property is affected by hazardous or
toxic wastes or substances and that the acquisition of the Mortgaged Property
would not be commercially reasonable, then the Master Servicer will not cause
the Trust to acquire title to the Mortgaged Property in a foreclosure or
similar proceeding. In connection with foreclosure or other conversion (or a
decision to forego foreclosure and charge off a defaulted Mortgage Loan), the
Master Servicer shall follow the practices and procedures it deems appropriate
and that are normal and usual in its general mortgage servicing activities,
including advancing funds to correct a default on a related senior mortgage
loan. However, the need not expend its own funds in connection with any
foreclosure or towards the correction of
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any default on a related senior mortgage loan or restoration of any property
unless it determines, in its sole discretion, that the expenditure will
increase Net Liquidation Proceeds and the Master Servicer acts in accordance
with the servicing standards in this Agreement.
If title to any Mortgaged Property is acquired in foreclosure or by
deed in lieu of foreclosure, the deed or certificate of sale shall be issued
to the Indenture Trustee, or to its nominee on behalf of Noteholders. The
Master Servicer shall dispose of the Mortgaged Property as soon as practicable
in a manner that maximizes its Liquidation Proceeds.
The Master Servicer, in its sole discretion, may purchase for its own
account from the Trust any Mortgage Loan that is 151 days or more delinquent.
The price for any Mortgage Loan purchased shall be 100% of its Asset Balance
plus accrued interest on it at the applicable Loan Rate from the date through
which interest was last paid by the related mortgagor to the first day of the
month in which the purchase price is to be distributed to the Noteholders. The
purchase price shall be deposited in the Collection Account. The Master
Servicer may only exercise this right on or before the penultimate day of the
calendar month in which the Mortgage Loan became 151 days delinquent. Any
delinquent Mortgage Loan that becomes current but thereafter again becomes 151
days or more delinquent may be purchased by the Master Servicer pursuant to
this Section.
Upon receipt of a certificate from the Master Servicer in the form of
Exhibit C, the Indenture Trustee shall release to the Master Servicer the
related Mortgage File and shall execute and deliver any instruments of
transfer prepared by the Master Servicer, without recourse, necessary to vest
in the purchaser of the Mortgage Loan any Mortgage Loan released to it and the
Master Servicer shall succeed to all the Trust's interest in the Mortgage Loan
and all related security and documents. This assignment shall be an assignment
outright and not for security. The Master Servicer shall then own the Mortgage
Loan, and all security and documents, free of any further obligation to the
Trust, the Owner Trustee, the Indenture Trustee, the Credit Enhancer, the
Transferor, or the Noteholders with respect to it. The certification by the
Master Servicer may be delivered to the Indenture Trustee electronically, and
if it is, its form may differ from Exhibit C so long as it contains the
information required by Exhibit C (that is, the relevant loan number, at least
one of the five reasons for requesting file as found in Exhibit C, and the
acknowledgment that the Mortgage File will be held in accordance with this
Agreement and will promptly be returned to the Indenture Trustee when the need
for it by the Master Servicer no longer exists unless the Mortgage Loan has
been liquidated or retransferred), and to the extent the transmission
originates on its face from a Servicing Officer, need not be manually signed.
Section 3.07. Indenture Trustee to Cooperate.
By each Payment Date, the Master Servicer will notify the Indenture
Trustee whenever the Asset Balance of any Mortgage Loan has been paid in full
during the preceding Collection Period. A Servicing Officer shall certify that
the Mortgage Loan has been paid in full and that all amounts received in
connection with the payment that are required to be deposited in the
Collection Account pursuant to Section 3.02 have been so deposited or
credited. Upon payment in full pursuant to Section 3.01, the Master Servicer
is authorized to execute an instrument of
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satisfaction regarding the related mortgage, which instrument of satisfaction
shall be recorded by the Master Servicer if required by applicable law and be
delivered to the person entitled to it.
If the mortgage has been registered on the MERS(R) System, the Master
Servicer shall cause the removal of the mortgage from registration on the
MERS(R) System and execute and deliver, on behalf of the Indenture Trustee and
the Noteholders, any instruments of satisfaction or cancellation or of partial
or full release. No expenses incurred in connection with the instrument of
satisfaction or transfer shall be reimbursed from amounts deposited in the
Collection Account or the Payment Account.
As appropriate for the servicing or foreclosure of any Mortgage Loan,
or in connection with the payment in full of the Asset Balance of any Mortgage
Loan, upon request of the Master Servicer and delivery to the Indenture
Trustee of a Request for Release substantially in the form of Exhibit C signed
by a Servicing Officer, the Indenture Trustee shall release the related
Mortgage File to the Master Servicer and the Indenture Trustee shall execute
any documents provided by the Master Servicer necessary to the prosecution of
any proceedings or the taking of other servicing actions. The Request for
Release by a Servicing Officer may be delivered to the Indenture Trustee
electronically, and if it is, its form may differ from Exhibit C so long as it
contains the information required by Exhibit C (that is, the relevant loan
number, at least one of the five reasons for requesting file as found in
Exhibit C, and the acknowledgment that the Mortgage File will be held in
accordance with this Agreement and will promptly be returned to the Indenture
Trustee when the need for it by the Master Servicer no longer exists unless
the Mortgage Loan has been liquidated or retransferred), and to the extent the
transmission originates on its face from a Servicing Officer, need not be
manually signed. The Master Servicer shall return the Mortgage File to the
Indenture Trustee when the need for it by the Master Servicer no longer
exists, unless the Mortgage Loan is liquidated, in which case, upon receipt of
a certificate of a Servicing Officer similar to that specified above, the
Request for Release shall be released by the Indenture Trustee to the Master
Servicer.
To facilitate the foreclosure of the mortgage securing any Mortgage
Loan that is in default following recordation of the assignments of mortgage
in accordance with this Agreement, if so requested by the Master Servicer, the
Indenture Trustee shall execute an appropriate assignment in the form provided
to the Indenture Trustee by the Master Servicer to assign the Mortgage Loan
for the purpose of collection to the Master Servicer or a subservicer. The
assignment shall unambiguously indicate that the assignment is for the purpose
of collection only. The Master Servicer will then bring all required actions
in its own name and otherwise enforce the terms of the Mortgage Loan and
deposit the Net Liquidation Proceeds, exclusive of Foreclosure Profits, in the
Collection Account. If all delinquent payments due under the Mortgage Loan are
paid by the mortgagor and any other defaults are cured, then the Master
Servicer shall promptly reassign the Mortgage Loan to the Indenture Trustee
and return the related Mortgage File to the place where it was being
maintained.
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Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Master Servicer.
The Master Servicer may retain the Servicing Fee pursuant to Section
3.02 as compensation for its services in servicing the Mortgage Loans.
Moreover, additional servicing compensation in the form of late payment
charges or other receipts not required to be deposited in the Collection
Account (other than Foreclosure Profits) shall be retained by the Master
Servicer. The Master Servicer must pay all expenses incurred by it in
connection with its activities under this Agreement (including payment of all
other fees and expenses not expressly stated under this Agreement to be for
the account of another person) and shall not be entitled to reimbursement
under this Agreement except as specifically provided in this Agreement.
Liquidation Expenses are reimbursable to the Master Servicer
FIRST, from related Liquidation Proceeds and
SECOND, from the Payment Account from funds attributable to the
related Loan Group pursuant to Section 8.03(a)(x) of the Indenture.
Section 3.09. Annual Statement as to Compliance.
(a) The Master Servicer will deliver to the Indenture Trustee, the
Credit Enhancer, and the Rating Agencies, by the date in each year specified
in the Adoption Annex, beginning on the date specified in the Adoption Annex,
an Officer's Certificate stating that (i) a review of the activities of the
Master Servicer during the preceding fiscal year (or the applicable shorter
period for the first report) and of its performance under this Agreement has
been made under the officer's supervision and (ii) to the best of the
officer's knowledge, based on the review, the Master Servicer has fulfilled
all of its material obligations under this Agreement throughout the fiscal
year, or, if there has been a default in the fulfillment of those obligations,
specifying each default known to the officer and its nature and status.
(b) Within five Business Days after obtaining knowledge of it, the
Master Servicer shall notify the Indenture Trustee, the Credit Enhancer, and
each of the Rating Agencies of any event that with the giving of notice or the
lapse of time would become an Event of Servicing Termination by delivering an
Officer's Certificate describing the event.
Section 3.10. Annual Servicing Report.
By the date in each year specified in the Adoption Annex, beginning
on the date specified in the Adoption Annex, the Master Servicer, at its
expense, shall cause a firm of nationally recognized independent public
accountants (who may also render other services to the Master Servicer) to
furnish a report to the Indenture Trustee, the Credit Enhancer, and each
Rating Agency to the effect that the firm has examined certain documents and
records relating to the servicing of mortgage loans during the most recent
fiscal year then ended under sale and servicing agreements or pooling and
servicing agreements (substantially similar to this Agreement, including this
Agreement), that the examination was conducted substantially in compliance
with the audit guide for audits of non-supervised mortgagees approved by the
Department of Housing and Urban Development for use by independent public
accountants (to the extent that the procedures in the audit guide are
applicable to the servicing obligations in those agreements), and that the
examination has disclosed no items of noncompliance with this
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Agreement that,
in the opinion of the firm, are material, except for the items of
noncompliance described in the report.
Section 3.11. Access to Certain Documentation and Information
Regarding the Mortgage Loans.
(a) The Master Servicer shall provide to the Indenture Trustee, the
Credit Enhancer, any Noteholders or Note Owners that are federally insured
savings and loan associations, the Office of Thrift Supervision, successor to
the Federal Home Loan Bank Board, the FDIC, and the supervisory agents and
examiners of the Office of Thrift Supervision access to the documentation
regarding the Mortgage Loans required by applicable regulations of the Office
of Thrift Supervision and the FDIC (acting as operator of the Savings
Association Insurance Fund or the Bank Insurance Fund). The Master Servicer
will provide access without charge but only after reasonable notice and during
normal business hours at the offices of the Master Servicer. Nothing in this
Section shall derogate from the obligation of the Master Servicer to observe
any applicable law prohibiting disclosure of information regarding the
mortgagors and the failure of the Master Servicer to provide access as
provided in this Section as a result of this obligation shall not constitute a
breach of this Section.
(b) The Master Servicer shall supply the information needed to make
required payments and to furnish required reports to Noteholders and to make
any claim under the Policy, in the form the Indenture Trustee reasonably
requests, to the Indenture Trustee and any Paying Agent by the start of the
Determination Date preceding the related Payment Date.
Section 3.12. Maintenance of Certain Servicing Insurance Policies.
The Master Servicer shall during the term of its service as master
servicer maintain in force (i) policies of insurance covering errors and
omissions in the performance of its obligations as master servicer under this
Agreement and (ii) a fidelity bond covering its officers, employees, or
agents. Each policy and bond together shall comply with the requirements from
time to time of ▇▇▇▇▇▇ ▇▇▇ for persons performing servicing for mortgage loans
purchased by ▇▇▇▇▇▇ ▇▇▇.
Section 3.13. Reports to the Securities and Exchange Commission.
The Administrator shall, on behalf of the Trust, effect filing with
the Securities and Exchange Commission of any periodic reports required to be
filed under the Securities Exchange Act of 1934 and the rules and regulations
of the Securities and Exchange Commission under it. At the request of the
Administrator, each of the Sponsor, the Master Servicer, the Depositor, the
Indenture Trustee, and the Transferor shall cooperate with the Administrator
in the preparation of these reports and shall provide to the Indenture Trustee
in a timely manner all information or documentation the Indenture Trustee
reasonably requests in connection with the performance of its obligations
under this Section. The Master Servicer shall prepare, execute, and deliver
all certificates or other documents required to be delivered by the Trust
pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 or the rules and regulations
promulgated thereunder.
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Section 3.14. Tax Treatment.
The Transferor shall treat the Mortgage Loans as its property for all
federal, state, or local tax purposes and shall report all income earned
thereon (including amounts payable as fees to the Master Servicer) as its
income for income tax purposes. The Master Servicer shall prepare all tax
information required by law to be distributed to Noteholders. The Master
Servicer shall not be liable for any liabilities, costs, or expenses of the
Trust, the Noteholders, the Transferor, or the Note Owners arising under any
tax law, including federal, state, or local income and franchise or excise
taxes or any other tax imposed on or measured by income (or any interest or
penalty with respect to any tax or arising from a failure to comply with any
tax requirement).
Section 3.15. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
The Master Servicer shall prepare and deliver all federal and state
information reports when and as required by all applicable state and federal
income tax laws. In particular, with respect to the requirement under Section
6050J of the Code for reports of foreclosures and abandonments of any
mortgaged property, the Master Servicer shall file reports relating to each
instance occurring during the previous calendar year in which the Master
Servicer (i) on behalf of the Indenture Trustee acquires an interest in any
Mortgaged Property through foreclosure or other comparable conversion in full
or partial satisfaction of a Mortgage Loan, or (ii) knows or has reason to
know that any Mortgaged Property has been abandoned. The reports from the
Master Servicer shall be in form, substance, and timing sufficient to meet the
reporting requirements imposed by Section 6050J of the Code.
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01. Servicing Certificate.
Not later than each Determination Date, the Master Servicer shall
deliver (a) to the Indenture Trustee (with a copy to the Credit Enhancer), the
data (including loan level data) necessary to prepare the items below and the
statement for Noteholders required to be prepared pursuant to Section 4.04 and
(b) to the Indenture Trustee, the Owner Trustee, the Sponsor, the Depositor,
the Paying Agent, the Credit Enhancer, and each Rating Agency a Servicing
Certificate (in written form or the form of computer readable media or such
other form as may be agreed to by the Indenture Trustee and the Master
Servicer), together with an Officer's Certificate to the effect that the
Servicing Certificate is correct in all material respects, stating the related
Collection Period, Payment Date, the series number of the Notes, the date of
this Agreement, and:
(i) the aggregate amount of collections received on the
Mortgage Loans in each Loan Group by the Determination Date for the
related Collection Period;
(ii) the aggregate amount of (a) Interest Collections for
each Loan Group for the related Collection Period and (b) Principal
Collections for each Loan Group for the related Collection Period;
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(iii) the Investor Floating Allocation Percentage and the
Investor Fixed Allocation Percentage for each Loan Group for the
related Collection Period;
(iv) the Investor Interest Collections and Investor
Principal Collections for each Loan Group for the related Collection
Period;
(v) the Interest Collections that are not Investor Interest
Collections and Transferor Principal Collections for each Loan Group
for the related Collection Period;
(vi) the Note Interest and the applicable Note Rate for each
Class of Notes for the related Interest Period;
(vii) the amount of the Note Interest that is not payable to
the Holders of each Class of Notes because of insufficient Investor
Interest Collections for the related Loan Group;
(viii) the Unpaid Investor Interest Shortfall for each Class
of Notes and the amount of interest on the shortfall at the
applicable Note Rate for each Class of Notes applicable from time to
time (separately stated) to be distributed on the related Payment
Date;
(ix) the remaining Unpaid Investor Interest Shortfall for
each Class of Notes after the distribution on the related Payment
Date;
(x) the amount of any Basis Risk Carryforward for each Class
of Notes in the distribution;
(xi) the amount of the remaining Basis Risk Carryforward for
each Class of Notes after giving effect to the related distribution;
(xii) the Accelerated Principal Payment Amount and the
portion of it that will be distributed pursuant to Section
8.03(a)(vii) of the Indenture for each Loan Group;
(xiii) the Scheduled Principal Collections Payment Amount
for each Loan Group, separately stating its components;
(xiv) the amount of any Transfer Deposit Amount for each
Loan Group paid by the Sponsor or the Depositor pursuant to Section
2.02 or 2.04;
(xv) any accrued Servicing Fees for the Mortgage Loans in
each Loan Group for previous Collection Periods and the Servicing Fee
for the related Collection Period;
(xvi) the Investor Loss Amount for each Loan Group for the
related Collection Period;
(xvii) the aggregate amount of Investor Loss Reduction
Amounts for previous Payment Dates that have not been previously
reimbursed to the Holders of each Class of Notes pursuant to Section
8.03(a)(iv), Section 8.03(a)(viii), or Section 8.03(c) of the
Indenture;
(xviii) the aggregate Asset Balance of the Mortgage Loans in
each Loan Group as of the end of the preceding Collection Period and
as of the end of the second preceding Collection Period;
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(xix) The Rolling Three Month Delinquency Rate (as defined
in the Insurance Agreement) and the Excess Spread Percentage for the
Payment Date, except that the Master Servicer shall not be required
to include this information in the first two Servicing Certificates;
(xx) the Note Principal Balance for each Class of Notes and
loan factor after giving effect to the payment on each Class of Notes
on the related Payment Date and to any reduction because of the
related Investor Loss Amount;
(xxi) the Transferor Interest and the Available Transferor
Subordinated Amount for each Loan Group after giving effect to the
distribution on the Payment Date;
(xxii) the aggregate amount of Additional Balances created
on the Mortgage Loans in each Loan Group during the previous
Collection Period;
(xxiii) for each Loan Group, the number and aggregate Asset
Balances of Mortgage Loans (x) as to which the Minimum Monthly
Payment is delinquent for 30-59 days, 60-89 days, and 90 or more
days, respectively and (y) that have become REO, in each case as of
the end of the preceding Collection Period;
(xxiv) whether a Rapid Amortization Event has occurred since
the prior Determination Date, specifying the Rapid Amortization Event
if one has occurred;
(xxv) whether an Event of Servicing Termination has occurred
since the prior Determination Date, specifying the Event of Servicing
Termination if one has occurred;
(xxvi) the amount to be distributed to the Credit Enhancer
pursuant to Section 8.03(a)(vi), Section 8.03(a)(ix), and Section
8.03(a)(xi) of the Indenture, stated separately;
(xxvii) the Guaranteed Principal Payment Amount for each
Class of Notes for the Payment Date;
(xxviii) the Credit Enhancement Draw Amount for each Class
of Notes for the related Payment Date;
(xxix) the amount to be distributed on the Mortgage Loans in
each Loan Group to the Transferor pursuant to Section 8.03(a)(xiii)
of the Indenture;
(xxx) the amount to be paid to the Master Servicer pursuant
to Section 8.03(a)(x) of the Indenture;
(xxxi) the Maximum Rate for the related Collection Period
and the Weighted Average Net Loan Rate for the Mortgage Loans in each
Loan Group;
(xxxii) the expected amount of any optional advances
pursuant to Section 4.03 by the Master Servicer on the Mortgage Loans
in each Loan Group included in the distribution on the related
Payment Date and the aggregate expected amount of optional advances
pursuant to Section 4.03 by the Master Servicer outstanding on the
Mortgage Loans in each Loan Group as of the close of business on the
related Payment Date;
(xxxiii) the number and principal balances of any Mortgage
Loans in each Loan Group transferred to the Transferor pursuant to
Section 2.06; and
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(xxxiv) in the Servicing Certificates for the first and
second Payment Dates, the number and Cut-off Date Asset Balance of
Mortgage Loans for each Loan Group for which the Mortgage Loan File
was not delivered to the Indenture Trustee within 30 days of the
Closing Date.
The Indenture Trustee and the Owner Trustee shall conclusively rely
on the information in a Servicing Certificate for purposes of making
distributions pursuant to Section 8.03 of the Indenture or distributions on
the Transferor Certificates, shall have no duty to inquire into this
information and shall have no liability in so relying. The format and content
of the Servicing Certificate may be modified by the mutual agreement of the
Master Servicer, the Indenture Trustee, and the Credit Enhancer. The Master
Servicer shall give notice of any changes to the Rating Agencies.
Section 4.02. Acknowledgement and Cooperation.
The Depositor, the Master Servicer, and the Indenture Trustee
acknowledge that without the need for any further action on the part of the
Credit Enhancer, the Depositor, the Master Servicer, the Indenture Trustee, or
the Note Registrar (a) to the extent the Credit Enhancer makes payments,
directly or indirectly, on account of principal of or interest or other
amounts on any Notes to the Holders of the Notes or the Credit Enhancer, as
applicable, will be fully subrogated to the rights of these Holders to receive
the principal and interest from the Trust and (b) the Credit Enhancer shall be
paid the principal and interest or other amounts but only from the sources and
in the manner provided in this Agreement for the payment of the principal and
interest or other amounts. The Indenture Trustee and the Master Servicer shall
cooperate in all respects with any reasonable request by the Credit Enhancer
for action to preserve or enforce the Credit Enhancer's rights or interests
under this Agreement and the Indenture without limiting the rights or
affecting the interests of the Holders as otherwise stated in this Agreement
and the Indenture.
Section 4.03. Optional Advances of the Master Servicer.
The Master Servicer, in its sole discretion, may advance the interest
component of any delinquent Minimum Monthly Payment (or any portion of it) by
depositing the amount into the Collection Account by the related Determination
Date.
Section 4.04. Statements to Noteholders.
Concurrently with each payment to Noteholders, the Master Servicer
shall deliver to the Indenture Trustee the data necessary to prepare a
statement (the "Monthly Statement") for each Payment Date with the following
information with respect to each Loan Group:
(i) the related Investor Floating Allocation Percentage for
the preceding Collection Period;
(ii) the aggregate amount to be paid to the related Class of
Noteholders;
(iii) the amount of Note Interest in the payment related to
each Class of Notes and the applicable Note Rate;
(iv) the amount of any related Unpaid Investor Interest
Shortfall in the payment;
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(v) the amount of the remaining related Unpaid Investor
Interest Shortfall after giving effect to the payment;
(vi) the amount of principal in the payment, separately
stating its components;
(vii) the amount of the reimbursement of previous related
Investor Loss Amounts in the payment;
(viii) the amount of the aggregate of unreimbursed related
Investor Loss Reduction Amounts after giving effect to the payment;
(ix) the amount of any related Basis Risk Carryforward in
the payment;
(x) the amount of the remaining related Basis Risk
Carryforward after giving effect to the payment;
(xi) the Servicing Fee for the Payment Date;
(xii) the Note Principal Balance of the related Class of
Notes and the factor to seven decimal places obtained by dividing the
Note Principal Balance of the related Class of Notes for the Payment
Date by the Original Note Principal Balance of the related Class of
Notes after giving effect to the payment;
(xiii) the Loan Group Balance as of the end of the preceding
Collection Period;
(xiv) any Credit Enhancement Draw Amount for the related
Class of Notes;
(xv) the number and aggregate Asset Balances of Mortgage
Loans in the related Loan Group as to which the Minimum Monthly
Payment is delinquent for 30-59 days, 60-89 days, and 90 or more
days, respectively, as of the end of the preceding Collection Period;
(xvi) the book value (within the meaning of 12 C.F.R. ss.
571.13 or comparable provision) of any real estate acquired through
foreclosure or grant of a deed in lieu of foreclosure for the related
Loan Group;
(xvii) the amount of any optional advances on the Mortgage
Loans in the related Loan Group pursuant to Section 4.03 by the
Master Servicer included in the payment on the Payment Date and the
aggregate amount of optional advances pursuant to Section 4.03 on
Mortgage Loans in the related Loan Group by the Master Servicer
outstanding as of the close of business on the Payment Date;
(xviii) the Note Rate for the related Class of Notes for the
Payment Date;
(xix) the number and principal balances of any Mortgage
Loans in that Loan Group retransferred to the Transferor pursuant to
each of Section 2.04 and Section 2.06;
(xx) the amount of Subordinated Transferor Collections for
the Mortgage Loans in that Loan Group included in the payment;
29
(xxi) the amount of Overcollateralization Step-Down Amount
for that Loan Group included in the payment;
(xxii) the Available Transferor Subordinated Amount for that
Loan Group and the Payment Date; and
(xxiii) for the first Payment Date, the number and Cut-off
Date Asset Balance of Mortgage Loans in that Loan Group for which the
Mortgage Loan File was not delivered to the Indenture Trustee within
30 days of the Closing Date.
The amounts furnished pursuant to clauses (ii), (iii) (for Note
Interest), (iv), (v), (vi), (vii), and (viii) above shall be expressed as a
dollar amount per $1,000 increment of Notes.
If the Monthly Statement is not accessible to any of the Noteholders,
the Master Servicer, the Credit Enhancer, or either Rating Agency on the
Indenture Trustee's internet website, the Indenture Trustee shall forward a
hard copy of it to each Noteholder, the Master Servicer, the Credit Enhancer,
and each Rating Agency immediately after the Indenture Trustee becomes aware
that the Monthly Statement is not accessible to any of them via the Indenture
Trustee's internet website. The address of the Indenture Trustee's internet
website where the Monthly Statement will be accessible is
▇▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇. Assistance in using the Indenture Trustee's
internet website may be obtained by calling the Indenture Trustee's customer
service desk at (▇▇▇) ▇▇▇-▇▇▇▇. The Indenture Trustee shall notify each
Noteholder, the Master Servicer, the Credit Enhancer, and each Rating Agency
in writing of any change in the address or means of access to the internet
website where the Monthly Statement is accessible.
Within 60 days after the end of each calendar year, the Master
Servicer shall prepare and forward to the Indenture Trustee the information in
clauses (iii) and (vi) above aggregated for the calendar year. This
requirement of the Master Servicer shall be satisfied if substantially
comparable information is provided by the Master Servicer or a Paying Agent
pursuant to any requirements of the Code.
The Indenture Trustee shall prepare (in a manner consistent with the
treatment of the Notes as indebtedness of the Transferor, or as may be
otherwise required by Section 3.14) Internal Revenue Service Form 1099 (or any
successor form) and any other tax forms required to be filed or furnished to
Noteholders for payments by the Indenture Trustee (or the Paying Agent) on the
Notes and shall file and distribute such forms as required by law.
ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01. Liability of the Sponsor, the Master Servicer, and the
Depositor.
The Sponsor, the Depositor, and the Master Servicer shall be liable
only for their express agreements under this Agreement.
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Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Master Servicer or the Depositor.
Any corporation into which the Master Servicer or the Depositor may
be merged or consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Master Servicer or the Depositor is
a party, or any corporation succeeding to the business of the Master Servicer
or the Depositor, shall be the successor of the Master Servicer or the
Depositor, as the case may be, under this Agreement, without the execution or
filing of any paper or any further act on the part of any of the parties to
this Agreement, notwithstanding anything in this Agreement to the contrary.
Section 5.03. Limitation on Liability of the Master Servicer and
Others.
Neither the Master Servicer nor any of its directors, officers,
employees, or agents is liable to the Trust, the Owner Trustee, the
Transferor, or the Noteholders for the Master Servicer's taking any action or
refraining from taking any action in good faith pursuant to this Agreement, or
for errors in judgment. This provision shall not protect the Master Servicer
or any of its directors, officers, employees, or agents against any liability
that would otherwise be imposed for misfeasance, bad faith, or gross
negligence in the performance of the duties of the Master Servicer or for
reckless disregard of the obligations of the Master Servicer. The Master
Servicer and any of its directors, officers, employees, or agents may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any person about anything arising under this Agreement.
The Master Servicer and each of its directors, officers, employees,
and agents shall be indemnified by the Trust (but only from funds available
from the applicable Loan Group) and held harmless against any loss, liability,
or expense incurred in connection with any legal action relating to this
Agreement, the Transferor Certificates, or the Notes, other than any loss,
liability, or expense related to any specific Mortgage Loan that is otherwise
not reimbursable pursuant to this Agreement and any loss, liability, or
expense incurred due to its willful misfeasance, bad faith, or gross
negligence in the performance of duties under this Agreement or due to its
reckless disregard of its obligations under this Agreement.
The Master Servicer need not appear in, prosecute, or defend any
legal action that is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement, and that in its opinion may involve
it in any expense or liability. The Master Servicer may in its sole discretion
undertake any action that it deems appropriate with respect to this Agreement
and the interests of the Noteholders. If so, the reasonable legal expenses and
costs of the action and any resulting liability shall be expenses, costs, and
liabilities of the Trust, and the Master Servicer shall only be entitled to be
reimbursed pursuant to Section 8.03(a)(x) of the Indenture (but only from
funds available from the applicable Loan Group). The Master Servicer's right
to indemnity or reimbursement pursuant to this Section shall survive any
resignation or termination of the Master Servicer pursuant to Section 5.04 or
6.01 with respect to any losses, expenses, costs, or liabilities arising
before its resignation or termination (or arising from events that occurred
before its resignation or termination).
31
Section 5.04. Master Servicer Not to Resign.
Subject to Section 5.02, the Master Servicer shall not resign as
Master Servicer under this Agreement except
(i) if the performance of its obligations under this
Agreement are no longer permissible under applicable law or due to
applicable law are in material conflict with any other activities
carried on by it or its subsidiaries or Affiliates that are of a type
and nature carried on by the Master Servicer or its subsidiaries or
Affiliates at the date of this Agreement or
(ii) if
(a) the Master Servicer has proposed a successor
Master Servicer to the Indenture Trustee and the proposed
successor Master Servicer is reasonably acceptable to the
Indenture Trustee;
(b) each Rating Agency has delivered a letter to
the Indenture Trustee before the appointment of the
successor Master ▇▇▇▇▇▇▇▇ stating that the proposed
appointment of the successor Master Servicer as Master
Servicer under this Agreement will not result in the
reduction or withdrawal of the then current rating of the
Notes without regard to the Policy; and
(c) the proposed successor Master ▇▇▇▇▇▇▇▇ is
reasonably acceptable to the Credit Enhancer in its sole
discretion, as evidenced by a letter to the Indenture
Trustee.
No resignation by the Master Servicer shall become effective until
the Indenture Trustee or successor Master Servicer designated by the Master
Servicer has assumed the Master Servicer's obligations under this Agreement or
the Indenture Trustee has designated a successor Master Servicer in accordance
with Section 6.02. Any resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in Sections 6.01 and 6.02
as obligations that survive the resignation or termination of the Master
Servicer. Any determination permitting the resignation of the Master Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to
that effect delivered to the Indenture Trustee and the Credit Enhancer. The
Master Servicer shall have no claim (whether by subrogation or otherwise) or
other action against the Transferor, any Noteholder, or the Credit Enhancer
for any amounts paid by the Master Servicer pursuant to any provision of this
Agreement.
Section 5.05. Delegation of Duties.
In the ordinary course of business, the Master Servicer may delegate
any of its duties under this Agreement at any time to any person who agrees to
act in accordance with standards comparable to those with which the Master
Servicer complies pursuant to Section 3.01, including any of its Affiliates or
any subservicer referred to in Section 3.01. This delegation shall not relieve
the Master Servicer of its obligations under this Agreement and shall not
constitute a resignation within the meaning of Section 5.04.
32
Section 5.06. Indemnification by the Master Servicer.
The Master Servicer shall indemnify the Trust, the Owner Trustee, and
the Indenture Trustee against any loss, liability, expense, damage, or injury
suffered or sustained due to the Master Servicer's actions or omissions in
servicing or administering the Mortgage Loans that are not in accordance with
this Agreement, including any judgment, award, settlement, reasonable
attorneys' fees, and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding, or claim. This
indemnification is not payable from the assets of the Trust. This indemnity
shall run directly to and be enforceable by an injured party subject to any
applicable limitations.
The Indenture Trustee and any director, officer, employee, or agent
of the Indenture Trustee shall be indemnified by the Master Servicer and held
harmless against any loss, liability or expense (i) incurred in connection
with any legal action relating to this Agreement, the Indenture, the Custodial
Agreement, the Administration Agreement, the Notes, or the Transferor
Certificates, or in connection with the performance of any of the Indenture
Trustee's duties thereunder, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of any of the Indenture Trustee's duties under this Agreement, the
Indenture, or the Custodial Agreement or by reason of reckless disregard of
the Indenture Trustee's obligations and duties under this Agreement.
The indemnity provisions of this Section shall survive the
termination of this Agreement or the resignation or removal of the Indenture
Trustee under the Indenture.
ARTICLE VI
SERVICING TERMINATION
Section 6.01. Events of Servicing Termination.
If any one of the following events ("Events of Servicing
Termination") shall occur and be continuing:
(i) any failure by the Master Servicer to deposit in the
Collection Account any deposit required to be made under this
Agreement or to remit to the Indenture Trustee amounts required to be
deposited to the Payment Account that continues unremedied either
beyond the relevant Payment Date or for five Business Days after the
date when notice of the failure has been given to the Master Servicer
by the Indenture Trustee or to the Master Servicer and the Indenture
Trustee by the Credit Enhancer or Holders of Notes representing not
less than 25% of the Outstanding Amount of both Classes of Notes; or
(ii) failure by the Master Servicer duly to observe or
perform in any material respect any other covenants or agreements of
the Master Servicer in the Notes or in this Agreement that materially
and adversely affects the interests of the Noteholders or the Credit
Enhancer and continues unremedied for a period of 60 days after the
date on which notice of the failure, requiring it to be remedied, and
stating that
33
the notice is a "Notice of Default" under this Agreement, has been
given to the Master Servicer by the Indenture Trustee or to the
Master Servicer and the Indenture Trustee by the Credit Enhancer or
the Holders of Notes representing not less than 25% of the
Outstanding Amount of both Classes of Notes; or
(iii) an Insolvency Event occurs with respect to the Master
Servicer;
then, until the Event of Servicing Termination has been remedied by the Master
Servicer, either the Indenture Trustee (with the consent of the Credit
Enhancer), the Credit Enhancer, or the Holders of Notes representing not less
than 51% of the Outstanding Amount of both Classes of Notes with the consent
of the Credit Enhancer by notice then given to the Master Servicer (and to the
Indenture Trustee if given by the Credit Enhancer or the Holders of Notes) may
terminate all of the rights and obligations of the Master Servicer as servicer
under this Agreement. This notice to the Master Servicer shall also be given
to each Rating Agency and the Credit Enhancer.
From the receipt by the Master Servicer of the notice, all the rights
and obligations of the Master Servicer under this Agreement, whether with
respect to the Notes or the Mortgage Loans or otherwise, shall pass to and be
vested in the Indenture Trustee pursuant to this Section; and the Indenture
Trustee is authorized to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any documents, and to do anything
else appropriate to effect the purposes of the notice of termination, whether
to complete the transfer and endorsement of each Mortgage Loan and related
documents, or otherwise. The Master Servicer agrees to cooperate with the
Indenture Trustee in effecting the termination of the rights and obligations
of the Master Servicer under this Agreement, including the transfer to the
Indenture Trustee for the administration by it of all cash amounts that are
held by the Master Servicer and are to be deposited by it in the Collection
Account, or that have been deposited by the Master Servicer in the Collection
Account or are subsequently received by the Master Servicer with respect to
the Mortgage Loans. All reasonable costs and expenses (including attorneys'
fees) incurred in connection with transferring the Mortgage Files to the
successor Master Servicer and amending this Agreement to reflect the
succession as Master Servicer pursuant to this Section shall be paid by the
predecessor Master Servicer (or if the predecessor Master Servicer is the
Indenture Trustee, the initial Master Servicer) on presentation of reasonable
documentation of the costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 6.01(i) for a period of five or more Business Days or under
Section 6.01(ii) for a period of 60 or more days, shall not constitute an
Event of Servicing Termination if the delay or failure could not be prevented
by the exercise of reasonable diligence by the Master Servicer and the delay
or failure was caused by an act of God or the public enemy, acts of declared
or undeclared war, public disorder, rebellion or sabotage, epidemics,
landslides, lightning, fire, hurricanes, earthquakes, floods, or similar
causes. The preceding sentence shall not relieve the Master Servicer from
using its best efforts to perform its obligations in a timely manner in
accordance with the terms of this Agreement, and the Master Servicer shall
provide the Indenture Trustee, the Depositor, the Transferor, the Credit
Enhancer, and the Noteholders with an Officers'
34
Certificate giving prompt notice of its failure or delay, together with a
description of its efforts to perform its obligations. The Master Servicer
shall immediately notify the Indenture Trustee of any Events of Servicing
Termination.
In connection with the termination of the Master Servicer if any
mortgage is registered on the MERS(R) System, then, either (i) the successor
Master Servicer, including the Indenture Trustee if the Indenture Trustee is
acting as successor Master Servicer, shall represent and warrant that it is a
member of MERS in good standing and shall agree to comply in all material
respects with the rules and procedures of MERS in connection with the
servicing of the Mortgage Loans that are registered with MERS, or (ii) the
predecessor Master Servicer shall cooperate with the successor Master Servicer
in causing MERS to execute and deliver an assignment of mortgage in recordable
form to transfer all the mortgages registered on the MERS(R) System from MERS
to the Indenture Trustee and to execute and deliver any other notices and
documents appropriate to effect a transfer of those mortgages or the servicing
of the Mortgage Loan on the MERS(R) System to the successor Master Servicer.
The predecessor Master Servicer shall file the assignment in the appropriate
recording office. The successor Master ▇▇▇▇▇▇▇▇ shall deliver the assignment
to the Indenture Trustee promptly upon receipt of the original with evidence
of recording on it or a copy certified by the public recording office in which
the assignment was recorded.
Section 6.02. Indenture Trustee to Act; Appointment of Successor.
(a) From the time the Master Servicer receives a notice of
termination pursuant to Section 6.01 or resigns pursuant to Section 5.04, the
Indenture Trustee shall be the successor in all respects to the Master
Servicer in its capacity as Master Servicer under this Agreement and the
transactions contemplated by this Agreement and shall be subject to all the
obligations of the Master Servicer under this Agreement except (i) the
obligation to repurchase or substitute for any Mortgage Loan, (ii) with
respect to any representation or warranty of the Master Servicer, or (iii) for
any act or omission of either a predecessor or successor Master Servicer other
than the Indenture Trustee. As its compensation under this Agreement, the
Indenture Trustee shall be entitled to the compensation the Master Servicer
would have been entitled to under this Agreement if no notice of termination
had been given. In addition, the Indenture Trustee will be entitled to
compensation with respect to its expenses in connection with conversion of
certain information, documents, and record keeping, as provided in Section
6.01.
Notwithstanding the above, (i) if the Indenture Trustee is unwilling
to act as successor Master Servicer, or (ii) if the Indenture Trustee is
legally unable to so act, the Indenture Trustee may (in the situation
described in clause (i)) or shall (in the situation described in clause (ii))
appoint, or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution, bank, or other mortgage loan
or home equity loan servicer having a net worth of not less than $15,000,000
as the successor to the Master Servicer under this Agreement to assume of any
obligations of the Master Servicer under this Agreement. The successor Master
Servicer must be acceptable to the Credit Enhancer in its sole discretion, as
evidenced by the Credit Enhancer's prior consent, as applicable, which consent
shall not be unreasonably withheld. The appointment of the successor Master
Servicer must not result in the
35
qualification, reduction, or withdrawal of the ratings assigned to the Notes
by the Rating Agencies without regard to the Policy.
Pending appointment of a successor to the Master Servicer, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act as Master Servicer. In connection with this appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation that the
Master Servicer would otherwise have received pursuant to Section 3.08 (or any
lesser compensation the Indenture Trustee and the successor agree to). The
Indenture Trustee and the successor shall take any action, consistent with
this Agreement, necessary to effectuate the succession.
(b) The appointment of a successor Master Servicer shall not affect
any liability of the predecessor Master Servicer that may have arisen under
this Agreement before its termination as Master Servicer (including any
deductible under an insurance policy pursuant to Section 3.04), nor shall any
successor Master Servicer be liable for any acts or omissions of the
predecessor Master Servicer or for any breach by the predecessor Master
Servicer of any of its representations or warranties in this Agreement. Except
for any compensation agreement with the Indenture Trustee, any successor
Master Servicer shall be subject to all the terms of this Agreement from the
time that it accepts its appointment to the same extent as if it were
originally named as Master Servicer.
Section 6.03. Notification to Noteholders and the Transferor.
Upon any termination or appointment of a successor to the Master
Servicer pursuant to this Article or Section 5.04, the Indenture Trustee shall
give prompt notice of it to the Noteholders at their respective addresses
appearing in the Note Register, the Transferor, the Credit Enhancer, and each
Rating Agency.
ARTICLE VII
TERMINATION
Section 7.01. Termination.
(a) The respective obligations and responsibilities of the Sponsor,
the Master Servicer, the Depositor, the Trust, and the Indenture Trustee
created by this Agreement (other than the obligation of the Master Servicer to
send certain notices) shall terminate on the earlier of
(i) the transfer of all the Mortgage Loans pursuant to
Section 7.01(b),
(ii) the termination of the Trust Agreement or the
Indenture, and
(iii) the final payment or other liquidation of the last
Mortgage Loan remaining in the Trust or the disposition of all
property acquired in foreclosure or by deed in lieu of foreclosure of
any Mortgage Loan.
Upon termination in accordance with this Section, the Indenture
Trustee shall execute any documents and instruments of transfer presented by
the Transferor, in each case without
36
recourse, representation, or warranty, and take any other actions the
Transferor reasonably requests to effect the transfer of the Mortgage Loans to
the Transferor. Notwithstanding the termination of this Agreement, the Master
Servicer shall comply with this Agreement in winding up activities under this
Agreement after termination if necessary.
(b) With the consent of the Credit Enhancer the Transferor may effect
the transfer of all the Mortgage Loans at their termination purchase price on
any Payment Date from the Payment Date immediately before which the aggregate
Note Principal Balance of both Classes of Notes is less than or equal to 10%
of the aggregate Original Note Principal Balance of both Classes of Notes and
require the Trust to redeem the Notes pursuant to Section 10.01 of the
Indenture with the proceeds. The termination purchase price is the sum of:
(i) the aggregate Note Principal Balance for both Classes of
Notes,
(ii) accrued aggregate Note Interest through the day
preceding the final Payment Date, and
(iii) interest accrued on any aggregate Unpaid Investor
Interest Shortfall, to the extent legally permissible.
(c) The Transferor must notify the Credit Enhancer, the Trust, and
the Indenture Trustee of any election to effect the transfer of the Mortgage
Loans pursuant to Section 7.01(b) no later than the first day of the month
before the month in which the transfer is to occur. The proceeds from the
purchase of the Mortgage Loans, for purposes of payments on the Notes, shall
be considered to have been received in the Collection Period before the
Collection Period in which the Payment Date on which the purchase takes place
occurs.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment.
This Agreement may be amended from time to time by the Sponsor, the
Master Servicer, the Depositor, the Owner Trustee, and the Indenture Trustee,
if the Rating Agency Condition is satisfied (in connection with which the
consent of the Credit Enhancer shall not be unreasonably withheld). However,
no amendment that significantly changes the permitted activities of the Trust
may be promulgated without the consent of a majority of the aggregate
Outstanding Amount of both Classes of Notes. For this purpose no Notes owned
by the Sponsor or any of its affiliates may vote, nor shall their Notes be
considered outstanding. This Agreement may also be amended from time to time
by the Sponsor, the Master Servicer, the Depositor, the Owner Trustee, and the
Indenture Trustee, with the consent of the Credit Enhancer (which consent
shall not be unreasonably withheld) and Holders of not less than 662/3% of the
aggregate Outstanding Amount of both Classes of Notes.
The Indenture Trustee may enter into any amendment of this Agreement
as to which the Rating Agency Condition is satisfied, and when so requested by
an Issuer Request, the Indenture Trustee shall enter into any amendment of
this Agreement
37
(i) that does not impose further obligations or liabilities
on the Indenture Trustee, and
(ii) as to which either the Rating Agency Condition is
satisfied or Holders of not less than 662/3% of the aggregate
Outstanding Amount of both Classes of Notes and the Credit Enhancer
have consented.
Following the execution and delivery of any amendment to this
Agreement or to the Policy to which the Credit Enhancer was required to
consent, either the Transferor, if the Transferor requested the amendment, or
the Master Servicer, if the Master Servicer requested the amendment, shall
reimburse the Credit Enhancer for the reasonable out-of-pocket costs and
expenses incurred by them in connection with the amendment.
Before the execution of the amendment, the party to this Agreement
requesting the amendment shall notify each Rating Agency of the substance of
the amendment. The Indenture Trustee shall deliver fully executed original
counterparts of the instruments effecting the amendment to the Credit
Enhancer.
Section 8.02. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT
WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Section 8.03. Notices.
All notices, demands, instructions, consents, and other
communications required or permitted under this Agreement shall be in writing
and signed by the party giving the same and shall be personally delivered or
sent by first class or express mail (postage prepaid), national overnight
courier service, or by facsimile transmission or other electronic
communication device capable of transmitting or creating a written record
(confirmed by first class mail) and shall be considered to be given for
purposes of this Agreement on the day that the writing is delivered when
personally delivered or sent by facsimile or overnight courier or three
Business Days after it was sent to its intended recipient if sent by first
class mail. A facsimile has been delivered when the sending machine issues an
electronic confirmation of transmission. Unless otherwise specified in a
notice sent or delivered in accordance with the provisions of this Section,
notices, demands, instructions, consents, and other communications in writing
shall be given to or made on the respective parties at their respective
addresses indicated below:
if to the Trust at:
CWABS Revolving Home Equity Loan Trust, Series 2004-R
Wilmington Trust Company, as Owner Trustee
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
38
if to the Depositor at:
CWABS, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Master Servicer at:
Countrywide Home Loans, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department,
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Indenture Trustee at:
the Corporate Trust Office
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
if to the Credit Enhancer at:
XL Capital Assurance Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-1001
Attention: Surveillance
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇▇▇'▇ at:
Residential Loan Monitoring Group, 4th Floor
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and if to Standard & Poor's at:
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Whenever a notice or other communication to the Credit Enhancer
refers to an Event of Servicing Termination or with respect to which failure
on the part of the Credit Enhancer to respond would constitute consent or
acceptance, then a copy of the notice or other communication shall also be
sent to the attention of the General Counsel of the Credit Enhancer and shall
be marked to indicate "URGENT MATERIAL ENCLOSED."
Section 8.04. Severability of Provisions.
Any provisions of this Agreement that are held invalid for any reason
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of the invalidity or
39
unenforceability without invalidating the remaining provisions of this
Agreement, and the prohibition or unenforceability in a jurisdiction shall not
invalidate or render unenforceable that provision in any other jurisdiction.
Section 8.05. Assignment.
Except as provided in Sections 5.02 and 5.04, this Agreement may not
be assigned by the Depositor or the Master Servicer without the prior consent
of the Credit Enhancer.
Section 8.06. Third-Party Beneficiaries.
This Agreement will be binding on the parties to this Agreement, and
inure to the benefit of the parties to this Agreement, the Noteholders, the
Transferor, the Note Owners, the Owner Trustee, and the Credit Enhancer and
their respective successors and permitted assigns. The Credit Enhancer is a
third party beneficiary of this Agreement. No other person will have any
rights under this Agreement.
Section 8.07. Counterparts.
This Agreement may be executed in any number of copies, and by the
different parties on the same or separate counterparts, each of which shall be
considered to be an original instrument.
Section 8.08. Effect of Headings and Table of Contents.
The Article and Section headings in this Agreement and the Table of
Contents are for convenience only and shall not affect the construction of
this Agreement.
40
IN WITNESS WHEREOF, the Depositor, the Sponsor and Master Servicer,
the Trust, and the Indenture Trustee have caused this Agreement to be duly
executed by their respective officers all as of the day and year first above
written.
CWABS, INC.
Depositor
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
Title: Senior Vice President
JPMORGAN CHASE BANK, N.A.
Indenture Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Attorney-In-Fact
41
CWABS REVOLVING HOME EQUITY LOAN
TRUST, SERIES 2004-R
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Financial Services Officer
42
State of CALIFORNIA )
) ss.:
County of LOS ANGELES )
On the 22nd day of December, 2004 before me, a notary public in and
for the State of California, personally appeared ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇., known to
me who, being by me duly sworn, did depose and say that he resides at
Calabasas, California; that he is the Vice President of CWABS, Inc. a Delaware
corporation, one of the parties that executed the foregoing instrument; that
he signed his name thereto by order of the Board of Directors of said
corporation.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Notary Public
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Commission # 1325392
Notary Public - California
Los Angeles County
My Comm. Expires October 15, 2005.
43
State of CALIFORNIA )
) ss.:
County of LOS ANGELES )
On the 22nd day of December, 2004 before me, a notary public in and
for the State of California, personally appeared ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇., known to
me who, being by me duly sworn, did depose and say that he resides at
Calabasas, California; that he is the Senior Vice President of Countrywide
Home Loans, Inc., a New York corporation, one of the parties that executed the
foregoing instrument; and that he signed his name thereto by order of the
Board of Directors of said corporation.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Notary Public
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Commission # 1325392
Notary Public - California
Los Angeles County
My Comm. Expires October 15, 2005.
44
State of ILLINOIS )
) ss.:
County of COOK )
On the 22nd day of December, 2004 before me, a notary public in and
for the State of Illinois, personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, known to
me who, being by me duly sworn, did depose and say that he resides at Cook
County, Illinois; that he is the Attorney-In-Fact of JPMorgan Chase Bank,
N.A., a national banking association, one of the parties that executed the
foregoing instrument; that he signed his name thereto by order of the Board of
Directors of said corporation.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Notary Public
OFFICIAL SEAL
Notary Public, State of Illinois
My Commission Expires: 08-09-05
-----------------
45
State of DELAWARE )
) ss.:
County of NEW CASTLE )
On the 22nd day of December, 2004 before me, a notary public in and for the
State of Delaware, personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, known to me who,
being by me duly sworn, did depose and say that she resides at Wilmington,
Delaware; that she is the Financial Services Officer of Wilmington Trust
Company, not in its individual capacity but in its capacity as Owner Trustee
of CWABS REVOLVING HOME EQUITY LOAN TRUST, SERIES 2004-R, one of the parties
that executed the foregoing instrument; that she signed her name thereto by
order of the Board of Directors of said corporation.
/s/ ▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Notary Public
My Commission Expires May 28, 2006
46
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[Delivered to Indenture Trustee Only]
A-1
EXHIBIT B
FORM OF LETTER OF REPRESENTATIONS
B-1
EXHIBIT C
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
JPMorgan Chase Bank, N.A.
as Indenture Trustee
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Institutional Trust Services, Countrywide HEL CWABS 2004-R
Attn: Corporate Trust Services Division
Re: CWABS, Inc. Revolving Home Equity Loan
Asset Backed Notes, Series 2004-R
--------------------------------------
Gentlemen:
In connection with the administration of the Mortgage Loans held by
you as Indenture Trustee under the Sale and Servicing Agreement, dated as of
December 22, 2004, among CWABS, Inc. as Depositor, Countrywide Home Loans,
Inc., as Sponsor and Master Servicer, CWABS Revolving Home Equity Loan Trust,
Series 2004-R and you, as Indenture Trustee (the "Agreement"), we hereby
request a release of the Mortgage File held by you as Indenture Trustee with
respect to the following described Mortgage Loan for the reason indicated
below.
Loan No.:
---------
[MIN No.]
-------
Reason for requesting file:
--------------------------
________________________ 1. Mortgage Loan paid in full. (The Master
Servicer hereby certifies that all
amounts received in connection with the
payment in full of the Mortgage Loan
which are required to be deposited in the
Collection Account pursuant to Section
3.02 of the Agreement have been so
deposited).
________________________ 2. Retransfer of Mortgage Loan. (The Master
Servicer hereby certifies that the
Transfer Deposit Amount has been
deposited in the Collection Account
pursuant to the Agreement).
________________________ 3. The Mortgage Loan is being foreclosed.
________________________ 4. The Mortgage Loan is being re-financed by
another depository institution. (The
Master Servicer hereby certifies that all
amounts received in connection with the
payment in full of the Mortgage Loan
which are required to be deposited in the
Collection Account pursuant to Section
3.02 of the Agreement have been so
deposited).
________________________ 5. Other (Describe).
The undersigned acknowledges that the above Mortgage File will be
held by the undersigned in accordance with the provisions of the Agreement and
will promptly be returned
C-1
to the Indenture Trustee when the need therefor by the Master Servicer no
longer exists unless the Mortgage Loan has been liquidated or retransferred.
Capitalized terms used herein shall have the meanings ascribed to
them in the Agreement.
COUNTRYWIDE HOME LOANS, INC.
By:_______________________________
Name:
Title: Servicing Officer
C-2
ANNEX 1
DEFINITIONS
"Adoption Annex" means Annex 2 to this Agreement.
"Affiliate" of any person means any other person controlling,
controlled by or under common control with the person. For purposes of this
definition, "control" means the power to direct the management and policies of
a person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise and "controlling" and "controlled" shall
have meanings correlative to the foregoing.
"Agreement" means this Sale and Servicing Agreement.
"Appraised Value" for any Mortgaged Property means the value
established by any of the following: (i) with respect to Credit Line
Agreements with Credit Limits greater than $100,000, by a full appraisal, (ii)
with respect to Credit Line Agreements with Credit Limits equal to or less
than $100,000, by either a drive by inspection or electronic appraisal of the
Mortgaged Property made to establish compliance with the underwriting criteria
then in effect in connection with the application for the Mortgage Loan
secured by the Mortgaged Property, and (iii) with respect to any Mortgage Loan
as to which the Servicer consents to a new senior lien pursuant to Section
3.01(a), in compliance with the underwriting criteria then in effect in
connection with the application for the related senior mortgage loan.
"Collection Account" means the Eligible Account or Eligible Accounts
created and maintained for the benefit of the Noteholders, the Transferor, and
the Credit Enhancer pursuant to Section 3.02(b).
"Combined Loan-to-Value Ratio" for any Mortgage Loan as of any date
means a fraction
o whose numerator is the sum of (i) the Credit Limit and
(ii) the outstanding principal balance as of the date of execution of
the related original Credit Line Agreement (or any subsequent date as
of which the outstanding principal balance may be determined in
connection with an increase in the Credit Limit for the Mortgage
Loan) of any mortgage loans that are senior or equal in priority to
the Mortgage Loan and that are secured by the same Mortgaged Property
and
o whose denominator is the Valuation of the related
Mortgaged Property.
"Credit Limit Utilization Rate" for any Mortgage Loan means a
fraction whose numerator is the Cut-off Date Asset Balance for the Mortgage
Loan and whose denominator is the related Credit Limit.
"Cut-off Date Loan Balance" means the Loan Balance calculated as of
the Cut-off Date.
"Defective Mortgage Loan" means a Mortgage Loan subject to retransfer
pursuant to Section 2.02 or 2.04.
"Delay Delivery Certification" has the meaning given to it in the
Custodial Agreement.
▇▇▇-1-1
"Depositor" means CWABS, Inc., a Delaware corporation, or its
successor in interest.
"Draw" for any Mortgage Loan means an additional borrowing by the
mortgagor after the Cut-off Date, in accordance with the related Mortgage
Note.
"Due Date" for any Mortgage Loan means the fifteenth day of the
month.
"Electronic Ledger" means the electronic master record of home equity
credit line mortgage loans maintained by the Master Servicer or by the
Sponsor, as appropriate.
"Eligible Substitute Mortgage Loan" means a Mortgage Loan substituted
by the Sponsor for a Defective Mortgage Loan that must, on the date of the
substitution,
(i) have an outstanding Asset Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage
Loan, an aggregate Asset Balance), not 10% more or 10% less than the
Transfer Deficiency relating to the Defective Mortgage Loan;
(ii) have a Loan Rate not less than the Loan Rate of the
Defective Mortgage Loan and not more than 1.000% in excess of the
Loan Rate of the Defective Mortgage Loan;
(iii) have a Loan Rate based on the same Index with
adjustments to the Loan Rate made on the same Interest Rate
Adjustment Date as that of the Defective Mortgage Loan;
(iv) have a FICO score not less than the FICO score of the
Defective Mortgage Loan and not more than 50 points higher than the
Defective Mortgage Loan;
(v) have a Gross Margin that is not less than the Gross
Margin of the Defective Mortgage Loan and not more than 100 basis
points higher than the Gross Margin for the Defective Mortgage Loan;
(vi) if the Mortgage Loan is being substituted for a
Defective Mortgage Loan in Loan Group 1, the Mortgage Loan's original
principal balance (by credit limit) conforms to ▇▇▇▇▇▇ ▇▇▇ or Freddie
Mac guidelines;
(vii) have a mortgage of the same or higher level of
priority as the mortgage relating to the Defective Mortgage Loan at
the time the mortgage was transferred to the Trust;
(viii) have a remaining term to maturity not more than six
months earlier than the remaining term to maturity of the Defective
Mortgage Loan, not later than the maturity date of the related Notes,
and not more than 60 months later than the remaining term to maturity
of the Defective Mortgage Loan;
(ix) comply with each representation and warranty in Section
2.04 (to be made as of the date of substitution); and
(x) have an original Combined Loan-to-Value Ratio not
greater than that of the Defective Mortgage Loan.
▇▇▇-1-2
More than one Eligible Substitute Mortgage Loan may be substituted for a
Defective Mortgage Loan if the Eligible Substitute Mortgage Loans meet the
foregoing attributes in the aggregate and the substitution is approved in
advance by the Credit Enhancer.
"Event of Servicing Termination" has the meaning given to it in
Section 6.01.
"Excess Spread Percentage" has the meaning given to it in the
Insurance Agreement.
"FDIC" means the Federal Deposit Insurance Corporation or any
successor to it.
"Foreclosure Profit" on a Liquidated Mortgage Loan means the amount
by which (i) the aggregate of its Net Liquidation Proceeds exceeds (ii) the
related Asset Balance (plus accrued and unpaid interest on it at the
applicable Loan Rate from the date interest was last paid to the end of the
Collection Period during which the Mortgage Loan became a Liquidated Mortgage
Loan) of the Liquidated Mortgage Loan immediately before the final recovery of
its Liquidation Proceeds.
"Gross Margin" for any Mortgage Loan means the percentage shown as
the "Gross Margin" for the Mortgage Loan on Exhibit A to this Agreement.
"Indenture" means the indenture of even date with this Agreement
between the Trust and the Indenture Trustee.
"Indenture Trustee Fee" means a fee that is separately agreed to
between the Master Servicer and the Indenture Trustee.
"Indenture Trustee Fee Rate" means the per annum rate at which the
Indenture Trustee Fee is calculated.
"Index" for each Interest Rate Adjustment Date for a Mortgage Loan
means the highest "prime rate" as published in the "Money Rates" table of The
Wall Street Journal as of the first business day of the calendar month.
"Insurance Proceeds" means proceeds paid by any insurer (other than
the Credit Enhancer under the Policy) pursuant to any insurance policy
covering a Mortgage Loan net of any amount (i) covering any expenses of the
Master Servicer in connection with obtaining the proceeds, (ii) applied to the
restoration or repair of the related Mortgaged Property, (iii) released to the
mortgagor in accordance with the Master Servicer's normal servicing
procedures, or (iv) required to be paid to any holder of a mortgage senior to
the Mortgage Loan.
"Interest Rate Adjustment Date" for each Mortgage Loan means any date
on which the Loan Rate is adjusted in accordance with the related Credit Line
Agreement.
"Lien" means any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance,
lien (statutory or other), preference, priority right, or interest or other
Security Agreement or preferential arrangement of any kind or nature
whatsoever, including any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of
the foregoing, and the filing of any Financing Statement under the UCC (other
than any Financing Statement filed
▇▇▇-1-3
for informational purposes only) or comparable law of any jurisdiction to
evidence any of the foregoing except that any assignment pursuant to Section
5.02 is not a Lien.
"Lifetime Rate Cap" for each Mortgage Loan whose related Mortgage
Note provides for a lifetime rate cap means the maximum Loan Rate permitted
over the life of the Mortgage Loan under the terms of the related Credit Line
Agreement, as shown on the Mortgage Loan Schedule.
"Liquidated Mortgage Loan" for any Payment Date means any Mortgage
Loan in respect of which the Master Servicer has determined, in accordance
with the servicing procedures specified in this Agreement, as of the end of
the related Collection Period, that all Liquidation Proceeds which it expects
to recover with respect to the disposition of the Mortgage Loan or the related
REO have been recovered.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of
overhead) that are incurred by the Master Servicer in connection with the
liquidation of any Mortgage Loan and not recovered under any insurance policy,
including legal fees and expenses, any unreimbursed amount expended pursuant
to Section 3.06 (including amounts advanced to correct defaults on any
mortgage loan which is senior to the Mortgage Loan and amounts advanced to
keep current or pay off a mortgage loan that is senior to the Mortgage Loan)
respecting the related Mortgage Loan and any related and unreimbursed
expenditures with respect to real estate property taxes, water or sewer taxes,
condominium association dues, property restoration or preservation or
insurance against casualty, loss or damage.
"Liquidation Proceeds" means proceeds (including Insurance Proceeds
but not including amounts drawn under the Policy) received in connection with
the liquidation of any Mortgage Loan or related REO, whether through trustee's
sale, foreclosure sale or otherwise.
"Loan Rate Cap" for each Mortgage Loan means the lesser of (i) the
Lifetime Rate Cap or (ii) the applicable state usury ceiling.
"Loan-to-Value Ratio" for any date of determination for any mortgage
loan means a fraction whose numerator is the outstanding principal balance of
the mortgage loan as of the date of determination and whose denominator is the
Valuation of the related Mortgaged Property.
"Master Servicer" means Countrywide Home Loans, Inc., a New York
corporation and any successor to it and any successor under this Agreement.
"Minimum Monthly Payment" for any Mortgage Loan and any month means
the minimum amount required to be paid by the related mortgagor in that month.
"Net Liquidation Proceeds" for any Liquidated Mortgage Loan means
Liquidation Proceeds net of Liquidation Expenses.
"Officer's Certificate" means a certificate (i) signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, a
Managing Director, a Vice President (however denominated), an Assistant Vice
President, the Treasurer, the Secretary, or one of the Assistant
▇▇▇-1-4
Treasurers or Assistant Secretaries of the Depositor, the Sponsor, the
Transferor, or the Master Servicer, or (ii), if provided for in this
Agreement, signed by a Servicing Officer.
"Opinion of Counsel" means a written opinion of counsel acceptable to
the Indenture Trustee, who may be in-house counsel for the Depositor, the
Sponsor, the Master Servicer, or the Transferor (except that any opinion
pursuant to Section 5.04 or relating to taxation must be an opinion of
independent outside counsel) and who, in the case of opinions delivered to the
Credit Enhancer or the Rating Agency, is reasonably acceptable to it.
"Purchase Price" with respect to any Mortgage Loan required to be
purchased by the Sponsor pursuant to Section 2.03 or 2.04 or purchased at the
option of the Master Servicer pursuant to Section 3.01 or 3.06 means an amount
equal to the sum of
(i) 100% of the unpaid principal balance of the Mortgage
Loan on the date of such purchase,
(ii) accrued interest on the Mortgage Loan at the applicable
Mortgage Rate (or at the applicable Adjusted Mortgage Rate if (x) the
purchaser is the Master Servicer or (y) if the purchaser is
Countrywide and Countrywide is an affiliate of the Master Servicer)
from the date through which interest was last paid by the Mortgagor
to the Due Date in the month in which the Purchase Price is to be
distributed to Noteholders, and
(iii) in the case of any Mortgage Loan required to be
purchased by the Sponsor because of, or that arises out of, a
violation of any predatory or abusive lending law with respect to the
related Mortgage Loan, any costs and damages incurred by the Trust
relating to such violation of any predatory or abusive lending law
with respect to the related Mortgage Loan.
"REO" means a Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
"Servicing Certificate" means a certificate completed and executed by
a Servicing Officer in accordance with Section 4.01.
"Servicing Officer" means any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Mortgage Loans
whose name and specimen signature appear on a list of servicing officers
furnished to the Indenture Trustee (with a copy to the Credit Enhancer) by the
Master Servicer on the Closing Date, as the list may be amended from time to
time.
"Sponsor" means Countrywide Home Loans, Inc., a New York corporation
and any successor to it.
"Spread Rate" has the meaning given to it in the Insurance Agreement.
"Transfer Date" has the meaning given to it in Section 2.06.
"Transfer Deficiency" means that the related Allocated Transferor
Interest after a retransfer of a Mortgage Loan in the related Loan Group
pursuant to Section 2.02(b) would be
▇▇▇-1-5
less than the sum of (i) the greater of the related Minimum Transferor
Interest and the related Required Transferor Subordinated Amount and (ii) in
the case of any Mortgage Loan required to be purchased by the Sponsor because
of, or that arises out of, a violation of any predatory or abusive lending law
with respect to the related Mortgage Loan, any costs and damages incurred by
the Trust relating to such violation of any predatory or abusive lending law
with respect to the related Mortgage Loan.
"Transfer Deposit Amount" has the meaning given to it in Section
2.02(b).
"Transfer Notice Date" has the meaning given to it in Section 2.06.
"Valuation" of any Mortgaged Property means the lesser of (i) the
Appraised Value of the Mortgaged Property and (ii) in the case of a Mortgaged
Property purchased within one year of the origination of the related Mortgage
Loan, the purchase price of the Mortgaged Property.
▇▇▇-1-6
The following have the meanings given to them in the Indenture:
Accelerated Principal Payment Amount MIN
Additional Balance Minimum Transferor Interest
Asset Balance MOM Loan
Assignment of Mortgage Moody's
Available Transferor Subordinated Amount Mortgage File
Basis Risk Carryforward Mortgage Loan
Business Day Mortgage Loan Schedule
Closing Date Mortgage Note
Code Mortgaged Property
Collection Period Note
Corporate Trust Office Note Rate
Credit Enhancement Draw Amount Note Interest
Credit Enhancer Note Principal Balance
Credit Enhancer Default Noteholder or Holder
Credit Limit Note Owner
Credit Line Agreement Note Register and Note Registrar
Custodial Agreement Original Note Principal Balance
Cut-off Date Outstanding Amount
Cut-off Date Asset Balance Paying Agent
Determination Date Payment Date
Eligible Account Policy
Eligible Investments Principal Collections
Guaranteed Principal Payment Amount Purchase Agreement
Indenture Trustee Rapid Amortization Event
Insolvency Event Rating Agency
Insurance Agreement Rating Agency Condition
Interest Collections Required Transferor Subordinated
Interest Formula Rate Amount
Interest Period Responsible Officer
Investor Fixed Allocation Percentage Scheduled Principal Collections
Investor Floating Allocation Percentage Payment Amount
Investor Interest Collections Servicing Fee
Investor Loss Amount Standard & Poor's
Investor Loss Reduction Amount Transferor
Investor Principal Collections Transferor Certificates
Issuer Request Transferor Interest
Loan Group Transferor Principal Collections
Loan Group Balance Trust
Loan Rate Trust Agreement
Managed Amortization Period UCC
Maximum Rate Unpaid Investor Interest Shortfall
MERS Weighted Average Net Loan Rate
MERS(R) System
▇▇▇-1-7
Annex 2
ADOPTION ANNEX
The initial aggregate principal amount of the Notes is
$1,490,000,000, the initial aggregate principal amount of the Class 1-A Notes
is $519,428,000, and the initial aggregate principal amount of the Class 2-A
Notes is $970,572,000
The title of the Collection Account is "JPMorgan Chase Bank, N.A., as
Indenture Trustee, Collection Account in trust for the registered holders of
Revolving Home Equity Loan Asset Backed Notes, Series 2004-R and XL Capital
Assurance Inc."
The date on which the Master Servicer delivers the Officer's
Certificate in each year is March 31, and the first Officer's Certificate
pursuant to Section 3.09 is March 31, 2005.
The date on which the Master Servicer delivers the annual servicing
report in each year is March 15, and the first annual servicing report
pursuant to Section 3.10 is March 15, 2005.
▇▇▇-2-1