EXHIBIT 99.6
MORTGAGE LOAN SALE AND SERVICING AGREEMENT
between
BANK OF AMERICA, N.A.,
as Seller and as Servicer,
and
▇▇▇▇▇▇ BROTHERS BANK, FSB,
as Purchaser
Dated August 1, 2002
Adjustable-Rate Mortgage Loans
Loan Package LBB02-4
TABLE OF CONTENTS
Page
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SECTION 1. Definitions...........................................................................1
SECTION 2. Purchase and Conveyance..............................................................11
SECTION 3. Mortgage Loan Schedule...............................................................11
SECTION 4. Purchase Price.......................................................................11
SECTION 5. Examination of Mortgage Files........................................................12
SECTION 6. Delivery of Mortgage Loan Documents..................................................12
Subsection 6.01. Possession of Mortgage Files................................................12
Subsection 6.02. Books and Records...........................................................13
Subsection 6.03. Delivery of Mortgage Loan Documents.........................................13
SECTION 7. Representations, Warranties and Covenants; Remedies for Breach.......................14
Subsection 7.01. Representations and Warranties Regarding Individual Mortgage Loans..........14
Subsection 7.02. Seller and Servicer Representations.........................................23
Subsection 7.03. Remedies for Breach of Representations and Warranties.......................24
SECTION 8. Closing..............................................................................26
SECTION 9. Closing Documents....................................................................27
SECTION 10. Costs................................................................................27
SECTION 11. Administration and Servicing of Mortgage Loans.......................................28
Subsection 11.01. Servicer to Act as Servicer; Subservicing...................................28
Subsection 11.02. Liquidation of Mortgage Loans...............................................29
Subsection 11.03. Collection of Mortgage Loan Payments........................................30
Subsection 11.04. Establishment of Custodial Account; Deposits in Custodial Account...........30
Subsection 11.05. Withdrawals From the Custodial Account......................................32
Subsection 11.06. Establishment of Escrow Account; Deposits in Escrow Account.................33
Subsection 11.07. Withdrawals From Escrow Account.............................................33
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Subsection 11.08. Payment of Taxes, Insurance and Other Charges; Collections Thereunder.......34
Subsection 11.09. Transfer of Accounts........................................................34
Subsection 11.10. Maintenance of Hazard Insurance.............................................34
Subsection 11.11. Maintenance of Primary Mortgage Insurance Policy; Claims....................35
Subsection 11.12. Fidelity Bond; Errors and Omissions Insurance...............................36
Subsection 11.13. Title, Management and Disposition of REO Property...........................36
Subsection 11.14. Servicing Compensation......................................................37
Subsection 11.15. Distributions...............................................................38
Subsection 11.16. Statements to the Purchaser.................................................38
Subsection 11.17. Advances by the Servicer....................................................39
Subsection 11.18. Assumption Agreements.......................................................39
Subsection 11.19. Satisfaction of Mortgages and Release of Mortgage Files.....................40
Subsection 11.20. Annual Statement as to Compliance...........................................40
Subsection 11.21. Annual Independent Public Accountants' Servicing Report.....................41
Subsection 11.22. Servicer Shall Provide Access and Information as Reasonably Required........41
Subsection 11.23. Restoration of Mortgaged Property...........................................41
Subsection 11.24. Master Servicer.............................................................42
SECTION 12. The Servicer.........................................................................42
Subsection 12.01. Indemnification; Third Party Claims.........................................42
Subsection 12.02. Merger or Consolidation of the Servicer.....................................42
Subsection 12.03. Limitation on Liability of the Servicer and Others..........................43
Subsection 12.04. Seller and Servicer Not to Resign...........................................43
SECTION 13. Default..............................................................................43
Subsection 13.01. Events of Default...........................................................43
Subsection 13.02. Waiver of Default...........................................................45
SECTION 14. Termination..........................................................................45
Subsection 14.01. Termination.................................................................45
Subsection 14.02. Termination of the Servicer Without Cause...................................45
Subsection 14.03. Successors to the Servicer..................................................46
SECTION 15. Notices..............................................................................47
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SECTION 16. Severability Clause..................................................................47
SECTION 17. No Partnership.......................................................................48
SECTION 18. Counterparts.........................................................................48
SECTION 19. Governing Law........................................................................48
SECTION 20. Intention of the Parties.............................................................48
SECTION 21. Waivers..............................................................................49
SECTION 22. Exhibits.............................................................................49
SECTION 23. General Interpretive Principles......................................................49
SECTION 24. Reproduction of Documents............................................................49
SECTION 25. Amendment............................................................................50
SECTION 26. Confidentiality......................................................................50
SECTION 27. Entire Agreement.....................................................................50
SECTION 28. Further Agreements; Transfers........................................................50
SECTION 29. Successors and Assigns...............................................................51
SECTION 30. Non-Solicitation.....................................................................51
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EXHIBITS
EXHIBIT 1 FORM OF SELLER'S OFFICER'S CERTIFICATE
EXHIBIT 2 MORTGAGE LOAN DOCUMENTS
EXHIBIT 3 CONTENTS OF EACH MORTGAGE FILE
EXHIBIT 4 MORTGAGE LOAN SCHEDULE
EXHIBIT 5 UNDERWRITING GUIDELINES
EXHIBIT 6 FORM OF LOST NOTE AFFIDAVIT
EXHIBIT 7 FORM OF OPINION OF COUNSEL
EXHIBIT 8 FORM OF MONTHLY REMITTANCE REPORT
EXHIBIT 9 FORM OF CUSTODIAL ACCOUNT CERTIFICATION
EXHIBIT 10 FORM OF ESCROW ACCOUNT CERTIFICATION
SCHEDULES
SCHEDULE 7.01(kk) LIST OF COOPERATIVE LOANS
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MORTGAGE LOAN SALE AND SERVICING AGREEMENT
THIS MORTGAGE LOAN SALE AND SERVICING AGREEMENT (the "Agreement"), dated
August 1, 2002, is hereby executed by and between ▇▇▇▇▇▇ Brothers Bank, FSB, a
federally chartered savings bank, as purchaser (the "Purchaser") and Bank of
America, N.A., a national banking association, in its capacity as seller (the
"Seller") and in its capacity as servicer (the "Servicer").
WITNESSETH:
WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller, certain conventional, adjustable-rate,
residential, first-lien mortgage loans (the "Mortgage Loans") as described
herein on a servicing-retained basis, and which shall be delivered as whole
loans as provided herein;
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust or
other security instrument creating a first lien on a residential dwelling
located in the jurisdiction indicated on the Mortgage Loan Schedule which is
annexed hereto as Exhibit 4; and
WHEREAS, the Purchaser, the Seller and the Servicer wish to prescribe the
manner of the conveyance, servicing and control of the Mortgage Loans;
NOW, THEREFORE, in consideration of the premises and mutual agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Purchaser, the Seller and the
Servicer agree as follows:
SECTION 1. DEFINITIONS.
For purposes of this Agreement, the following capitalized terms shall have
the respective meanings set forth below.
Adjustment Date: As to each Mortgage Loan, the date on which the Mortgage
Interest Rate is adjusted in accordance with the terms of the related Mortgage
Note and Mortgage.
Agency Transfer: An exchange of the Mortgage Loans for agency securities.
Agreement: This Mortgage Loan Sale and Servicing Agreement including all
exhibits, schedules, amendments and supplements hereto.
ALTA: The American Land Title Association.
Appraised Value: With respect to any Mortgaged Property, the lesser of (i)
the value thereof as determined by a Qualified Appraiser at the time of
origination of the Mortgage Loan, and (ii) the purchase price paid for the
related Mortgaged Property by the Mortgagor with the proceeds of the Mortgage
Loan; provided, however, that in the case of a Refinanced Mortgage Loan, such
value of the Mortgaged Property is based solely upon the value determined by an
appraisal made for the originator of such Refinanced Mortgage Loan at the time
of origination of such Refinanced Mortgage Loan by a Qualified Appraiser.
Assignment of Mortgage: An individual assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form and in blank, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to give record notice of the sale of the Mortgage to the Purchaser.
BPO: A broker's price opinion with respect to a Mortgaged Property.
Business Day: Any day other than a Saturday or Sunday, or a day on which
banking and savings and loan institutions in the state in which (i) the Servicer
is located or (ii) the Custodial Account is maintained are authorized or
obligated by law or executive order to be closed.
Closing Date: August 27, 2002.
Closing Documents: The documents required to be delivered on the Closing
Date pursuant to Section 9.
CLTA: The California Land Title Association.
Code: The Internal Revenue Code of 1986, as amended, or any successor
statute thereto.
Condemnation Proceeds: All awards, compensation and settlements in respect
of a taking (whether permanent or temporary) of all or part of a Mortgaged
Property by exercise of the power of condemnation or the right of eminent
domain, to the extent not required to be released to a Mortgagor in accordance
with the terms of the related Mortgage Loan Documents.
Cooperative Corporation: The entity that holds title (fee or an acceptable
leasehold estate) to the real property and improvements constituting the
Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.
Cooperative Loan Documents: With respect to any Cooperative Loan, (i) the
Cooperative Shares, together with a stock power in blank; (ii) the original
executed Security Agreement and the assignment of the Security Agreement
endorsed in blank; (iii) the original executed Proprietary Lease and the
assignment of the Proprietary Lease endorsed in blank; (iv) the original
executed Recognition Agreement and the assignment of the Recognition Agreement
(or a blanket assignment of all Recognition Agreements) endorsed in blank; (v)
the executed UCC-1 financing statement with evidence of recording thereon, which
has been filed in all places required to perfect the security interest in the
Cooperative Shares and the Proprietary Lease; and (vi) the Seller's executed
UCC-3 financing statements (or copies thereof) or other appropriate UCC
financing statements required by state law, evidencing a complete and unbroken
chain of title from the mortgagee to the Seller with evidence of recording
thereon (or in a form suitable for recordation).
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Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, that includes the allocation of individual dwelling
units to the holders of the Cooperative Shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
Property.
Customary Servicing Procedures: Procedures (including collection
procedures) that the Servicer customarily employs and exercises in servicing and
administering mortgage loans for its own account that are similar to the
Mortgage Loans and which are in accordance with accepted mortgage servicing
practices of prudent lending institutions.
Convertible Mortgage Loan: A Mortgage Loan that by its terms and subject to
certain conditions allows the Mortgagor to convert the adjustable Mortgage
Interest Rate thereon to a fixed Mortgage Interest Rate.
Custodial Account: As defined in Subsection 11.04.
Custodial Agreement: That certain Custodial Agreement between Purchaser and
Custodian dated as of September 1, 1999.
Custodian: U.S. Bank Trust National Association or any successor under the
Custodial Agreement.
Cut-off Date: August 1, 2002.
Cut-off Date Principal Balance: The aggregate Stated Principal Balance of
the Mortgage Loans as of the Cut-off Date which is determined after the
application, to the reduction of principal, of payments of principal due on or
before the Cut-off Date, whether or not collected, and of Principal Prepayments
received before the Cut-off Date.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced with a
Substitute Mortgage Loan in accordance with this Agreement.
Determination Date: With respect to each Remittance Date, the 15th day (or,
if such 15th day is not a Business Day, the following Business Day) of the month
in which such Remittance Date occurs.
Due Date: With respect to each Remittance Date, the first day of the
calendar month in which such Remittance Date occurs, which is the day on which
the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period beginning on
the second day of the month preceding the month of the Remittance Date, and
ending on the first day of the month of the Remittance Date.
Eligible Investments: Any one or more of the following obligations or
securities:
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(i) obligations of or guaranteed as to principal and interest by
▇▇▇▇▇▇▇ Mac, ▇▇▇▇▇▇ ▇▇▇ or any agency or instrumentality of the United
States when such obligations are backed by the full faith and credit of the
United States; provided, however, that such obligations of ▇▇▇▇▇▇▇ Mac or
▇▇▇▇▇▇ ▇▇▇ shall be limited to senior debt obligations and mortgage
participation certificates except that investments in mortgage-backed or
mortgage participation securities with yields evidencing extreme
sensitivity to the rate of principal payments on the underlying mortgages
shall not constitute Eligible Investments hereunder;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than one month from the date of acquisition thereof;
(iii) federal funds, certificates of deposit, demand deposits, time
deposits and bankers' acceptances (which shall each have an original
maturity of not more than ninety (90) days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than 365
days or a remaining maturity of more than thirty (30) days) denominated in
United States dollars of any United States depository institution or trust
company incorporated under the laws of the United States or any state
thereof or of any domestic branch of a foreign depository institution or
trust company;
(iv) commercial paper (having original maturities of not more than 365
days) of any corporation incorporated under the laws of the United States
or any state thereof which is rated not lower than "P-2" by ▇▇▇▇▇'▇
Investors Service, Inc. and rated not lower than "A-2" by Standard & Poor's
Ratings Service, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.; and
(v) a money market fund;
provided, however, that no instrument shall be an Eligible Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest with respect to such instrument provide a yield to
maturity greater than 120% of the yield to maturity at par of such underlying
obligations.
Escrow Account: As defined in Subsection 11.06.
Escrow Payments: The amounts constituting ground rents, taxes, assessments,
Primary Mortgage Insurance Policy premiums (if any), fire and hazard insurance
premiums, flood insurance premiums, condominium charges and other payments as
may be required to be escrowed by the Mortgagor with the Mortgagee pursuant to
the terms of any Mortgage Note or Mortgage.
Event of Default: Any one of the conditions or circumstances enumerated in
Subsection 13.01.
▇▇▇▇▇▇ Mae: The entity formerly known as the Federal National Mortgage
Association or any successor thereto.
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▇▇▇▇▇▇ ▇▇▇ Guides: The ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' Guide and the ▇▇▇▇▇▇ ▇▇▇
Servicers' Guide and all amendments or additions thereto.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
Fidelity Bond: The fidelity bond required to be obtained by the Servicer
pursuant to Subsection 11.12.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement Act of
1989, as amended and in effect from time to time.
▇▇▇▇▇▇▇ Mac: The entity formerly known as the Federal Home Loan Mortgage
Corporation or any successor thereto.
Gross Margin: With respect to each Mortgage Loan, the fixed percentage
amount set forth in each related Mortgage Note and Mortgage which is added to
the Index in order to determine the related Mortgage Interest Rate.
HUD: The United States Department of Housing and Urban Development or any
successor thereto.
Index: With respect to any Mortgage Loan, the index identified on the
Mortgage Loan Schedule and set forth in the related Mortgage Note for the
purpose of calculating interest thereon.
Initial Rate Cap: As to each Mortgage Loan, the maximum increase or
decrease in the Mortgage Interest Rate on the first Adjustment Date as provided
in the related Mortgage Note.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Lifetime Rate Cap: As to each Mortgage Loan, the maximum Mortgage Interest
Rate which shall be as permitted in accordance with the provisions of the
related Mortgage Note.
Liquidation Proceeds: The proceeds received in connection with the
liquidation of a defaulted Mortgage Loan through trustee's sale, foreclosure
sale or otherwise, other than amounts received following the acquisition of REO
Property, Insurance Proceeds and Condemnation Proceeds.
Loan-to-Value Ratio: With respect to any Mortgage Loan as of any date of
determination, the ratio, expressed as a percentage, the numerator of which is
the outstanding principal balance of the Mortgage Loan at origination (or on
such date, if a current Loan-to-Value Ratio is being calculated), and the
denominator of which is the Appraised Value of the related Mortgaged Property.
LTV: Loan-to-Value Ratio.
MERS: Mortgage Electronic Registration Systems, Inc. or any successor
thereto.
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Monthly Payment: With respect to any Mortgage Loan, the scheduled payment
of principal and interest payable by a Mortgagor under the related Mortgage Note
on each Due Date, which such payment may change on any Adjustment Date as
provided in the related Mortgage Note and Mortgage.
Mortgage: The mortgage, deed of trust or other instrument creating a first
lien on the Mortgaged Property securing the Mortgage Note, including, but not
limited to, the limitations on such interest rate imposed by the Initial Rate
Cap, the Periodic Rate Cap/Floor and the Lifetime Rate Cap.
Mortgage File: With respect to any Mortgage Loan, the items listed in
Exhibit 3 hereto and any additional documents required to be added to the
Mortgage File pursuant to this Agreement.
Mortgage Interest Rate: With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan from time to time in accordance
with the provisions of the related Mortgage Note, including, but not limited to,
the limitations on such interest rate imposed by the Initial Rate Cap, the
Periodic Rate Cap/Floor and the Lifetime Rate Cap.
Mortgage Loan: Each mortgage loan sold, assigned and transferred pursuant
to this Agreement and identified on the Mortgage Loan Schedule annexed to this
Agreement as Exhibit 4, including, without limitation, the Mortgage File, the
Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds, and all other rights,
benefits, proceeds and obligations arising from or in connection with such
mortgage loan.
Mortgage Loan Documents: With respect to any Mortgage Loan, the documents
listed in Exhibit 2 hereto.
Mortgage Loan Remittance Rate: With respect to any Mortgage Loan, the
annual rate of interest payable to the Purchaser, which shall be equal to the
related Mortgage Interest Rate minus the related Servicing Fee Rate.
Mortgage Loan Schedule: The schedule of Mortgage Loans relating to the
Mortgage Loans to be annexed hereto as Exhibit 4 on the Closing Date, setting
forth the following information with respect to each Mortgage Loan: (1) the
Servicer's Mortgage Loan identifying number; (2) the Mortgagor's and
co-Mortgagor's name; (3) the street address of the Mortgaged Property including
the city, state, county, and the zip code; (4) a code indicating whether the
loan was originated through a correspondent, retail, or wholesale channel; (5) a
code indicating whether the Mortgaged Property is a single family residence, a
two-to-four family residence, a unit in a condominium, a unit in a planned unit
development or a townhouse; (6) the year in which the Mortgaged Property was
built; (7) the original months to maturity or the remaining months to maturity
from the Cut-off Date, in any case based on the original amortization schedule,
and if different, the maturity expressed in the same manner but based on the
actual amortization schedule; (8) a code indicating the lien status of the
Mortgage Loan; (9) the Loan-to-Value Ratio at origination; (10) the combined
Loan-to-Value Ratio at origination, if applicable; (11) the Appraised Value and
purchase price, if applicable, of the Mortgaged
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Property; (12) the Mortgage Interest Rate at the time of origination; (13) the
Mortgage Interest Rate as of the Cut-off Date; (14) the loan commitment
(lock-in) date; (15) the origination date of the Mortgage Loan; (16) the first
payment date of the Mortgage Loan; (17) the stated maturity date of the Mortgage
Loan; (18) the amount of the monthly principal and interest payment as of the
Cut-Off Date; (19) the amount of the monthly principal and interest payment at
the time of origination; (20) the next due date of the Mortgage Loan; (21) a
twelve month history for the Mortgage Loan and the number of times that Mortgage
Loan was thirty, sixty, and ninety days delinquent in the past twelve months;
(22) a code indicating the payment status of the loan (i.e., bankruptcy,
foreclosure, REO); (23) the original principal amount of the Mortgage Loan; (24)
the actual principal balance of the Mortgage Loan as of the close of business on
the Cut-off Date, after deduction of payments of principal actually collected on
or before the Cut-off Date; (25) the scheduled principal balance of the Mortgage
Loan as of the close of business on the Cut-off Date; after deduction of
payments of principal due on or before the Cut-off Date, whether or not
collected; (26) the Mortgage Loan purpose type; (27) the occupancy status of the
Mortgaged Property at the time of origination; (28) the Mortgagor's and
Co-Mortgagor's FICO score; (29) a code indicating the mortgage insurance
provider and percent of coverage, if applicable; (30) the mortgage insurance
certificate number; the method of payment for mortgage insurance premiums and
cost (lender paid mortgage insurance), if applicable; (31) the loan
documentation type; (32) the back-end debt to income ratio; (33) number of
borrowers; (34) borrower Social Security Number; (35) co-borrower Social
Security Number; (36) borrower age; (37) co-borrower age; (38) borrower gender;
(39) co-borrower gender; (40) borrower race; (41) co-borrower race; (42)
combined annual income; (43) a code indicating first time buyer; (44) the
monthly servicing fee; (45) the escrow balance as of the Cut-off Date; (46) a
code indicating whether the Mortgagor or the co-Mortgagor has been in
foreclosure at any time during the previous twenty-four months; (47) a monthly
payment history on the Mortgage Loan from the date of origination through the
Cut-off Date; (48) the Gross Margin; (49) the Lifetime Rate Cap; (50) the
Periodic Rate Cap/Floor; (51) the Initial Rate Cap; (52) the Adjustment Date;
(53) the Indices and payment and rate adjustment frequencies; (54) the initial
interest rate Adjustment Date; (55) the initial payment Adjustment Date; (56)
the next interest rate Adjustment Date; (57) the next payment Adjustment Date;
(58) the minimum Mortgage Interest Rate under the terms of the Mortgage Note;
(59) the maximum Mortgage Interest Rate under the terms of the Mortgage Note;
(60) the rounding provisions under the terms of the Mortgage Note; and (61) the
lookback provisions (number of days) under the terms of the Mortgage Note.
Mortgage Note: The original executed note or other evidence of the Mortgage
Loan indebtedness of a Mortgagor.
Mortgaged Property: The Mortgagor's real property securing repayment of a
related Mortgage Note, consisting of a fee simple interest in a single parcel of
real property improved by a Residential Dwelling.
Mortgagee: The mortgagee or beneficiary named in the Mortgage and the
successors and assigns of such mortgagee or beneficiary.
Mortgagor: The obligor on a Mortgage Note, who is an owner of the Mortgaged
Property and the grantor or mortgagor named in the Mortgage and such grantor's
or mortgagor's successors in title to the Mortgaged Property.
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NAIC: The National Association of Insurance Commissioners or any successor
organization.
Officer's Certificate: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, a President or a Vice President of the Person on
behalf of whom such certificate is being delivered.
Opinion of Counsel: A written opinion of counsel, who may be an employee of
the Seller or the Servicer, reasonably acceptable to the Purchaser.
OTS: The Office of Thrift Supervision or any successor thereto.
Owner: As defined in Subsection 11.13.
P&I Advance: As defined in Subsection 11.17.
Periodic Rate Cap/Floor: As to each Mortgage Loan, the maximum increase or
decrease in the Mortgage Interest Rate, on any Adjustment Date as provided in
the related Mortgage Note.
Person: An individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Primary Mortgage Insurance Policy: A policy of primary mortgage guaranty
insurance issued by an insurer acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date that is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Purchase Price: The price paid on the Closing Date by the Purchaser to the
Seller pursuant to this Agreement in exchange for the Mortgage Loans as set
forth in Section 4 hereto.
Purchase Price and Terms Letter. The letter agreement between the Seller
and the Purchaser, dated as of August 7, 2002, or any subsequent dates prior to
the Closing Date relating to the sale of the Mortgage Loans.
Purchaser: The Person listed as such in the initial paragraph of this
Agreement, together with its successors and assigns as permitted under the terms
of this Agreement.
Qualified Appraiser: An appraiser of a Mortgaged Property duly appointed by
the originator of the related Mortgage Loan, who had no interest, direct or
indirect, in such Mortgaged Property or in any loan made on the security
thereof, whose compensation is not affected by the approval or disapproval of
the related Mortgage Loan and who met the minimum
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qualifications of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and satisfied the requirements of
Title XI of FIRREA.
Qualified Depository: A deposit account or accounts maintained with a
federal or state chartered depository institution the deposits in which are
insured by the FDIC to the applicable limits and the short-term unsecured debt
obligations of which (or, in the case of a depository institution that is a
subsidiary of a holding company, the short-term unsecured debt obligations of
such holding company) are rated AA by Standard & Poor's Ratings Group or Aa by
▇▇▇▇▇'▇ Investors Service, Inc. (or a comparable rating if another rating agency
is specified by the Purchaser by written notice to the Seller) at the time any
deposits are held on deposit therein.
Recognition Agreement: With respect to any Cooperative Loan, an agreement
between the related Cooperative Corporation and the originator of such Mortgage
Loan to establish the rights of such originator in the related Cooperative
Property.
Record Date: The close of business of the last Business Day of the month
preceding the month of the related Remittance Date.
Refinanced Mortgage Loan: A Mortgage Loan the proceeds of which were not
used to purchase the related Mortgaged Property.
Remittance Date: The 18th day of any month, beginning in September 2002
(or, if such 18th day is not a Business Day, the following Business Day).
REO Disposition: The final sale by the Servicer of an REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Subsection 11.13.
REO Property: A Mortgaged Property acquired by the Servicer through
foreclosure or deed in lieu of foreclosure, as described in Subsection 11.13.
Repurchase Price: With respect to any Mortgage Loan, an amount equal to (A)
the Stated Principal Balance of such Mortgage Loan as of the date of repurchase
plus (B) interest on such Stated Principal Balance at the Mortgage Loan
Remittance Rate from and including the last Due Date through which interest has
been paid on behalf of the Mortgagor or advanced by the Servicer to the day
prior to such date of repurchase, less amounts received in respect of such
repurchased Mortgage Loan which are being held in the Custodial Account for
distribution in connection with such Mortgage Loan.
Residential Dwelling: Any one of the following: (i) a detached one-family
dwelling, (ii) a detached two- to four-family dwelling, (iii) a one-family
dwelling unit in a condominium project or (iv) a one-family dwelling in a
planned unit development, none of which is a cooperative Property (except as set
forth in Schedule 7.01(kk) hereto), mobile or manufactured home.
Securities: The securities issued in connection with a Securitization
evidencing beneficial ownership interests in a trust the assets of which include
the Mortgage Loans.
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Securitization: The transfer of the Mortgage Loans to a trust formed as
part of a publicly issued and/or privately placed, rated securitization,
including the issuance of the related Securities.
Security Agreement: With respect to any Cooperative Loan, the agreement
between the owner of the related Cooperative Shares and the originator of the
related Mortgage Note that defines the terms of the security interest in such
Cooperative Shares and the related Proprietary Lease.
Seller: Bank of America, N.A., a national banking association, or its
successor in interest or any successor to the Seller under this Agreement
appointed as herein provided.
Servicer: Bank of America, N.A., a national banking association, or its
successor in interest or any successor to the Servicer under this Agreement
appointed as herein provided.
Servicing Advances: All customary, reasonable and necessary out-of-pocket
costs and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
judicial proceedings, including foreclosures, (c) the management and liquidation
of the Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage, and (d) payments made by the Servicer with respect to a
Mortgaged Property pursuant to Subsection 11.08.
Servicing Fee: With respect to each Mortgage Loan, the amount of the annual
fee the Purchaser shall pay to the Servicer, which shall, for each month, be
equal to one-twelfth of the product of (i) the Servicing Fee Rate and (ii) the
Stated Principal Balance of such Mortgage Loan. Such fee shall be payable
monthly, computed on the basis of the same principal amount and period
respecting which any related interest payment on a Mortgage Loan is computed.
The obligation of the Purchaser to pay the Servicing Fee is limited to, and
payable solely from, the interest portion (including recoveries with respect to
interest from Liquidation Proceeds and other proceeds, to the extent permitted
by Subsection 11.05) of related Monthly Payments collected by the Servicer, or
as otherwise provided under Subsection 11.05.
Servicing Fee Rate: With respect to each Mortgage Loan, an amount equal to
0.250% per annum.
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name appears
on a list of servicing officers furnished to the Purchaser by the Servicer, as
such list may be amended from time to time.
Stated Principal Balance: As to each Mortgage Loan as to any date of
determination, (i) the principal balance of the Mortgage Loan at the Cut-off
Date after giving effect to the principal portion of any Monthly Payments due on
or before such date, whether or not received, as well as any Principal
Prepayments received on or before such date, minus (ii) all amounts previously
distributed to the Purchaser with respect to the Mortgage Loan representing
payments or recoveries of principal, or advances in lieu thereof.
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Substitute Mortgage Loan: A mortgage loan substituted by the Seller for a
Deleted Mortgage Loan which must, on the date of such substitution, (i) have a
Stated Principal Balance, after deduction of the principal portion of the
Monthly Payment due in the month of substitution, not in excess of, and not
materially greater or less than, the Stated Principal Balance of the Deleted
Mortgage Loan; (ii) have a Mortgage Interest Rate, Gross Margin, Initial Rate
Cap, Periodic Rate Cap/Floor and Lifetime Rate Cap equal to that of the Deleted
Mortgage Loan; (iii) have a Loan-to-Value Ratio not higher than that of the
Deleted Mortgage Loan; (iv) have a remaining term to maturity not greater than
(and not more than one year less than) that of the Deleted Mortgage Loan; (v)
comply with each representation and warranty set forth in Subsection 7.01 (vi)
be current in the payment of principal and interest; and (vii) be secured by a
Mortgaged Property of the same type and occupancy status as secured the Deleted
Mortgage Loan.
Transfers: As defined in Section 28.
Underwriting Guidelines: The underwriting guidelines of Bank of America
Mortgage, a division of Bank of America, N.A., substantially in the form
attached hereto as Exhibit 5.
Whole Loan Transfers: Any sale or transfer of some or all of the Mortgage
Loans by the Purchaser to a third party, which sale or transfer is not an Agency
Transfer or a Securitization.
SECTION 2. PURCHASE AND CONVEYANCE.
The Seller, in exchange for the payment of the Purchase Price by the
Purchaser on the Closing Date, receipt of which is hereby acknowledged, hereby
sells, transfers, assigns, sets over and conveys to the Purchaser, without
recourse, but subject to the terms of this Agreement, all of its rights, title
and interest in and to the Mortgage Loans identified in the Mortgage Loan
Schedule on Exhibit 4 as being sold by it, which Mortgage Loans identified on
Exhibit 4 collectively have an aggregate Cut-off Date Principal Balance of
$51,759,440.05, together with the related Mortgage Files and all rights and
obligations arising under the documents contained therein.
With respect to each Mortgage Loan purchased, the Purchaser shall own and
be entitled to receive: (a) all scheduled principal due after the Cut-off Date,
(b) all other payments and/or recoveries of principal collected on or after the
Cut-off Date (provided, however, that all scheduled payments of principal due on
or before the Cut-off Date and collected by the Servicer after the Cut-off Date
shall belong to the Seller) and (c) all payments of interest on the Mortgage
Loans net of the Servicing Fee (minus that portion of any such interest payment
that is allocable to the period prior to the Cut-off Date).
SECTION 3. MORTGAGE LOAN SCHEDULE.
The Seller shall deliver the Mortgage Loan Schedule to the Purchaser at
least three (3) Business Days prior to the Closing Date.
SECTION 4. PURCHASE PRICE.
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The Purchase Price for the Mortgage Loans shall be the purchase price set
forth in the Purchase Price and Terms Letter plus accrued interest at the
Mortgage Loan Remittance Rate from the Cut-off Date through the day immediately
prior to the Closing Date. Subject to the conditions set forth in Section 8
hereof, the Purchaser shall pay the Purchase Price on a best efforts basis to
the Seller by 4:00 p.m. Eastern Time on the Closing Date. Such payment shall be
made by wire transfer of immediately available funds to the account designated
by the Seller.
SECTION 5. EXAMINATION OF MORTGAGE FILES.
In addition to any rights granted to the Purchaser hereunder to underwrite
the Mortgage Loans and review the Mortgage Loan Documents prior to the Closing
Date, the Purchaser shall be entitled to conduct a due diligence review of the
Mortgage Files in accordance with the timetable and any additional terms and
conditions set forth in the Purchase Price and Terms Letter. Such underwriting
by the Purchaser or its designee shall not impair or diminish the rights of the
Purchaser or any of its successors under this Agreement with respect to a breach
of the representations and warranties contained in this Agreement. The fact that
the Purchaser or its designee has conducted or has failed to conduct any partial
or complete examination of the Mortgage Files shall not affect the Purchaser's
or any of its successors' rights to demand repurchase or other relief or remedy
provided for in this Agreement.
SECTION 6. DELIVERY OF MORTGAGE LOAN DOCUMENTS.
Subsection 6.01. Possession of Mortgage Files.
The contents of each Mortgage File required to be retained by the Servicer
to service the Mortgage Loans pursuant to this Agreement and thus not delivered
to the Purchaser or its designee are and shall be held in trust by the Servicer
for the benefit of the Purchaser as the owner thereof. The Servicer's possession
of any portion of each such Mortgage File is at the will of the Purchaser for
the sole purpose of facilitating servicing of the Mortgage Loans pursuant to
this Agreement, and such retention and possession by the Servicer shall be in a
custodial capacity only. The ownership of each Mortgage Note, each Mortgage and
the contents of each Mortgage File is vested in the Purchaser and the ownership
of all records and documents with respect to the related Mortgage Loan prepared
by or which come into the possession of the Servicer shall immediately vest in
the Purchaser and shall be retained and maintained, in trust, by the Servicer at
the will of the Purchaser in such custodial capacity only. The Mortgage File
retained by the Servicer with respect to each Mortgage Loan pursuant to this
Agreement shall be appropriately identified in the Servicer's computer system to
reflect clearly the ownership of such related Mortgage Loan by the Purchaser.
The Servicer shall release from its custody the contents of any Mortgage File
retained by it only in accordance with this Agreement, except when such release
is required in connection with a repurchase of any such Mortgage Loan pursuant
to Subsection 7.03 of this Agreement or if required under applicable law or
court order. The Servicer shall deliver to the Purchaser copies of any documents
in a Mortgage File reasonably requested by the Purchaser within two (2) days
after the date of such request, at the expense of the Purchaser.
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Subsection 6.02. Books and Records.
Record title to each Mortgage and the related Mortgage Note as of the
Closing Date shall be in the name of the Seller, provided, however, that if a
Mortgage has been recorded in the name of MERS or its designee, the Seller is
shown as the owner of the related Mortgage Loan on the records of MERS for
purposes of the system of recording transfers of beneficial ownership of
mortgages maintained by MERS. Notwithstanding the foregoing, ownership of each
Mortgage and the related Mortgage Note shall be vested solely in the Purchaser
or the appropriate designee of the Purchaser, as the case may be. All rights
arising out of the Mortgage Loans including, but not limited to, all funds
received by the Servicer after the Cut-off Date on or in connection with a
Mortgage Loan as provided in Section 2 shall be vested in the Purchaser;
provided, however, that all such funds received on or in connection with a
Mortgage Loan as provided in Section 2 shall be received and held by the
Servicer in trust for the benefit of the Purchaser as the owner of the Mortgage
Loans pursuant to the terms of this Agreement.
As more fully set forth in Section 20, it is the express intention of the
parties that the transactions contemplated by this Agreement be, and be
construed as, a sale of the Mortgage Loans by the Seller and not a pledge of the
Mortgage Loans by the Seller to the Purchaser to secure a debt or other
obligation of the Seller. Consequently, the sale of each Mortgage Loan shall be
reflected as a purchase on the Purchaser's business records, tax returns and
financial statements, and as a sale of assets on the Seller's business records,
tax returns and financial statements.
Subsection 6.03. Delivery of Mortgage Loan Documents.
With respect to each Mortgage Loan, the Seller shall deliver and release to
the Purchaser, or its designee, (a) at least five (5) Business Days prior to the
Closing Date (or such later date as the Purchaser may reasonably request), the
original Mortgage Note endorsed in blank and the original Assignment of Mortgage
assigned in blank and (b) the other Mortgage Loan Documents no later than sixty
(60) days following the Closing Date, subject to the following paragraph. All
documents shall be original documents or, in the case of Mortgage Loan Documents
delivered for recording, either the original recorded documents or
clerk-certified copies.
In the event that such original or copy of any document submitted for
recordation to the appropriate public recording office is not so delivered to
the Purchaser or its designee within one hundred eighty (180) days following the
Closing Date, and in the event that the Seller does not cure such failure within
sixty (60) days after receipt of written notification of such failure from the
Purchaser, the related Mortgage Loan shall, upon the request of the Purchaser,
be repurchased by the Seller at a price and in the manner specified in
Subsection 7.03. The foregoing repurchase obligation shall not apply in the
event the Seller cannot cause the Servicer to deliver such original or
clerk-certified copy of any document submitted for recordation to the
appropriate public recording office within the specified period due to a delay
caused by the recording office in the applicable jurisdiction; provided that the
Seller shall cause the Servicer instead to deliver a recording receipt of such
recording office or, if such recording receipt is not available, an officer's
certificate of a Servicing Officer of the Servicer, confirming that such
document has been accepted for recording and that the Servicer shall immediately
deliver such document upon receipt; and, provided further, that if the Seller
cannot cause the Servicer to
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deliver such original or clerk-certified copy of any document submitted for
recordation to the appropriate public recording office within the specified time
for any reason within one hundred eighty (180) days after receipt of written
notification of such failure from the Purchaser, the Seller shall repurchase the
Mortgage Loan at the price and in the manner specified in Subsection 7.03.
To the extent received by it, the Servicer shall promptly forward to the
Purchaser, or its designee, original documents evidencing an assumption,
modification, consolidation or extension of any Mortgage Loan entered into in
accordance with this Agreement.
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS; REMEDIES FOR BREACH.
Subsection 7.01. Representations and Warranties Regarding Individual
Mortgage Loans.
The Seller, with respect to Mortgage Loans sold by it, and, solely if
specified below, the Servicer, hereby represent and warrant to the Purchaser
that, as to each Mortgage Loan, as of the Closing Date or such other date
specified herein:
(a) The information set forth in the Mortgage Loan Schedule and the
Mortgage Loan Documents is true, correct and complete in all material
respects.
(b) There are no defaults by the Seller, the Servicer or any prior
originator in complying with the terms of the Mortgage, and all taxes,
ground rents, governmental assessments, insurance premiums, leasehold
payments, water, sewer and municipal charges which previously became due
and owing have been paid, or escrow funds have been established in an
amount sufficient to pay for every such escrowed item which remains unpaid
and which has been assessed but is not yet due and payable.
(c) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments which have been recorded in the applicable public recording
office required by law or if necessary to maintain the lien priority of the
Mortgage, and which have been delivered to the Purchaser; the substance of
any such waiver, alteration or modification has been approved by the
insurer under the Primary Mortgage Insurance Policy, if any, and by the
title insurer, to the extent required by the related policy, and is
reflected on the Mortgage Loan Schedule. No other instrument of waiver,
alteration or modification has been executed, and no Mortgagor has been
released, in whole or in part, except in connection with an assumption
agreement approved by the insurer under the Primary Mortgage Insurance
Policy, if any, and by the title insurer, to the extent required by the
policy, and which assumption agreement is a part of the Mortgage File and
is reflected on the Mortgage Loan Schedule.
(d) The Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including, without
limitation, the defense of usury, nor will the operation of any of the
terms of the Mortgage Note and the Mortgage,
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or the exercise of any right thereunder, render either the Mortgage Note or
the Mortgage unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including, without
limitation, the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto; and the
Mortgagor was not a debtor in any state or federal bankruptcy or insolvency
proceeding at the time the Mortgage Loan was originated.
(e) All buildings or other customarily insured improvements upon the
Mortgaged Property are insured by an insurer generally acceptable to ▇▇▇▇▇▇
▇▇▇ and to prudent mortgage lending institutions against loss by fire,
hazards of extended coverage and such other hazards as are provided for in
the ▇▇▇▇▇▇ Mae Guides as well as all additional requirements set forth
herein, pursuant to an insurance policy conforming to the requirements of
Customary Servicing Procedures and providing coverage in an amount equal to
the lesser of (i) the full insurable value of the Mortgaged Property or
(ii) the outstanding principal balance owing on the Mortgage Loan. All such
insurance policies are in full force and effect and contain a standard
mortgagee clause naming the originator of the Mortgage Loan, its successors
and assigns as mortgagee and all premiums thereon have been paid. If the
Mortgaged Property is in an area identified on a flood hazard map or flood
insurance rate map issued by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made
available), a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration is in effect
which policy conforms to the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac. The
Mortgage obligates the Mortgagor thereunder to maintain all such insurance
at the Mortgagor's cost and expense, and on the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor.
(f) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth in lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity, fair housing or disclosure laws applicable to the origination
and servicing of the Mortgage Loan have been complied with; the Servicer
maintains, and shall maintain, evidence of such compliance as required by
applicable law or regulation and shall make such evidence available for
inspection at the Servicer's office during normal business hours upon
reasonable advance notice.
(g) The Mortgage has not been satisfied, canceled, subordinated or
rescinded, in whole or in part (other than as to Principal Prepayments in
full which may have been received on or after the Cut-off Date and prior to
the Closing Date), and the Mortgaged Property has not been released from
the lien of the Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such satisfaction, cancellation,
subordination, rescission or release. Neither the Seller nor the Servicer
has waived the performance by the Mortgagor of any action, if the
Mortgagor's failure to perform such action would cause the Mortgage Loan to
be in default, and neither the Seller nor the Servicer has waived any
default.
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(h) The Mortgage is a valid, existing, perfected and enforceable first
lien on the Mortgaged Property, including all improvements on the Mortgaged
Property, free and clear of all adverse claims, liens and encumbrances
having priority over the lien of the Mortgage, subject only to (i) the lien
of current real property taxes and assessments not yet due and payable,
(ii) covenants, conditions and restrictions, rights of way, easements and
other matters of the public record as of the date of recording being
acceptable to mortgage lending institutions generally and either (A)
specifically referred to in the lender's title insurance policy delivered
to the originator of the Mortgage Loan or (B) which do not adversely affect
the Appraised Value of the Mortgaged Property and (iii) other matters to
which like properties are commonly subject which do not individually or in
the aggregate materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property. Any security agreement,
chattel mortgage or equivalent document related to and delivered in
connection with the Mortgage Loan establishes and creates a valid, existing
and enforceable first lien and first priority security interest on the
property described therein and the Seller has the full right to sell and
assign the same to the Purchaser.
(i) The Mortgage Note and the related Mortgage are original and
genuine and each is the legal, valid and binding obligation of the maker
thereof, enforceable in all respects in accordance with its terms except as
enforceability may be limited by (i) bankruptcy, insolvency, liquidation,
receivership, moratorium, reorganization or other similar laws affecting
the enforcement of the rights of creditors and (ii) general principles of
equity, whether enforcement is sought in a proceeding in equity or at law
and the Seller has taken all action necessary to transfer such rights of
enforceability to the Purchaser.
(j) All parties to the Mortgage Note and the Mortgage had the legal
capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have
been duly and properly executed by such parties. Either the Mortgagor is a
natural person or the related co-borrower or guarantor is a natural person.
(k) The proceeds of the Mortgage Loan have been fully disbursed to or
for the account of the Mortgagor and there is no obligation for the
Mortgagee to advance additional funds thereunder and any and all
requirements as to completion of any on-site or off-site improvement and as
to disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing the Mortgage Loan
and the recording of the Mortgage have been paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due to the Mortgagee pursuant
to the Mortgage Note or Mortgage.
(l) The Seller and all other parties which have had any interest in
the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise,
are (or, during the period in which they held and disposed of such
interest, were) in compliance with any and all applicable "doing business"
and licensing requirements of the laws of the state wherein the Mortgaged
Property is located.
16
(m) The Mortgage Loan is covered by an ALTA or CLTA lender's title
insurance policy, acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, issued by a
title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and qualified to do
business in the jurisdiction where the Mortgaged Property is located,
insuring (subject to the exceptions contained in (h)(i), (ii) and (iii)
above) the Seller, its successors and assigns as to the first priority lien
of the Mortgage in the original principal amount of the Mortgage Loan and
against any loss by reason of the invalidity or unenforceability of the
lien resulting from the provisions of the Mortgage providing for adjustment
in the Mortgage Interest Rate or Monthly Payment. The Seller and its
successors and assigns are the sole insureds of such lender's title
insurance policy, and such lender's title insurance policy is in full force
and effect and will be in full force and effect upon the consummation of
the transactions contemplated by this Agreement and will inure to the
benefit of the Purchaser and its assigns without any further act. No claims
have been made under such lender's title insurance policy, and the Seller
has not done, by act or omission, anything which would impair the coverage
of such lender's title insurance policy.
(n) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and no event which, with
the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event permitting
acceleration, and neither the Seller nor the Servicer has waived any
default, breach, violation or event permitting acceleration.
(o) There are no, and, as of the Closing Date, neither the Seller nor
the Servicer has received any notice of any, mechanics' or similar liens or
claims filed for work, labor or material (and no rights are outstanding
that under law could give rise to such lien) affecting the related
Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage.
(p) All improvements which were considered in determining the
Appraised Value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property.
(q) The Mortgage Loan was originated by a commercial bank or similar
banking institution which is supervised and examined by a federal or state
authority, or by a mortgagee approved by the Secretary of HUD.
(r) Principal payments on the Mortgage Loan commenced no more than
sixty (60) days after the proceeds of the Mortgage Loan were disbursed. The
Mortgage Loans are 7/1 year adjustable rate mortgage loans, each having an
original term to maturity of not more than thirty (30) years, with interest
payable in arrears on the first day of the month. As to each Mortgage Loan,
on each applicable Adjustment Date, the Mortgage Interest Rate will be
adjusted to equal the sum of the Index plus the applicable Gross Margin,
rounded up or down as provided in the Mortgage Note; provided, however,
that the Mortgage Interest Rate will not increase or decrease by more than
the Initial Rate Cap on the first Adjustment Date or the Periodic Rate
Cap/Floor on any subsequent Adjustment Date, and will in no event exceed
the Lifetime Rate Cap. Each Mortgage
17
Note requires a Monthly Payment that is sufficient (i) during the period
prior to the first adjustment to the Mortgage Interest Rate, to amortize
the original principal balance fully over the original term thereof and to
pay interest at the related Mortgage Interest Rate, and (ii) during the
period following each Adjustment Date, to amortize the outstanding
principal balance fully as of the first day of such period over the then
remaining term of such Mortgage Note and to pay interest at the related
Mortgage Interest Rate The Mortgage Note does not permit negative
amortization. Interest on the Mortgage Note is calculated on the basis of a
360-day year consisting of twelve 30-day months. No Mortgage Loan is a
Convertible Mortgage Loan.
(s) There is no proceeding pending or, to the Seller's knowledge,
threatened for the total or partial condemnation of the Mortgaged Property
and such property is in good repair and is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty,
so as to affect adversely the value of the Mortgaged Property as security
for the Mortgage Loan or the use for which the premises were intended.
(t) The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged Property
of the benefits of the security provided thereby, including (i) in the case
of a Mortgage designated as a deed of trust, by trustee's sale, and (ii)
otherwise by judicial foreclosure. To the best of the Seller's knowledge,
following the date of origination of the Mortgage Loan, the Mortgaged
Property has not been subject to any bankruptcy proceeding or foreclosure
proceeding and the Mortgagor has not filed for protection under applicable
bankruptcy laws. There is no homestead or other exemption or right
available to the Mortgagor or any other person which would interfere with
the right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage.
(u) The Mortgage Note and Mortgage are on forms acceptable to ▇▇▇▇▇▇
▇▇▇ or ▇▇▇▇▇▇▇ Mac.
(v) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (h) above.
(w) The Mortgage File contains an appraisal of the related Mortgaged
Property, in a form acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and such
appraisal complies with the requirements of FIRREA, and was made and
signed, prior to the approval of the Mortgage Loan application, by a
Qualified Appraiser.
(x) In the event the Mortgage constitutes a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Purchaser to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor.
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(y) The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation, balloon payment or other
contingent interest feature, nor does it contain any "buydown" provision
which is currently in effect.
(z) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the event that the Mortgaged Property is sold or transferred
without the prior written consent of the mortgagee thereunder.
(aa) The Mortgagor has received all disclosure materials required by
applicable law with respect to the making of mortgage loans of the same
type as the Mortgage Loan and rescission materials required by applicable
law if the Mortgage Loan is a Refinanced Mortgage Loan and has acknowledged
receipt of such materials to the extent required by applicable law and such
documents will remain in the Mortgage File.
(bb) No Mortgage Loan has an LTV at origination in excess of 95%. Each
Mortgage Loan with an LTV at origination in excess of 80%, if any, will be
subject to a Primary Mortgage Insurance Policy, issued by an insurer
acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac at the time of origination, which
insures that portion of the Mortgage Loan in excess of the portion of the
Appraised Value of the Mortgaged Property as required by ▇▇▇▇▇▇ Mae and
▇▇▇▇▇▇▇ Mac guidelines. All provisions of such Primary Mortgage Insurance
Policy have been and are being complied with, such policy is in full force
and effect, and all premiums due thereunder have been paid. Any Mortgage
subject to any such Primary Mortgage Insurance Policy obligates the
Mortgagor thereunder to maintain such insurance and to pay all premiums and
charges in connection therewith at least until the LTV of such Mortgage
Loan is reduced to less than 80%. The Mortgage Interest Rate for the
Mortgage Loan does not include any such insurance premium. No Mortgage Loan
requires payment of such premiums, in whole or in part, by the Purchaser.
(cc) As of the date of origination of the Mortgage Loan, (i) the
Mortgaged Property is lawfully occupied under applicable law, (ii) all
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy, have been made or obtained from the appropriate
authorities and (iii) no improvement located on or part of the Mortgaged
Property is in violation of any zoning law or regulation.
(dd) The Assignment of Mortgage (except with respect to any Mortgage
that has been recorded in the name of MERS or its designee) is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located.
(ee) All payments required to be made prior to the Cut-off Date for
such Mortgage Loan under the terms of the Mortgage Note have been made, the
Mortgage Loan has not been dishonored, there are no material defaults under
the terms of the Mortgage Loan and no Mortgage Loan has been more than
thirty (30) days delinquent in the twelve (12) month period immediately
prior to the Cut-off Date.
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(ff) None of the Seller, the Servicer or any prior originator or
servicer has advanced funds, or induced, solicited or knowingly received
any advance from any party other than the Mortgagor, directly or
indirectly, for the payment of any amount due under the Mortgage Loan.
(gg) With respect to each Mortgage Loan, the Servicer is in possession
of a complete Mortgage File except for the documents which have been
delivered to the Purchaser or which have been submitted for recording and
not yet returned.
(hh) Immediately prior to the payment of the Purchase Price, the
Seller was the sole owner and holder of the Mortgage Loans and the
indebtedness evidenced by the Mortgage Note. The Mortgage Loans, including
the Mortgage Note and the Mortgage, were not assigned or pledged by the
Seller and the Seller had good and marketable title thereto, and the Seller
had full right to transfer and sell the Mortgage Loans to the Purchaser
free and clear of any encumbrance, participation interest, lien, equity,
pledge, claim or security interest and had full right and authority subject
to no interest or participation in, or agreement with any other party to
sell or otherwise transfer the Mortgage Loans. Following the sale of the
Mortgage Loan, the Purchaser will own such Mortgage Loan free and clear of
any encumbrance, equity, participation interest, lien, pledge, charge,
claim or security interest. The Seller intends to relinquish all rights to
monitor, possess and control the Mortgage Loan except in connection with
the servicing of the Mortgage Loan by the Servicer as set forth in this
Agreement. After the Closing Date, neither the Seller nor the Servicer will
have any right to modify or alter the terms of the sale of the Mortgage
Loan and neither the Seller nor the Servicer will have any obligation or
right to repurchase the Mortgage Loan, except as provided in this Agreement
or as otherwise agreed to by the Seller, the Servicer and the Purchaser.
(ii) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the Mortgage,
and the secured principal amount, as consolidated, bears a single interest
rate and single repayment term. The lien of the Mortgage securing the
consolidated principal amount is expressly insured as having first lien
priority by a title insurance policy, an endorsement to the policy insuring
the mortgagee's consolidated interest or by other title evidence acceptable
to ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac. The consolidated principal amount does not
exceed the original principal amount of the Mortgage Loan.
(jj) The Mortgage Loan was underwritten in accordance with the
Underwriting Guidelines in effect at the time of origination with
exceptions thereto exercised in a reasonable manner, which exceptions will
have no material adverse effects on the Purchaser.
(kk) The Mortgaged Property is located in the state identified in the
Mortgage Loan Schedule and consists of a parcel of real property with a
detached single family residence erected thereon, or a two- to four-family
dwelling, or an individual condominium unit, or an individual unit in a
planned unit development; provided, however, that any condominium project
or planned unit development generally conforms with the Underwriting
Guidelines regarding such dwellings, and except as set forth in
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Schedule 7.01(kk) hereto, no residence or dwelling is a mobile home,
manufactured dwelling or Cooperative Property. As of the date of
origination, no portion of the Mortgaged Property was used for commerical
purposes and, to the Seller's knowledge, since the date of origination, no
portion of the Mortgaged Property has been used for commerical purposes.
(ll) If the Mortgaged Property is a condominium unit or a planned unit
development (other than a de minimis planned unit development) such
condominium or planned unit development project meets ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇
Mac eligibility requirements for sale to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, as the
case may be, or is located in a condominium or planned unit development
project which has received ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac project approval or as
to which ▇▇▇▇▇▇ Mae's and ▇▇▇▇▇▇▇ Mac's eligibility requirements have been
waived.
(mm) The Seller used no adverse selection procedures in selecting the
Mortgage Loan from among the outstanding first-lien, residential mortgage
loans owned by it which were available for inclusion in the Mortgage Loans.
(nn) Each Mortgage Loan is a "qualified mortgage" within Section
860G(a)(3) of the Code.
(oo) With respect to each Mortgage where a lost note affidavit has
been delivered to the Purchaser or its designee in place of the related
Mortgage Note, the related Mortgage Note is no longer in existence. Each
such lost note affidavit is substantially in the form attached hereto as
Exhibit 6.
(pp) No fraud was committed by the Seller or the Servicer or, to the
Seller's or the Servicer's knowledge, any other person in connection with
the origination of the Mortgage Loan.
(qq) The origination practices used by the Seller and the collection
and servicing practices used by the Servicer with respect to each Mortgage
Loan have been in all respects legal, proper, prudent and customary in the
mortgage origination and servicing industry and the collection and
servicing practices used by the Servicer have been acceptable to ▇▇▇▇▇▇ Mae
and ▇▇▇▇▇▇▇ Mac.
(rr) The Mortgagor is not in bankruptcy and is not insolvent and
neither the Seller nor the Servicer have any knowledge of any circumstances
or condition with respect to the Mortgage, the Mortgaged Property, the
Mortgagor or the Mortgagor's credit standing that could reasonably be
expected to cause investors to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent or materially
adversely affect the value or the marketability of the Mortgage Loan.
(ss) The Mortgagor has not notified the Seller or the Servicer, and
neither the Seller nor the Servicer has knowledge of any relief requested
or allowed to the Mortgagor under the Soldiers' and Sailors' Civil Relief
Act of 1940.
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(tt) No Mortgage Loan was made in connection with (i) the construction
or rehabilitation of a Mortgaged Property or (ii) facilitating the trade-in
or exchange of a Mortgaged Property.
(uu) To the best of the Seller's knowledge, there exists no violation
of any local, state or federal environmental law, rule or regulation in
respect of the Mortgaged Property which violation has had or would have a
material adverse effect on the market value of such Mortgaged Property.
There is no pending action or proceeding directly involving any Mortgaged
Property of which the Seller or the Servicer is aware in which compliance
with any environmental law, rule or regulation is an issue.
(vv) No action, inaction, or event has occurred and no state of
affairs exists or has existed that has resulted or will result in the
exclusion from, denial of, or defense to coverage under any applicable
special hazard insurance policy, Primary Mortgage Insurance Policy (if any)
or bankruptcy bond, irrespective of the cause of such failure of coverage.
In connection with the placement of any such insurance, no commission, fee,
or other compensation has been or will be received by the Seller or the
Servicer or any designee of the Seller or the Servicer or any corporation
in which the Seller, the Servicer or any officer, director, or employee of
the Seller or the Servicer had a financial interest at the time of
placement of such insurance.
(ww) With respect to any ground lease to which a Mortgaged Property
may be subject: (A) the Mortgagor is the owner of a valid and subsisting
leasehold interest under such ground lease; (B) such ground lease is in
full force and effect, unmodified and not supplemented by any writing or
otherwise; (C) all rent, additional rent and other charges reserved therein
have been fully paid to the extent payable as of the Closing Date; (D) the
Mortgagor enjoys the quiet and peaceful possession of the leasehold estate;
(E) the Mortgagor is not in default under any of the terms of such ground
lease, and, to the best of the Seller's knowledge, there are no
circumstances which, with the passage of time or the giving of notice, or
both, would result in a default under such ground lease; (F) the lessor
under such ground lease is not in default under any of the terms or
provisions of such ground lease on the part of the lessor to be observed or
performed; (G) the lessor under such ground lease has satisfied any repair
or construction obligations due as of the Closing Date pursuant to the
terms of such ground lease; and (H) the execution, delivery and performance
of the Mortgage do not require the consent (other than those consents which
have been obtained and are in full force and effect) under, and will not
contravene any provision of or cause a default under, such ground lease.
(xx) With respect to escrow deposits and payments that the Servicer is
entitled to collect, all such payments are in the possession of, or under
the control of the Servicer, and there exist no deficiencies in connection
therewith for which customary arrangements for repayment thereof have not
been made. All escrow payments have been collected in full compliance with
state and federal law and the provisions of the related Mortgage Note and
Mortgage. As to any Mortgage Loan that is the subject of an escrow, escrow
of funds is not prohibited by applicable law and has been established in an
amount sufficient to pay for every escrowed item that remains unpaid and
has been assessed but is not yet
22
due and payable. No escrow deposits or other charges or payments due under
the Mortgage Note have been capitalized under any Mortgage or the related
Mortgage Note.
(yy) The Mortgage Loan characteristics set forth in Section 4 of the
Purchase Price and Terms Letter are true and complete in all material
respects.
Subsection 7.02. Seller and Servicer Representations.
The Seller and Servicer hereby represent and warrant to the Purchaser that,
as to itself, as of the Closing Date:
(a) It is a national banking association, duly organized, validly
existing, and in good standing under the laws of the United States of
America and has all licenses necessary to carry on its business as now
being conducted and is licensed, qualified and in good standing in the
states where the Mortgaged Property is located if the laws of such state
require licensing or qualification in order to conduct business of the type
conducted by it. It is an approved seller/servicer in good standing of
conventional residential mortgage loans for ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and
is a HUD-approved mortgagee under Section 203 of the National Housing Act.
It has corporate power and authority to execute and deliver this Agreement
and to perform in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by it and the consummation of the
transactions contemplated hereby have been duly and validly authorized.
This Agreement, assuming due authorization, execution and delivery by the
Purchaser, evidences the legal, valid, binding and enforceable obligation
of it, subject to applicable law except as enforceability may be limited by
(i) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the
rights of creditors and (ii) general principles of equity, whether
enforcement is sought in a proceeding in equity or at law. All requisite
corporate action has been taken by it to make this Agreement valid and
binding upon it in accordance with the terms of this Agreement.
(b) No consent, approval, authorization or order is required for the
transactions contemplated by this Agreement from any court, governmental
agency or body, or federal or state regulatory authority having
jurisdiction over it or, if required, such consent, approval, authorization
or order has been or will, prior to the Closing Date, be obtained.
(c) The consummation of the transactions contemplated by this
Agreement are in its ordinary course of business and will not result in the
breach of any term or provision of its charter or by-laws or result in the
breach of any term or provision of, or conflict with or constitute a
default under or result in the acceleration of any obligation under, any
agreement, indenture or loan or credit agreement or other instrument to
which it or its property is subject, or result in the violation of any law,
rule, regulation, order, judgment or decree to which it or its property is
subject.
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(d) Its transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages pursuant to this Agreement are not subject to the bulk
transfer or any similar statutory provisions in effect in any applicable
jurisdiction.
(e) There is no action, suit, proceeding or investigation pending or,
to its best knowledge, threatened against it which, either individually or
in the aggregate, would result in any material adverse change in its
business, operations, financial condition, properties or assets, or in any
material impairment of its right or ability to carry on its business
substantially as now conducted or which would draw into question the
validity of this Agreement or the Mortgage Loans or of any action taken or
to be taken in connection with its obligations contemplated herein, or
which would materially impair its ability to perform under the terms of
this Agreement.
(f) It does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in this
Agreement.
(g) It acknowledges and agrees that the Servicing Fee shall be treated
by the Servicer, for accounting and tax purposes, as compensation for the
servicing and administration of the Mortgage Loans pursuant to this
Agreement.
(h) It has determined that the disposition of the Mortgage Loans
pursuant to this Agreement will be afforded sale treatment for accounting
and tax purposes.
(i) It is solvent and the sale of the Mortgage Loans will not cause it
to become insolvent. The sale of the Mortgage Loans is not undertaken with
the intent to hinder, delay or defraud any of its creditors.
(j) It has not dealt with any broker, investment banker, agent or
other person that may be entitled to any commission or compensation in
connection with the sale of the Mortgage Loans.
(k) None of this Agreement, the Mortgage Loan Schedule or the Mortgage
Loan Documents furnished in connection with this transaction contain any
untrue statement of fact by the Seller or the Servicer, or omits to state a
fact, necessary to make the statements of the Seller or Servicer herein or
therein, in the light of the circumstances under which they were made, not
materially misleading; provided, however, that the Purchaser acknowledges
that it had the opportunity to dictate the contents of the Mortgage Loan
Schedule and, therefore, the Seller and the Servicer shall not be liable
for any omitted fields on the Mortgage Loan Schedule that were not
requested by the Purchaser.
Subsection 7.03. Remedies for Breach of Representations and Warranties.
It is understood and agreed that the representations and warranties set
forth in Subsections 7.01 and 7.02 shall survive the sale of the Mortgage Loans
to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or lack of examination of any
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Mortgage File. Upon discovery by the Seller, the Servicer or the Purchaser of a
breach of any of the foregoing representations and warranties which materially
and adversely affects the value of the Mortgage Loans or the interest of the
Purchaser therein (or which materially and adversely affects the interest of the
Purchaser in or the value of the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan), the party
discovering such breach shall give prompt written notice to the others.
Within sixty (60) days after the earlier of either discovery by or notice
to either the Seller or the Servicer of any breach of a representation or
warranty which materially and adversely affects the value of a Mortgage Loan or
the Mortgage Loans or the interest of the Purchaser therein, the Seller or the
Servicer, as the case may be, shall use its best efforts promptly to cure such
breach in all material respects and, if such breach cannot be cured, the Seller
shall repurchase such Mortgage Loan or Mortgage Loans at the Repurchase Price.
However, the Seller may, at its option and assuming that the Seller has a
Substitute Mortgage Loan, rather than repurchase the Mortgage Loan as provided
above, remove such Mortgage Loan and substitute in its place a Substitute
Mortgage Loan or Substitute Mortgage Loans; provided, however, that any such
substitution shall be effected not later than ninety (90) days after the Closing
Date. If the Seller has no Substitute Mortgage Loan, it shall repurchase the
deficient Mortgage Loan. Any repurchase of a Mortgage Loan pursuant to the
foregoing provisions of this Subsection 7.03 shall occur on a date designated by
the Purchaser, and acceptable to the Seller, and shall be accomplished by the
Seller remitting to the Servicer the amount of the Repurchase Price for
distribution to the Purchaser on the next scheduled Remittance Date.
At the time of repurchase of any deficient Mortgage Loan (or removal of any
Deleted Mortgage Loan), the Purchaser and the Seller shall arrange for the
assignment of the repurchased Mortgage Loan (or Deleted Mortgage Loan) to the
Seller or its designee and the delivery to the Seller of any documents held by
the Purchaser relating to the repurchased Mortgage Loan in the manner required
by this Agreement with respect to the purchase and sale of such Mortgage Loan on
the Closing Date. In the event a deficient Mortgage Loan is repurchased, the
Seller shall, simultaneously with its remittance to the Servicer of such
Repurchase Price, give written notice to the Purchaser that such repurchase has
taken place. Upon such repurchase, the Mortgage Loan Schedule shall
simultaneously be amended to reflect the withdrawal of the repurchased Mortgage
Loan from this Agreement.
As to any Deleted Mortgage Loan for which the Seller substitutes one or
more Substitute Mortgage Loans, the Seller shall effect such substitution by
delivering to the Purchaser for each Substitute Mortgage Loan the Mortgage Note,
the Mortgage, the Assignment of Mortgage and such other documents and agreements
as are required by Subsection 6.03. The Seller shall remit to the Servicer for
distribution the Monthly Payment due on each Substitute Mortgage Loan in the
month following the date of such substitution. Monthly Payments due with respect
to Substitute Mortgage Loans in the month of substitution will be retained by
the Seller. For the month of substitution, distributions to the Purchaser will
include the Monthly Payment due on such Deleted Mortgage Loan in the month of
substitution, and the Seller shall thereafter be entitled to retain all amounts
subsequently received by it in respect of such Deleted Mortgage Loan. The Seller
shall give written notice to the Purchaser that such substitution has taken
place and shall amend the Mortgage Loan Schedule to reflect the removal of such
Deleted Mortgage Loan from the terms of this Agreement and the substitution of
the Substitute Mortgage Loan.
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Upon such substitution, each Substitute Mortgage Loan shall be subject to the
terms of this Agreement in all respects, and the Seller shall be deemed to have
made with respect to such Substitute Mortgage Loan, as of the date of
substitution, the covenants, representations and warranties set forth in
Subsections 7.01 and 7.02.
For any month in which the Seller substitutes one or more Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate principal balance of all such
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all such Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall, plus an amount equal to the aggregate of any
Monthly Advances made with respect to such Deleted Mortgage Loans, shall be
remitted to the Servicer by the Seller for distribution by the Servicer in the
month of substitution.
In addition to such cure, repurchase and substitution obligations, the
Seller or the Servicer shall indemnify the Purchaser and hold it harmless
against any out-of-pocket losses, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and other costs and expenses
resulting from any claim, demand, defense or assertion by any third party that
is based on or grounded upon, or resulting from, a breach of the Seller or the
Servicer, as applicable, representations and warranties contained in this
Agreement; provided, however, indemnification shall not be available for any
economic losses of the Purchaser due to reinvestment losses, loss of investment
income or any other special, indirect or consequential losses or damages.
No action may be brought against the Seller or the Servicer, as applicable,
relating to or arising out of the breach of any representations and warranties
made in Subsections 7.01 or 7.02 with respect to any Mortgage Loan unless and
until (i) discovery of such breach by the Purchaser or notice thereof by the
Seller or the Servicer to Purchaser, (ii) failure by the Seller or the Servicer,
as applicable, to cure such breach, repurchase such Mortgage Loan as specified
above, substitute a Substitute Mortgage Loan for such Mortgage Loan as specified
above and/or indemnify the Purchaser and (iii) demand upon the Seller or the
Servicer, as applicable, by the Purchaser for compliance with the terms of this
Agreement.
It is understood and agreed that the obligations of the Seller or the
Servicer, as applicable, set forth in this Subsection 7.03 to cure, repurchase
or substitute for a defective Mortgage Loan and/or to indemnify the Purchaser
constitute the sole remedies of the Purchaser respecting a breach of the
representations and warranties set forth in Subsections 7.01 and 7.02.
SECTION 8. CLOSING.
The closing for the purchase and sale of the Mortgage Loans shall take
place on the Closing Date. The closing shall be by telephone, confirmed by
letter or wire as the parties shall agree. The closing shall be subject to each
of the following conditions:
(a) all of the representations and warranties of the Seller and the
Servicer in this Agreement shall be true and correct as of the Closing Date
and no event shall have
26
occurred which, with notice or the passage of time, would constitute an
Event of Default under this Agreement;
(b) the Seller's attorneys shall have received in escrow all Closing
Documents as specified in Section 9, in such forms as are agreed upon and
acceptable to the Purchaser, duly executed by all signatories as required
pursuant to the terms hereof; and
(c) all other terms and conditions of this Agreement required to be
complied with or performed shall have been complied with or performed.
SECTION 9. CLOSING DOCUMENTS.
On the Closing Date, the Seller and the Servicer shall deliver to its
attorneys in escrow fully executed originals of:
(a) this Agreement, executed by the Seller and the Servicer, including
all exhibits;
(b) an Officer's Certificate, in the form of Exhibit 1 hereto, for the
Seller and the Servicer including all attachments thereto;
(c) the Mortgage Loan Schedule, one copy to be attached hereto;
(d) an opinion of in-house counsel for the Seller and the Servicer,
substantially in the form attached hereto as Exhibit 7;
(e) an Escrow Account Certification;
(f) a Custodial Account Certification;
(g) the Purchase Price and Terms Letter; and
(h) a certified true copy of the Custodial Agreement. On the Closing
Date, the Purchaser will assign to the Seller its rights as the Servicer
under the Custodial Agreement.
SECTION 10. COSTS.
The Seller shall pay any commissions due its salesmen and the legal fees
and expenses of its attorneys. The Seller also shall pay the cost of preparing
and recording the Assignments of Mortgage (and, if any Assignment of Mortgage is
missing, the reasonable cost of securing a copy of such Assignment of Mortgage).
The Purchaser shall pay the Seller's cost of delivering the Mortgage Loan
Documents to a location designated by the Purchaser (if other than the
Custodian). All other costs and expenses incurred in connection with the sale of
the Mortgage Loans by the Seller to the Purchaser, including without limitation
the fees and expenses of the Custodian, all costs and expenses of the Seller,
the Servicer and the Purchaser incurred in connection with any Transfer or
further assignment of the Mortgage Loans and the Purchaser's attorneys' fees,
shall be paid by the Purchaser.
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SECTION 11. ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.
Subsection 11.01. Servicer to Act as Servicer; Subservicing.
The Servicer shall service and administer the Mortgage Loans in accordance
with this Agreement and Customary Servicing Procedures and the terms of the
Mortgage Notes and Mortgages, and shall have full power and authority, acting
alone or through subservicers or agents, to do or cause to be done any and all
things in connection with such servicing and administration which the Servicer
may deem necessary or desirable and consistent with the terms of this Agreement.
The Servicer may perform its servicing responsibilities through agents or
independent contractors, but, shall not thereby be released from any of its
responsibilities hereunder. Notwithstanding anything to the contrary, the
Servicer may delegate any of its duties under this Agreement to one or more of
its affiliates without regard to any of the requirements of this section;
provided, however, that the Servicer shall not be released from any of its
responsibilities hereunder by virtue of such delegation. The Mortgage Loans may
be subserviced by one or more unaffiliated subservicers on behalf of the
Servicer provided each subservicer is a ▇▇▇▇▇▇ ▇▇▇ approved seller/servicer or a
▇▇▇▇▇▇▇ Mac approved seller/servicer in good standing, and no event has
occurred, including but not limited to a change in insurance coverage, that
would make it unable to comply with the eligibility for seller/servicers imposed
by ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, or which would require notification to ▇▇▇▇▇▇ Mae
or ▇▇▇▇▇▇▇ Mac. The Servicer shall pay all fees and expenses of the subservicer
from its own funds (provided that any such expenditures that would constitute
Servicing Advances if made by the Servicer hereunder shall be reimbursable to
the Servicer as Servicing Advances), and the subservicer's fee shall not exceed
the Servicing Fee.
At the cost and expense of the Servicer, without any right of reimbursement
from the Custodial Account, the Servicer shall be entitled to terminate the
rights and responsibilities of a subservicer and arrange for any servicing
responsibilities to be performed by a successor subservicer meeting the
requirements in the preceding paragraph; provided, however, that nothing
contained herein shall be deemed to prevent or prohibit the Servicer, at the
Servicer's option, from electing to service the related Mortgage Loans itself.
If the Servicer's responsibilities and duties under this Agreement are
terminated and if requested to do so by the Purchaser, the Servicer shall at its
own cost and expense terminate the rights and responsibilities of the
subservicer as soon as is reasonably possible. The Servicer shall pay all fees,
expenses or penalties necessary in order to terminate the rights and
responsibilities of the subservicer from the Servicer's own funds without
reimbursement from the Purchaser.
The Servicer shall be entitled to enter into an agreement with the
subservicer for indemnification of the Servicer by the subservicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
Any subservicing agreement and any other transactions or services relating
to the Mortgage Loans involving the subservicer shall be deemed to be between
the subservicer and Servicer alone, and the Purchaser shall have no obligations,
duties or liabilities with respect to the subservicer including no obligation,
duty or liability of Purchaser to pay the subservicer's fees and expenses. For
purposes of distributions and advances by the Servicer pursuant to this
28
Agreement, the Servicer shall be deemed to have received a payment on a Mortgage
Loan when the subservicer has received such payment.
Consistent with the terms of this Agreement, the Servicer may waive, modify
or vary any term of any Mortgage Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any
Mortgagor; provided, however, that (unless the Mortgagor is in default with
respect to the Mortgage Loan, or such default is, in the judgment of the
Servicer, imminent, and the Servicer has the consent of the Purchaser) the
Servicer shall not enter into any payment plan or agreement to modify payments
with a Mortgagor lasting more than six (6) months or permit any modification
with respect to any Mortgage Loan which would materially and adversely affect
the Mortgage Loan, including without limitation, any modification that would
change the Mortgage Interest Rate, the Lifetime Rate Cap, the Initial Rate Cap,
the Periodic Rate Cap/Floor or the Gross Margin, defer or forgive the payment of
any principal or interest, change the outstanding principal amount (except for
actual payments of principal), make any future advances or extend the final
maturity date, as the case may be, with respect to such Mortgage Loan. Without
limiting the generality of the foregoing, the Servicer in its own name or acting
through subservicers or agents is hereby authorized and empowered by the
Purchaser when the Servicer believes it appropriate and reasonable in its best
judgment, to execute and deliver, on behalf of itself and the Purchaser, all
instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments, with respect to the Mortgage
Loans and the Mortgaged Properties and to institute foreclosure proceedings or
obtain a deed-in-lieu of foreclosure so as to convert the ownership of such
properties, and to hold or cause to be held title to such properties, on behalf
of the Purchaser pursuant to the provisions of Subsection 11.13.
The Servicer shall make all required Servicing Advances and shall service
and administer the Mortgage Loans in accordance with all applicable laws, rules
and regulations and shall provide to the Mortgagors any reports required to be
provided to them thereby. The Purchaser shall furnish to the Servicer any powers
of attorney and other documents reasonably necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties under this
Agreement.
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed-in-lieu of foreclosure, if the
Servicer has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, or if the Purchaser
otherwise requests an environmental inspection or review of such Mortgaged
Property, such an inspection or review is to be conducted by a qualified
inspector at the Purchaser's expense. Upon completion of the inspection, the
Servicer shall promptly provide the Purchaser with a written report of the
environmental inspection. After reviewing the inspection, the Purchaser shall
determine how the Servicer shall proceed with respect to the Mortgaged Property.
Subsection 11.02. Liquidation of Mortgage Loans.
If any payment due under any Mortgage Loan is not paid when the same
becomes due and payable, or in the event the Mortgagor fails to perform any
other covenant or obligation under the Mortgage Loan and such failure continues
beyond any applicable grace period, the
29
Servicer shall take such action as it shall deem to be in the best interest of
the Purchaser. If any payment due under any Mortgage Loan remains delinquent for
a period of ninety (90) days or more, the Servicer shall commence foreclosure
proceedings in accordance with Customary Servicing Procedures and the guidelines
set forth by ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac. In such connection, the Servicer shall
from its own funds make all necessary and proper Servicing Advances. If the
portion of any Liquidation Proceeds or REO Disposition Proceeds allocable as a
recovery of interest on any Mortgage Loan is less than the full amount of
accrued and unpaid interest on such Mortgage Loan as of the date such proceeds
are received, then the applicable Servicing Fees with respect to such Mortgage
Loan shall be paid first and any amounts remaining thereafter shall be
distributed to the Purchaser.
Subsection 11.03. Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Servicer will proceed diligently, in
accordance with this Agreement, to collect all payments due under each of the
Mortgage Loans when the same shall become due and payable. Further, the Servicer
will in accordance with Customary Servicing Procedures ascertain and estimate
taxes, assessments, fire and hazard insurance premiums, premiums for Primary
Mortgage Insurance Policies (if any), and all other charges that, as provided in
any Mortgage, will become due and payable to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
Subsection 11.04. Establishment of Custodial Account; Deposits in Custodial
Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts
(collectively, the "Custodial Account"), titled "Bank of America, N.A., in trust
for ▇▇▇▇▇▇ Brothers Bank, FSB as Purchaser of Mortgage Loans and various
Mortgagors." Such Custodial Account shall be established with a Qualified
Depository. In any case, the Custodial Account shall be insured by the FDIC in a
manner which shall provide maximum available insurance thereunder and which may
be drawn on by the Servicer. The creation of the Custodial Account shall be
evidenced by a certificate delivered by the Servicer (the "Custodial Account
Certification") substantially in the form of Exhibit 9 hereto.
The Servicer shall deposit in the Custodial Account on a daily basis, and
retain therein the following payments and collections received or made by it
subsequent to the Cut-off Date (other than in respect of principal and interest
on the Mortgage Loans due on or before the Cut-off Date):
(a) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(b) all payments on account of interest on the Mortgage Loans adjusted
to the Mortgage Loan Remittance Rate;
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(c) all Liquidation Proceeds;
(d) all proceeds received by the Servicer under any title insurance
policy, hazard insurance policy, Primary Mortgage Insurance Policy (if any)
or other insurance policy other than proceeds to be held in the Escrow
Account and applied to the restoration or repair of the Mortgaged Property
or released to the Mortgagor in accordance with Customary Servicing
Procedures;
(e) all awards or settlements in respect of condemnation proceedings
or eminent domain affecting any Mortgaged Property which are not released
to the Mortgagor in accordance with Customary Servicing Procedures;
(f) any amount required to be deposited in the Custodial Account
pursuant to Subsections 11.15, 11.17 and 11.19;
(g) any amount required to be deposited by the Servicer in connection
with any REO Property pursuant to Subsection 11.13;
(h) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Subsection 7.03, and all amounts required to be
deposited by the Servicer in connection with shortfalls in principal amount
of Qualified Substitute Mortgage Loans pursuant to Subsection 7.03;
(i) with respect to each Principal Prepayment in full, an amount (to
be paid by the Servicer out of its own funds) which, when added to all
amounts allocable to interest received in connection with the Principal
Prepayment in full, equals one month's interest on the amount of principal
so prepaid for the month of prepayment at the applicable Mortgage Loan
Remittance Rate; provided, however, that the Servicer's aggregate
obligations under this paragraph for any month shall be limited to the
total amount of Servicing Fees actually received with respect to the
Mortgage Loans by the Servicer during such month; and
(j) amounts required to be deposited by the Servicer in connection
with the deductible clause of any hazard insurance policy.
The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges, assumption
fees and other ancillary fees need not be deposited by the Servicer in the
Custodial Account.
The Servicer may invest the funds in the Custodial Account in Eligible
Investments designated in the name of the Servicer for the benefit of the
Purchaser, which shall mature not later than the Business Day next preceding the
Remittance Date next following the date of such investment (except that (A) any
investment in the institution with which the Custodial Account is maintained may
mature on such Remittance Date and (B) any other investment may mature on such
Remittance Date if the Servicer shall advance funds on such Remittance Date,
pending receipt thereof to the extent necessary to make distributions to the
Owner) and shall not be sold
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or disposed of prior to maturity. Notwithstanding anything to the contrary
herein and above, all income and gain realized from any such investment shall be
for the benefit of the Servicer and shall be subject to withdrawal by the
Servicer. The amount of any losses incurred in respect of any such investments
shall be deposited in the Custodial Account by the Servicer out of its own funds
immediately as realized.
Subsection 11.05. Withdrawals From the Custodial Account.
The Servicer shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(a) to make payments to the Purchaser in the amounts and in the manner
provided for in Subsection 11.15;
(b) to reimburse itself for P&I Advances, the Servicer's right to
reimburse itself pursuant to this subclause (b) with respect to any
Mortgage Loan being limited to related Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds and such other
amounts as may be collected by the Servicer from the Mortgagor or otherwise
relating to the Mortgage Loan, it being understood that, in the case of any
such reimbursement, the Servicer's right thereto shall be prior to the
rights of the Purchaser with respect to such Mortgage Loan, except that,
where the Seller is required to repurchase a Mortgage Loan, pursuant to
Subsection 7.03, the Servicer's right to such reimbursement shall be
subsequent to the payment to the Purchaser of the Repurchase Price pursuant
to Subsection 7.03, and all other amounts required to be paid to the
Purchaser with respect to such Mortgage Loan;
(c) to reimburse itself for any unpaid Servicing Fees and for
unreimbursed Servicing Advances, the Servicer's right to reimburse itself
pursuant to this subclause (c) with respect to any Mortgage Loan being
limited to related Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds, REO Disposition Proceeds and such other amounts as may be
collected by the Servicer from the Mortgagor or otherwise relating to the
Mortgage Loan, it being understood that, in the case of any such
reimbursement, the Servicer's right thereto shall be prior to the rights of
the Purchaser unless the Seller is required to repurchase a Mortgage Loan
pursuant to Subsection 7.03, in which case the Servicer's right to such
reimbursement shall be subsequent to the payment to the Purchaser of the
Repurchase Price pursuant to Subsection 7.03 and all other amounts required
to be paid to the Purchaser with respect to such Mortgage Loan;
(d) to reimburse itself for unreimbursed Servicing Advances and for
▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advances, to the extent that such amounts are
nonrecoverable (as certified by the Servicer to the Purchaser in an
Officer's Certificate) by the Servicer pursuant to subclause (b) or (c)
above, provided that the Mortgage Loan for which such advances were made is
not required to be repurchased by the Seller pursuant to Subsection 7.03;
(e) to reimburse itself for expenses incurred by and reimbursable to
it pursuant to Subsection 12.01;
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(f) to withdraw amounts to make P&I Advances in accordance with
Subsection 11.17;
(g) to pay to itself any interest earned or any investment earnings on
funds deposited in the Custodial Account, net of any losses on such
investments;
(h) to withdraw any amounts inadvertently deposited in the Custodial
Account; and
(i) to clear and terminate the Custodial Account upon the termination
of this Agreement.
Subsection 11.06. Establishment of Escrow Account; Deposits in Escrow
Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts (collectively, the "Escrow Account"),
titled "Bank of America, N.A., in trust for ▇▇▇▇▇▇ Brothers Bank, FSB as
Purchaser of Mortgage Loans and various Mortgagors." The Escrow Account shall be
established with a Qualified Depository. In any case, the Escrow Account shall
be insured by the FDIC in a manner which shall provide maximum available
insurance thereunder and which may be drawn on by the Servicer. The creation of
the Escrow Account shall be evidenced by a certificate delivered by the Servicer
(the "Escrow Account Certification") substantially in the form of Exhibit 10
hereto.
The Servicer shall deposit in the Escrow Account on a daily basis, and
retain therein: (a) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any such items as required
under the terms of this Agreement, (b) all amounts representing proceeds of any
hazard insurance policy which are to be applied to the restoration or repair of
any Mortgaged Property and (c) all amounts representing proceeds of any Primary
Mortgage Insurance Policy (if any). The Servicer shall make withdrawals
therefrom only in accordance with Subsection 11.07 hereof. As part of its
servicing duties, the Servicer shall pay to the Mortgagors interest on funds in
the Escrow Account, to the extent required by law.
Subsection 11.07. Withdrawals From Escrow Account.
Withdrawals from the Escrow Account shall be made by the Servicer only (a)
to effect timely payments of ground rents, taxes, assessments, premiums for
Primary Mortgage Insurance Policies (if any), fire and hazard insurance premiums
or other items constituting Escrow Payments for the related Mortgage, (b) to
reimburse the Servicer for any Servicing Advance made by Servicer pursuant to
Subsection 11.08 hereof with respect to a related Mortgage Loan, (c) to refund
to any Mortgagor any funds found to be in excess of the amounts required under
the terms of the related Mortgage Loan, (d) for transfer to the Custodial
Account upon default of a Mortgagor or in accordance with the terms of the
related Mortgage Loan and if permitted by applicable law, (e) for application to
restore or repair of the Mortgaged Property, (f) to pay to the Mortgagor, to the
extent required by law, any interest paid on the funds deposited in the Escrow
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Account, (g) to pay to itself any interest earned on funds deposited in the
Escrow Account (and not required to be paid to the Mortgagor), (h) to the extent
permitted under the terms of the related Mortgage Note and applicable law, to
pay late fees with respect to any Monthly Payment which is received after the
applicable grace period, (i) to withdraw suspense payments that are deposited
into the Escrow Account, (j) to withdraw any amounts inadvertently deposited in
the Escrow Account or (k) to clear and terminate the Escrow Account upon the
termination of this Agreement.
Subsection 11.08. Payment of Taxes, Insurance and Other Charges;
Collections Thereunder.
With respect to each Mortgage Loan, the Servicer shall maintain accurate
records reflecting the status of ground rents, taxes, assessments and other
charges which are or may become a lien upon the Mortgaged Property and the
status of premiums for Primary Mortgage Insurance Policies (if any) and fire and
hazard insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in the Escrow Account which shall have been estimated
and accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage. If a Mortgage does not provide for
Escrow Payments, the Servicer shall determine that any such payments are made by
the Mortgagor. The Servicer assumes full responsibility for the timely payment
of all such bills and shall effect timely payments of all such bills
irrespective of each Mortgagor's faithful performance in the payment of same or
the making of the Escrow Payments and shall make Servicing Advances to effect
such payments, subject to its ability to recover such Servicing Advances
pursuant to Subsections 11.05(c), 11.05(d) and 11.07(b). No costs incurred by
the Servicer or subservicers in effecting the payment of taxes and assessments
on the Mortgaged Properties shall, for the purpose of calculating remittances to
the Purchaser, be added to the amount owing under the related Mortgage Loans,
notwithstanding that the terms of such Mortgage Loans so permit.
Subsection 11.09. Transfer of Accounts.
The Servicer may transfer the Custodial Account or the Escrow Account to a
Qualified Depository. Such transfer shall be made only upon obtaining the prior
written consent of the Purchaser, such consent not to be unreasonably withheld.
Subsection 11.10. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage Loan fire and
hazard insurance with extended coverage customary in the area where the
Mortgaged Property is located by an insurer acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇
Mac in an amount which is at least equal to the lesser of (a) the full insurable
value of the Mortgaged Property or (b) the greater of (i) the outstanding
principal balance owing on the Mortgage Loan and (ii) an amount such that the
proceeds of such insurance shall be sufficient to avoid the application to the
Mortgagor or loss payee of any coinsurance clause under the policy. If the
Mortgaged Property is in an area identified in the Federal Register by the
Federal Emergency Management Agency as a special
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flood hazard area (and such flood insurance has been made available) the
Servicer will cause to be maintained a flood insurance policy meeting the
requirements of the National Flood Insurance Program, in an amount representing
coverage not less than the lesser of (A) the minimum amount required under the
terms of the coverage to compensate for any damage or loss to the Mortgaged
Property on a replacement-cost basis (or the outstanding principal balance of
the Mortgage Loan if replacement-cost basis is not available) or (B) the maximum
amount of insurance available under the National Flood Insurance Program. The
Servicer shall also maintain on REO Property fire and hazard insurance with
extended coverage in an amount which is at least equal to the maximum insurable
value of the improvements which are a part of such property, liability insurance
and, to the extent required and available under the National Flood Insurance
Program, flood insurance in an amount required above. Any amounts collected by
the Servicer under any such policies (other than amounts to be deposited in the
Escrow Account and applied to the restoration or repair of the property subject
to the related Mortgage or property acquired in liquidation of the Mortgage
Loan, or to be released to the Mortgagor in accordance with Customary Servicing
Procedures) shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Subsection 11.05. It is understood and agreed that no earthquake or
other additional insurance need be required by the Servicer of any Mortgagor or
maintained on REO Property other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. All policies required hereunder shall be endorsed with
standard mortgagee clauses with loss payable to Servicer, and shall provide for
at least thirty (30) days prior written notice of any cancellation, reduction in
amount or material change in coverage to the Servicer. The Servicer shall not
interfere with the Mortgagor's freedom of choice in selecting either its
insurance carrier or agent; provided, however, that the Servicer shall not
accept any such insurance policies from insurance companies unless such
companies are acceptable to ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac and are licensed to do
business in the state wherein the property subject to the policy is located.
The hazard insurance policies for each Mortgage Loan secured by a unit in a
condominium development or planned unit development shall be maintained with
respect to such Mortgage Loan and the related development in a manner which is
consistent with ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac requirements.
Subsection 11.11. Maintenance of Primary Mortgage Insurance Policy; Claims.
With respect to each Mortgage Loan with a LTV in excess of 80%, if any, the
Servicer shall, without any cost to the Purchaser, maintain or cause the
Mortgagor to maintain in full force and effect a Primary Mortgage Insurance
Policy insuring that portion of the Mortgage Loan in excess of a percentage in
conformance with ▇▇▇▇▇▇ Mae requirements. The Servicer shall pay or shall cause
the Mortgagor to pay the premium thereon on a timely basis, at least until the
LTV of such Mortgage Loan is reduced to 80%. If such Primary Mortgage Insurance
Policy shall be terminated, the Servicer shall obtain from another insurer a
comparable replacement policy, with a total coverage equal to the remaining
coverage of such terminated Primary Mortgage Insurance Policy. If the insurer
shall cease to be a qualified insurer, the Servicer shall obtain from another
qualified insurer a replacement insurance policy. The Servicer shall not take
any action which would result in noncoverage under any applicable Primary
Mortgage Insurance Policy of any loss which, but for the actions of the Servicer
would have been covered thereunder. In connection with any assumption or
substitution agreement entered into or to be entered into
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pursuant to Subsection 11.18, the Servicer shall promptly notify the insurer
under the related Primary Mortgage Insurance Policy, if any, of such assumption
or substitution of liability in accordance with the terms of such Primary
Mortgage Insurance Policy and shall take all actions which may be required by
such insurer as a condition to the continuation of coverage under such Primary
Mortgage Insurance Policy. If such Primary Mortgage Insurance Policy is
terminated as a result of such assumption or substitution of liability, the
Servicer shall obtain a replacement Primary Mortgage Insurance Policy as
provided above.
In connection with its activities as servicer, the Servicer agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any Primary Mortgage Insurance Policy (if any) in a timely fashion
in accordance with the terms of such Primary Mortgage Insurance Policy and, in
this regard, to take such action as shall be necessary to permit recovery under
any Primary Mortgage Insurance Policy respecting a defaulted Mortgage Loan.
Pursuant to Subsection 11.06, any amounts collected by the Servicer under any
Primary Mortgage Insurance Policy (if any) shall be deposited in the Escrow
Account, subject to withdrawal pursuant to Subsection 11.07.
Subsection 11.12. Fidelity Bond; Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket Fidelity Bond
and an errors and omissions insurance policy, with broad coverage on all
officers, employees or other persons acting in any capacity requiring such
persons to handle funds, money, documents or papers relating to the Mortgage
Loans. These policies must insure the Servicer against losses resulting from
fraud, theft, errors, omissions, negligence, dishonest or fraudulent acts
committed by the Servicer's personnel, any employees of outside firms that
provide data processing services for the Servicer, and temporary contract
employees or student interns. The Fidelity Bond shall also protect and insure
the Servicer against losses in connection with the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Subsection 11.12 requiring such Fidelity
Bond and errors and omissions insurance shall diminish or relieve the Servicer
from its duties and obligations as set forth in this Agreement. The minimum
coverage under any such Fidelity Bond and insurance policy shall be at least
equal to the corresponding amounts required by ▇▇▇▇▇▇ ▇▇▇ in the ▇▇▇▇▇▇ Mae
Servicers' Guide or by ▇▇▇▇▇▇▇ Mac in the ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' & Servicers'
Guide, as amended or restated from time to time, or in an amount as may be
permitted to the Servicer by express waiver of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac. Upon
request of the Purchaser, the Servicer shall cause to be delivered to the
Purchaser a certified true copy of such Fidelity Bond or a certificate
evidencing the same with a statement that the Servicer shall endeavor to provide
written notice to the Purchaser 30 days prior to modification or any material
change.
Subsection 11.13. Title, Management and Disposition of REO Property.
If title to the Mortgaged Property is acquired in foreclosure or by deed in
lieu of foreclosure, the deed or certificate of sale shall be taken in the name
of the Servicer or its nominee, in either case as nominee, for the benefit of
the Purchaser of record on the date of acquisition of title (the "Owner"). If
the Servicer is not authorized or permitted to hold title to real property in
the state where the REO Property is located, or would be adversely affected
under the "doing business" or tax laws of such state by so holding title, the
deed or certificate of
36
sale shall be taken in the name of such Person or Persons as shall be consistent
with an opinion of counsel obtained by the Servicer, at the expense of the
Purchaser, from an attorney duly licensed to practice law in the state where the
REO Property is located. The Person or Persons holding such title other than the
Owner shall acknowledge in writing that such title is being held as nominee for
the Owner.
The Servicer shall cause to be deposited on a daily basis in the Custodial
Account all revenues received with respect to the conservation and disposition
of the related REO Property and shall withdraw therefrom funds necessary for the
proper operation, management and maintenance of the REO Property, including the
cost of maintaining any hazard insurance pursuant to Subsection 11.10 and the
fees of any managing agent acting on behalf of the Servicer. Any disbursement in
excess of $5,000 shall be made only with the written approval of the Purchaser.
The Servicer shall make distributions as required on each Remittance Date to the
Purchaser of the net cash flow from the REO Property (which shall equal the
revenues from such REO Property net of the expenses described above and of any
reserves reasonably required from time to time to be maintained to satisfy
anticipated liabilities for such expenses).
The disposition of REO Property shall be carried out by the Servicer in
accordance with the provisions of this Agreement and shall be made at such
price, and upon such terms and conditions, as the Servicer deems to be in the
best interests of the Owner. Upon the request of the Owner, and at the Owner's
expense, the Servicer shall cause an appraisal of the REO Property to be
performed for the Owner. The proceeds of sale of the REO Property shall be
promptly deposited in the Custodial Account and, as soon as practical
thereafter, the expenses of such sale shall be paid, the Servicer shall
reimburse itself for any related unreimbursed Servicing Advances, unpaid
Servicing Fees, unreimbursed advances made pursuant to Subsection 11.17 and any
appraisal performed pursuant to this paragraph and the net cash proceeds of such
sale remaining in the Custodial Account shall be distributed to the Purchaser.
The Servicer shall either itself or through an agent selected by the
Servicer, manage, conserve, protect and operate the REO Property in the same
manner that it manages, conserves, protects and operates other foreclosed
property for its own account, and in the same manner that similar property in
the same locality as the REO Property is managed. The Servicer shall attempt to
sell the same within a three-year period (and may temporarily rent the same) on
such terms and conditions as the Servicer deems to be in the best interest of
the Owner.
Upon request, with respect to any REO Property, the Servicer shall furnish
to the Owner a statement covering the Servicer's efforts in connection with the
sale of that REO Property and any rental of the REO Property incidental to the
sale thereof for the previous month (together with an operating statement).
Subsection 11.14. Servicing Compensation.
As compensation for its services hereunder, the Servicer shall be entitled
to retain the Servicing Fee from interest payments actually collected on the
Mortgage Loans. Additional servicing compensation in the form of assumption
fees, late payment charges, prepayment penalties and other ancillary income
shall be retained by the Servicer to the extent not required to be deposited in
the Custodial Account. The Servicer shall be required to pay all expenses
37
incurred by it in connection with its servicing activities hereunder and shall
not be entitled to reimbursement therefor except as specifically provided for
herein.
Subsection 11.15. Distributions.
On each Remittance Date the Servicer shall remit by wire transfer of
immediately available funds to the account designated in writing by the
Purchaser of record on the preceding Record Date (a) all Monthly Payments due in
the Due Period prior to such Remittance Date and received by the Servicer prior
to the related Determination Date, plus (b) all amounts, if any, which the
Servicer is obligated to distribute pursuant to Subsection 11.17, plus (c) any
amounts attributable to Principal Prepayments received in the calendar month
preceding the month in which the Remittance Date occurs, together with any
additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayments in accordance with Subsection
11.04(i), minus (d) all amounts that may be withdrawn from the Custodial Account
pursuant to Subsections 11.05(b) through (e).
With respect to any remittance received by the Purchaser after the Business
Day on which such payment was due, the Servicer shall pay to the Purchaser
interest on any such late payment at an annual rate equal to the rate of
interest as is publicly announced from time to time at its principal office by
Bank of America, N.A., or its successor, as its prime lending rate, adjusted as
of the date of each change, plus two percent (2%), but in no event greater than
the maximum amount permitted by applicable law. Such interest shall be paid by
the Servicer to the Purchaser on the date such late payment is made and shall
cover the period commencing with the Business Day on which such payment was due
and ending with the Business Day immediately preceding the Business Day on which
such payment is made, both inclusive. The payment by the Servicer of any such
interest shall not be deemed an extension of time for payment or a waiver of any
Event of Default by the Servicer.
Subsection 11.16. Statements to the Purchaser.
Not later than the tenth calendar day of each month, the Servicer shall
forward to the Purchaser a statement, substantially in the form of Exhibit 8 and
certified by a Servicing Officer, setting forth on a loan-by-loan basis: (a) the
amount of the distribution made on such Remittance Date which is allocable to
principal and allocable to interest; (b) the amount of servicing compensation
received by the Servicer during the prior calendar month; and (c) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the
preceding month. Such statement shall also include information regarding
delinquencies on Mortgage Loans, indicating the number and aggregate principal
amount of Mortgage Loans which are either one (1), two (2) or three (3) or more
months delinquent and the book value of any REO Property. The Servicer shall
submit to the Purchaser monthly a liquidation report with respect to each
Mortgaged Property sold in a foreclosure sale as of the related Record Date and
not previously reported. Such liquidation report shall be incorporated into the
remittance report delivered to Purchaser in the form of Exhibit 8 hereto. Upon
the written request of the Purchaser, the Servicer shall also provide such
information as set forth above to the Purchaser in electronic form in the
Servicer's standard format.
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In addition, within a reasonable period of time after the end of each
calendar year, the Servicer will furnish a report to each Person that was a
Purchaser at any time during such calendar year. Such report shall state the
aggregate of amounts distributed to the Purchaser for such calendar year. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code.
The Servicer shall prepare and file any and all tax returns, information
statements or other filings required to be delivered to any governmental taxing
authority, the Mortgagor or to the Purchaser pursuant to any applicable law with
respect to the Mortgage Loans and the transactions contemplated hereby. In
addition, the Servicer shall provide the Purchaser with such information
concerning the Mortgage Loans as is necessary for such Purchaser to prepare
federal income tax returns as the Purchaser may reasonably request from time to
time.
Subsection 11.17. Advances by the Servicer.
On the Business Day immediately preceding each Remittance Date, the
Servicer shall either (a) deposit in the Custodial Account from its own funds an
amount equal to the aggregate amount of all Monthly Payments (with interest
adjusted to the Mortgage Loan Remittance Rate) which were due on the Mortgage
Loans during the applicable Due Period and which were delinquent at the close of
business on the immediately preceding Determination Date (each such advance, a
"P&I Advance"), (b) cause to be made an appropriate entry in the records of the
Custodial Account that amounts held for future distribution have been, as
permitted by this Subsection 11.17, used by the Servicer in discharge of any
such P&I Advance or (c) make P&I Advances in the form of any combination of (a)
or (b) aggregating the total amount of advances to be made. Any amounts held for
future distribution and so used shall be replaced by the Servicer by deposit in
the Custodial Account on or before any future Remittance Date if funds in the
Custodial Account on such Remittance Date shall be less than payments to the
Purchaser required to be made on such Remittance Date. The Servicer's obligation
to make P&I Advances as to any Mortgage Loan will continue through the last
Monthly Payment due prior to the payment in full of a Mortgage Loan, or through
the last Remittance Date prior to the Remittance Date for the distribution of
all other payments or recoveries (including proceeds under any title, hazard or
other insurance policy, or condemnation awards) with respect to a Mortgage Loan;
provided, however, that such obligation shall cease if the Servicer, in its good
faith judgment, determines that such P&I Advances would not be recoverable
pursuant to Subsection 11.05(d). The determination by the Servicer that a P&I
Advance, if made, would be nonrecoverable, shall be evidenced by an Officer's
Certificate of the Servicer, delivered to the Purchaser, which details the
reasons for such determination.
Subsection 11.18. Assumption Agreements.
The Servicer will use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note; provided that, subject to
the Purchaser's prior approval, the Servicer shall permit such assumption if so
required in accordance with the terms of the Mortgage or the Mortgage Note. When
the Mortgaged Property has been conveyed by the Mortgagor, the Servicer will, to
the extent it has knowledge of such conveyance, exercise its rights to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause
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applicable thereto; provided, however, the Servicer will not exercise such
rights if prohibited by law from doing so or if the exercise of such rights
would impair or threaten to impair any recovery under the related Primary
Mortgage Insurance Policy, if any. In connection with any such assumption, the
outstanding principal amount, the Monthly Payment, the Mortgage Interest Rate,
the Lifetime Rate Cap, the Gross Margin, the Initial Rate Cap or the Periodic
Rate Cap/Floor of the related Mortgage Note shall not be changed, and the term
of the Mortgage Loan will not be increased or decreased. If an assumption is
allowed pursuant to this Subsection 11.18, the Servicer with the prior consent
of the issuer of the Primary Mortgage Insurance Policy, if any, is authorized to
enter into a substitution of liability agreement with the purchaser of the
Mortgaged Property pursuant to which the original Mortgagor is released from
liability and the purchaser of the Mortgaged Property is substituted as
Mortgagor and becomes liable under the Mortgage Note.
Subsection 11.19. Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will obtain the portion of the
Mortgage File that is in the possession of the Purchaser or its designee,
prepare and process any required satisfaction or release of the Mortgage and
notify the Purchaser in accordance with the provisions of this Agreement. The
Purchaser or its designee agrees to deliver to the Servicer the original
Mortgage Note for any Mortgage Loan not later than five (5) Business Days
following its receipt of a notice from the Servicer that such a payment in full
has been received or that a notification has been received that such a payment
in full shall be made. Such Mortgage Note shall be held by the Servicer, in
trust, for the purpose of canceling such Mortgage Note and delivering the
canceled Mortgage Note to the Mortgagor in a timely manner as and to the extent
provided under applicable state law.
If the Mortgage has been recorded in the name of MERS or its designee, the
Servicer shall take all necessary action to effect the release of the Mortgage
Loan on the records of MERS.
If the Servicer grants a satisfaction or release of a Mortgage without
having obtained payment in full of the indebtedness secured by the Mortgage or
should the Servicer otherwise prejudice any right the Purchaser may have under
the mortgage instruments, the Servicer, upon written demand of the Purchaser,
shall remit to the Purchaser the Stated Principal Balance of the related
Mortgage Loan by deposit thereof in the Custodial Account. The Fidelity Bond
shall insure the Servicer against any loss it may sustain with respect to any
Mortgage Loan not satisfied in accordance with the procedures set forth herein.
Subsection 11.20. Annual Statement as to Compliance.
Within ninety (90) days after the Servicer's fiscal year end, beginning
with the fiscal year end 2002, the Servicer will deliver to the Purchaser an
Officer's Certificate stating that (a) a review of the activities of the
Servicer during the preceding calendar year and if performance under this
Agreement has been made under such officer's supervision, and (b) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement throughout such year, or, if there has been
a default in the fulfillment of any such
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obligation, specifying each such default known to such officer and the nature
and status thereof and the action being taken by the Servicer to cure such
default.
Subsection 11.21. Annual Independent Public Accountants' Servicing Report.
Within ninety (90) days after the Servicer's fiscal year end, beginning
with the fiscal year end 2002, the Servicer at its expense shall cause a firm of
independent public accountants which is a member of the American Institute of
Certified Public Accountants to furnish a statement to the Purchaser to the
effect that such firm has, with respect to the Servicer's overall servicing
operations, examined such operations in accordance with the requirements of the
Uniform Single Attestation Program for Mortgage Bankers, stating such firm's
conclusions relating thereto.
Subsection 11.22. Servicer Shall Provide Access and Information as
Reasonably Required.
The Servicer shall provide to the Purchaser, and for any Purchaser insured
by FDIC or NAIC, the supervisory agents and examiners of FDIC and OTS or NAIC,
access to any documentation regarding the Mortgage Loans which may be required
by applicable regulations. Such access shall be afforded without charge, but
only upon reasonable request, during normal business hours and at the offices of
the Servicer.
In addition, the Servicer shall furnish upon request by the Purchaser,
during the term of this Agreement, such periodic, special or other reports or
information, whether or not provided for herein, as shall be necessary,
reasonable and appropriate with respect to the purposes of this Agreement and
applicable regulations. All such reports or information shall be provided by and
in accordance with all reasonable instructions and directions the Purchaser may
require. The Servicer agrees to execute and deliver all such instruments and
take all such action as the Purchaser, from time to time, may reasonably request
in order to effectuate the purposes and to carry out the terms of this
Agreement.
Subsection 11.23. Restoration of Mortgaged Property.
The Servicer need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Customary Servicing Procedures. At a minimum, the Servicer
shall comply with the following conditions in connection with any such release
of Insurance Proceeds or Condemnation Proceeds:
(a) the Servicer shall receive satisfactory independent verification
of completion of repairs and issuance of any required approvals with
respect thereto;
(b) the Servicer shall take all steps necessary to preserve the
priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens;
(c) the Servicer shall verify that the Mortgage Loan is not in
default; and
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(d) pending repairs or restoration, the Servicer shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional loss payee, the Servicer is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Subsection 11.24. Master Servicer.
The Purchaser has designated Aurora Loan Services, Inc. ("Aurora") as its
master servicer for the Mortgage Loans being sold by the Seller and purchased by
the Purchaser pursuant to this Agreement. The Purchaser has empowered and given
the authority to Aurora, in its capacity as the Purchaser's master servicer, to
conduct and administer certain servicing and pool administration activities of
the Servicer on the Purchaser's behalf. The parties hereto agree that this
interaction between Aurora and the Servicer will occur when Aurora deals with
the Servicer in its capacity of servicer of the Mortgage Loans pursuant to the
terms hereof. The parties hereto expect that subsequent to the closing of the
purchase and sale contemplated hereunder, representatives of Aurora will contact
the Servicer (a) to discuss the reporting and remittance timing and requirements
relative to the servicing/master servicing function and (b) to provide the
Servicer with any forms which the Servicer will be required to produce in
connection with the monthly reporting process.
SECTION 12. THE SERVICER.
Subsection 12.01. Indemnification; Third Party Claims.
The Servicer agrees to indemnify and hold harmless the Purchaser against
any and all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses that the
Purchaser may sustain in any way related to the failure of the Servicer to
service the Mortgage Loans in compliance with the terms of this Agreement. The
Servicer shall immediately notify the Purchaser if a claim is made by a third
party with respect to this Agreement or the Mortgage Loans, and the Servicer
shall assume (with the consent of the Purchaser, which consent shall not be
unreasonably withheld or delayed) the defense of any such claim and pay all
expenses in connection therewith, including counsel fees. The Servicer shall
provide the Purchaser with a written report of all expenses and advances
incurred by the Servicer, if any, pursuant to this Subsection 12.01 and the
Purchaser shall promptly reimburse the Servicer for all amounts advanced by it
pursuant to the preceding sentence except when the claim in any way relates to
the failure of the Servicer to service the Mortgage Loans in accordance with the
terms of this Agreement.
Subsection 12.02. Merger or Consolidation of the Servicer.
The Servicer will keep in full effect its existence, rights and franchises
as a national banking association, and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.
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Any Person into which the Servicer may be merged or consolidated, or any
entity resulting from any merger, conversion or consolidation to which the
Servicer shall be a party, or any Person succeeding to substantially all of the
business of the Servicer (whether or not related to loan servicing), shall be
the successor of the Servicer hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Subsection 12.03. Limitation on Liability of the Servicer and Others.
The duties and obligations of the Servicer shall be determined solely by
the express provisions of this Agreement, the Servicer shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Agreement and no implied covenants or obligations shall be
read into this Agreement against the Servicer. Neither the Servicer nor any of
the directors, officers, employees or agents of the Servicer shall be under any
liability to the Purchaser for any action taken or for refraining from the
taking of any action in accordance with Customary Servicing Procedures and
otherwise in good faith pursuant to this Agreement or for errors in judgment;
provided, however, that this provision shall not protect the Servicer against
any liability resulting from any breach of any representation or warranty made
herein, or from any liability specifically imposed on the Servicer herein; and,
provided further, that this provision shall not protect the Servicer against any
liability that would otherwise be imposed by reason of the willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of the obligations or duties hereunder. The Servicer and any
director, officer, employee or agent of the Servicer may rely on any document of
any kind which it in good faith reasonably believes to be genuine and to have
been adopted or signed by the proper authorities respecting any matters arising
hereunder. Subject to the terms of Subsection 12.01, the Servicer shall have no
obligation to appear with respect to, prosecute or defend any legal action which
is not incidental to the Servicer's duty to service the Mortgage Loans in
accordance with this Agreement.
Subsection 12.04. Seller and Servicer Not to Resign.
Neither the Seller nor the Servicer shall assign this Agreement or resign
from the obligations and duties hereby imposed on it except by mutual consent of
the Servicer or the Seller, as the case may be, and the Purchaser or upon the
determination that the Servicer's duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Servicer. Any
such determination permitting the unilateral resignation of the Servicer shall
be evidenced by an Opinion of Counsel to such effect delivered to the Purchaser,
which Opinion of Counsel shall be in form and substance acceptable to the
Purchaser. No such resignation or assignment shall become effective until a
successor has assumed the Servicer's responsibilities and obligations hereunder
in accordance with Subsection 14.03.
SECTION 13. DEFAULT.
Subsection 13.01. Events of Default.
In case one or more of the following Events of Default by the Servicer
shall occur and be continuing:
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(a) any failure by the Servicer to remit to the Purchaser any payment
required to be made under the terms of this Agreement which continues
unremedied for a period of two (2) Business Days after the date upon which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Purchaser;
(b) failure by the Servicer to duly observe or perform, in any
material respect, any other covenants, obligations or agreements of the
Servicer as set forth in this Agreement which failure continues unremedied
for a period of thirty (30) days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to
the Servicer by the Purchaser;
(c) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, readjustment of debt, marshalling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force, undischarged or
unstayed for a period of sixty (60) days;
(d) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating
to the Servicer or relating to all or substantially all of the Servicer's
property;
(e) the Servicer shall admit in writing its inability to pay its debts
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of
its creditors, or voluntarily suspend payment of its obligations;
(f) the Servicer shall cease to be qualified to do business under the
laws of any state in which a Mortgaged Property is located, but only to the
extent such qualification is necessary to ensure the enforceability of each
Mortgage Loan and to perform the Servicer's obligations under this
Agreement; or
(g) the Servicer shall fail to meet the servicer eligibility
qualifications of ▇▇▇▇▇▇ ▇▇▇ and the Servicer shall fail to meet the
servicer eligibility qualifications of ▇▇▇▇▇▇▇ Mac;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Purchaser, by notice in writing to the Servicer, may, in
addition to whatever rights the Purchaser may have at law or equity to damages,
including injunctive relief and specific performance, commence termination of
all the rights and obligations of the Servicer under this Agreement and in and
to the Mortgage Loans and the proceeds thereof. Upon receipt by the Servicer of
such written notice from the Purchaser stating that it intends to terminate the
Servicer as a result of such Event of Default, all authority and power of the
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the successor appointed pursuant to
Subsection 14.03. Upon written request from the
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Purchaser, the Servicer shall prepare, execute and deliver to a successor any
and all documents and other instruments, place in such successor's possession
all Mortgage Files and do or cause to be done all other acts or things necessary
or appropriate to effect the purposes of such notice of termination, including,
but not limited to, the transfer and endorsement or assignment of the Mortgage
Loans and related documents to the successor at the Servicer's sole expense. The
Servicer agrees to cooperate with the Purchaser and such successor in effecting
the termination of the Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to such successor for administration
by it of all amounts which shall at the time be credited by the Servicer to the
Custodial Account or Escrow Account or thereafter received with respect to the
Mortgage Loans.
Subsection 13.02. Waiver of Default.
The Purchaser may waive any default by the Servicer in the performance of
its obligations hereunder and its consequences. Upon any waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto except to the extent expressly so waived.
SECTION 14. TERMINATION.
Subsection 14.01. Termination.
The respective obligations and responsibilities of the Servicer, as
servicer, shall terminate upon (a) the distribution to the Purchaser of the
final payment or liquidation with respect to the last Mortgage Loan (or advances
of same by the Servicer), or (b) the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure with respect to the last Mortgage
Loan and the remittance of all funds due hereunder, unless terminated with
respect to all or a portion of the Mortgage Loans on an earlier date pursuant to
Section 13. Upon written request from the Purchaser in connection with any such
termination, the Servicer shall prepare, execute and deliver, any and all
documents and other instruments, place in the Purchaser's possession all
Mortgage Files, and do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise, at the Purchaser's sole expense. The Servicer
agrees to cooperate with the Purchaser and such successor in effecting the
termination of the Servicer's responsibilities and rights hereunder as servicer,
including, without limitation, the transfer to such successor for administration
by it of all cash amounts which shall at the time be credited by the Servicer to
the Custodial Account or Escrow Account or thereafter received with respect to
the Mortgage Loans.
Subsection 14.02. Termination of the Servicer Without Cause.
Notwithstanding anything herein to the contrary, the Purchaser may
terminate the obligations and responsibilities of the Servicer in its capacity
as Servicer, without cause, upon payment to the Servicer of a termination fee
equal to two percent (2%) of the aggregate outstanding principal balance of the
Mortgage Loans as of the date of such termination. In addition, the Purchaser
shall reimburse the Servicer for any and all out-of-pocket costs incurred
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by the Servicer in connection with such termination; provided, however, that the
Purchaser's reimbursement obligation for such out-of-pocket costs shall not
exceed Fifty Dollars ($50.00) per Mortgage Loan. The termination fee provided
for in this Subsection 14.02 shall be paid by the Purchaser within ten (10)
Business Days of any such termination without cause by the Purchaser, and the
Purchaser shall reimburse the Servicer for its out-of-pocket costs resulting
from such termination within ten (10) Business Days following the Purchaser's
receipt of an invoice for such costs.
Subsection 14.03. Successors to the Servicer.
Prior to the termination of the Servicer's responsibilities and duties
under this Agreement pursuant to Subsections 12.04, 13.01 or 14.01, the
Purchaser shall, (a) succeed to and assume all of the Servicer's
responsibilities, rights, duties and obligations under this Agreement or (b)
appoint a successor which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement
upon such termination. In connection with such appointment and assumption, the
Purchaser may make such arrangements for the compensation of such successor out
of payments on Mortgage Loans as it and such successor shall agree. If the
Servicer's duties, responsibilities and liabilities under this Agreement shall
be terminated pursuant to the aforementioned Subsections, the Servicer shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The resignation or
removal of the Servicer pursuant to the aforementioned Subsections shall not
become effective until a successor shall be appointed pursuant to this
Subsection and shall in no event relieve the Seller of the representations and
warranties made pursuant to Subsections 7.01 and 7.02 and the remedies available
to the Purchaser under Subsection 7.03, it being understood and agreed that the
provisions of such Subsections 7.01 and 7.02 shall be applicable to the Seller
notwithstanding any such resignation or termination of the Servicer, or the
termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Servicer and to the Purchaser an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Servicer or this Agreement pursuant to
Subsections 12.04, 13.01 or 14.01 shall not affect any claims that the Purchaser
may have against the Servicer arising prior to any such termination or
resignation.
The Servicer shall promptly deliver to the successor the funds in the
Custodial Account and Escrow Account and all Mortgage Files and related
documents and statements held by it hereunder and the Servicer shall account for
all funds and shall execute and deliver such instruments and do such other
things as may reasonably be required to more fully and definitively vest in the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer.
Upon a successor's acceptance of appointment as such, the Servicer shall
notify by mail the Purchaser of such appointment.
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SECTION 15. NOTICES.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed, by registered or certified
mail, return receipt requested, or, if by other means, when received by the
other party at the address as follows:
(a) if to the Purchaser:
▇▇▇▇▇▇ Brothers Bank, FSB
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Contract Finance--▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Seller:
Bank of America, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Secondary Marketing Manager
(c) if to the Servicer:
Bank of America, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Servicing Manager
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 16. SEVERABILITY CLAUSE.
Any part, provision, representation or warranty of this Agreement which is
prohibited or which is held to be void or unenforceable shall be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation or warranty of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction,
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
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or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.
SECTION 17. NO PARTNERSHIP.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Purchaser.
SECTION 18. COUNTERPARTS.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
SECTION 19. GOVERNING LAW.
EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW, THE AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICTS OF LAWS PROVISIONS OF NEW YORK OR ANY OTHER JURISDICTION.
SECTION 20. INTENTION OF THE PARTIES.
It is the intention of the parties that the Purchaser is purchasing, and
the Seller is selling, the Mortgage Loans and not a debt instrument of the
Seller or another security. Accordingly, the parties hereto each intend to treat
the transaction for federal income tax purposes as a sale by the Seller, and a
purchase by the Purchaser, of the Mortgage Loans. The Purchaser shall have the
right to review the Mortgage Loans and the related Mortgage Files to determine
the characteristics of the Mortgage Loans which shall affect the federal income
tax consequences of owning the Mortgage Loans and the Seller and the Servicer
shall cooperate with all reasonable requests made by the Purchaser in the course
of such review.
It is not the intention of the parties that such conveyances be deemed a
pledge thereof. However, in the event that, notwithstanding the intent of the
parties, such assets are held to be the property of the Seller or if for any
other reason this Agreement is held or deemed to create a security interest in
either such assets, then (a) this Agreement shall be deemed to be a security
agreement within the meaning of the Uniform Commercial Code of the State of New
York and (b) the conveyances provided for in this Agreement shall be deemed to
be an assignment and a grant by the Seller to the Purchaser of a security
interest in all of the assets transferred, whether now owned or hereafter
acquired.
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SECTION 21. WAIVERS.
No term or provision of this Agreement may be waived or modified unless
such waiver or modification is in writing and signed by the party against whom
such waiver or modification is sought to be enforced.
SECTION 22. EXHIBITS.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
SECTION 23. GENERAL INTERPRETIVE PRINCIPLES.
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs" and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
(d) reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which
the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
SECTION 24. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
agree that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party hereto
in the regular course of business, and that
49
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
SECTION 25. AMENDMENT.
This Agreement may be amended from time to time by the Purchaser, the
Seller and the Servicer by written agreement signed by the parties hereto.
SECTION 26. CONFIDENTIALITY.
Each of the Purchaser, the Seller and the Servicer shall employ proper
procedures and standards designed to maintain the confidential nature of the
terms of this Agreement, except to the extent (a) the disclosure of which is
reasonably believed by such party to be required in connection with regulatory
requirements or other legal requirements relating to its affairs; (b) disclosed
to any one or more of such party's employees, officers, directors, agents,
attorneys or accountants who would have access to the contents of this Agreement
and such data and information in the normal course of the performance of such
person's duties for such party, to the extent such party has procedures in
effect to inform such person of the confidential nature thereof; (c) that is
disclosed in a prospectus, prospectus supplement or private placement memorandum
relating to a securitization of the Mortgage Loans by the Purchaser (or an
affiliate assignee thereof) or to any person in connection with the resale or
proposed resale of all or a portion of the Mortgage Loans by such party in
accordance with the terms of this Agreement; and (d) that is reasonably believed
by such party to be necessary for the enforcement of such party's rights under
this Agreement.
SECTION 27. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement and understanding relating
to the subject matter hereof between the parties hereto and any prior oral or
written agreements between them shall be deemed to have merged herewith.
SECTION 28. FURTHER AGREEMENTS; TRANSFERS.
The Seller, the Servicer and the Purchaser each agree to execute and
deliver to the other such reasonable and appropriate additional documents,
instruments or agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement.
The Seller and the Servicer each agree to enter into additional documents,
instruments or agreements as may be reasonably necessary to effect one or more
Whole-Loan Transfers, Agency Transfers or Securitizations (each, a "Transfer")
of the Mortgage Loans. The parties also agree that the servicing provisions set
forth in this Agreement may be altered in a manner reasonably acceptable to the
Servicer if necessary to effect a Transfer (including, but not limited to, any
changes required to satisfy rating agency requirements or the requirements of
▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac). If the Purchaser sells any Mortgage Loans as part of
a Whole Loan Transfer, the Purchaser may assign this Agreement, to the extent it
relates to those Mortgage Loans, to any subsequent purchaser pursuant to the
provisions of Section 29. Notwithstanding the foregoing, the Servicer shall not
be required to service the Mortgage Loans for more than three (3) Persons
50
at any time and shall not recognize any Transfer if following such Transfer more
than three (3) Persons would be Purchasers hereunder. As used herein and in
Section 29, the trust formed in connection with a Securitization shall be deemed
to constitute a single "Person." All reasonable out-of-pocket costs actually
incurred by the Seller or the Servicer, including reasonable attorney's fees and
accountant's fees in connection with performing its obligations under this
Section 28 with respect to a Transfer shall be reimbursed by the Purchaser upon
demand therefor.
SECTION 29. SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of and be enforceable by
the initial Purchaser, the Seller and the Servicer, and the respective
successors and assigns of the initial Purchaser, Seller and the Servicer. The
initial Purchaser and any subsequent Purchasers may assign this Agreement to any
Person to whom any Mortgage Loan is transferred pursuant to a sale or financing
upon prior written notice to the Servicer in accordance with the following
paragraph; provided, however, that the Servicer shall not be required to service
the Mortgage Loans for more than three (3) Persons at any time and shall not
recognize any assignment of this Agreement to the extent that following such
assignment more than three (3) Persons would be Purchasers hereunder. Upon any
such assignment and written notice thereof to the Servicer, the Person to whom
such assignment is made shall succeed to all rights and obligations of the
Purchaser under this Agreement to the extent of the related Mortgage Loan or
Mortgage Loans and this Agreement, to the extent of the related Mortgage Loan or
Loans, shall be deemed to be a separate and distinct Agreement between the
Servicer and such Purchaser, and a separate and distinct Agreement between the
Servicer and each other Purchaser to the extent of the other related Mortgage
Loan or Loans.
At least five (5) Business Days prior to the end of the month preceding the
date upon which the first remittance is to be made to an assignee of the
Purchaser, the Purchaser shall provide to the Servicer written notice of any
assignment setting forth: (a) the Servicer's applicable Mortgage Loan
identifying number for each of the Mortgage Loans affected by such assignment;
(b) the aggregate scheduled transfer balance of such Mortgage Loans; and (c) the
full name, address and wiring instructions of the assignee and the name and
telephone number of an individual representative for such assignee, to whom the
Servicer should: (i) send remittances; (ii) send any notices required by or
provided for in this Agreement; and (iii) deliver any legal documents relating
to the Mortgage Loans (including, but not limited to, contents of any Mortgage
File obtained after the effective date of any assignment).
If the Purchaser has not provided the notice of assignment required by this
Section 29, the Servicer shall not be required to treat any other Person as a
"Purchaser" hereunder and may continue to treat the Purchaser which purports to
assign the Agreement as the "Purchaser" for all purposes of this Agreement.
SECTION 30. NON-SOLICITATION.
From and after the Closing Date, the Seller hereby agrees that it will not
take any action or permit or cause any action to be taken by any of its agents
or affiliates, or by any independent contractors on its behalf, to personally,
by telephone or mail, solicit a Mortgagor under any
51
Mortgage Loan for the purpose of refinancing a Mortgage Loan, in whole or in
part, without the prior written consent of Purchaser. It is understood and
agreed that all rights and benefits relating to the solicitation of any
Mortgagors and the attendant rights, title and interest in and to the list of
such Mortgagors and data relating to their Mortgages (including insurance
renewal dates) shall be transferred to Purchaser pursuant hereto on the Closing
Date and the Seller shall not take any action to undermine these rights and
benefits.
Notwithstanding the foregoing, it is understood and agreed that the Seller:
(a) may advertise its availability for handling refinancings of
mortgages in its portfolio, including the promotion of terms it has
available for such refinancings, through the sending of letters or
promotional material, so long as it does not specifically target Mortgagors
and so long as such promotional material either is sent to the mortgagors
for all of the mortgages in its servicing portfolio (those it owns as well
as those serviced for others) or sent to all of the mortgagors who have
specific types of mortgages (such as FHA, VA, conventional fixed-rate or
conventional adjustable-rate) or sent to those mortgagors whose mortgages
fall within specific interest rate ranges;
(b) may provide pay-off information and otherwise cooperate with
individual mortgagors who contact it about prepaying their mortgages by
advising them of refinancing terms and streamlined origination arrangements
that are available; and
(c) may offer to refinance a Mortgage Loan made within thirty (30)
days following receipt by it of a pay-off request from the related
Mortgagor.
Promotions undertaken by the Seller or any affiliate of the Seller which
are directed to the general public at large (including, without limitation, mass
mailing based on commercially acquired mailing lists, newspaper, radio and
television advertisements), shall not constitute solicitation under this Section
30.
52
IN WITNESS WHEREOF, the Purchaser, the Seller and the Servicer have caused
their names to be signed hereto by their respective officers thereunto duly
authorized on the date first above written.
▇▇▇▇▇▇ BROTHERS BANK, FSB,
as Purchaser
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
BANK OF AMERICA, N.A.,
as Seller and as Servicer
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
EXHIBIT 1
FORM OF SELLER'S OFFICER'S CERTIFICATE
I, [_____________], hereby certify that I am a duly elected [_____________]
of Bank of America, N.A., a national banking association (the "Bank"), and
further certify, on behalf of the Bank as follows:
1. Attached hereto as Attachment I are a true and correct copy of the
Articles of Association and by-laws of the Bank as are in full force and effect
on the date hereof. No event has occurred which has affected the good standing
of the Bank under the laws of the United States. Attached hereto as Attachment
II is a true and correct copy of a recent Certificate of Good Standing of the
Bank, and no event has occurred since the date thereof which would impair such
standing.
2. No proceedings looking toward liquidation, dissolution or bankruptcy of
the Bank or a merger pursuant to which the Bank would not be the surviving
entity are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the Bank, signed
(a) the Mortgage Loan Sale and Servicing Agreement (the "Sale Agreement"), dated
August 1, 2002, by and between the Bank, as seller and as servicer, and ▇▇▇▇▇▇
Brothers Bank, FSB, as purchaser, and (b) any other document delivered prior
hereto or on the date hereof in connection with the sale and servicing of the
Mortgage Loans in accordance with the Sale Agreement was, at the respective
times of such signing and delivery, and is, as of the date hereof, duly elected
or appointed, qualified and acting as such officer or attorney-in-fact, and the
signatures of such persons appearing on such documents are their genuine
signatures.
4. All of the representations and warranties of the Bank contained in
Subsections 7.01 and 7.02 of the Sale Agreement were true and correct in all
material respects as of the Closing Date.
5. The Bank has performed all of its duties and has satisfied all the
material conditions on its part to be performed or satisfied prior to the
Closing Date pursuant to the Sale Agreement.
All capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Sale Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name on this 27th day of
August, 2002.
BANK OF AMERICA, N.A.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
I, _________________________, a ____________________ of Bank of America,
N.A., hereby certify that __________________________ is a duly elected,
qualified and acting _______________________ of the Seller and the Servicer and
that the signature appearing above is such person's genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name on this 27th day of
August, 2002.
BANK OF AMERICA, N.A.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
EXHIBIT 2
MORTGAGE LOAN DOCUMENTS
With respect to each Mortgage Loan, the Mortgage Loan Documents shall
consist of the following:
(a) the original Mortgage Note bearing all intervening endorsements,
endorsed in blank and signed in the name of the Seller by an officer
thereof or, if the original Mortgage Note has been lost or destroyed, a
lost note affidavit substantially in the form of Exhibit 6 hereto;
(b) the original Assignment of Mortgage with assignee's name left
blank;
(c) the original of any guarantee executed in connection with the
Mortgage Note;
(d) the original Mortgage with evidence of recording thereon, or if
any such mortgage has not been returned from the applicable recording
office or has been lost, or if such public recording office retains the
original recorded mortgage, a photocopy of such mortgage certified by the
Seller to be a true and complete copy of the original recorded mortgage;
(e) the originals of all assumption, modification, consolidation or
extension agreements, if any, with evidence of recording thereon;
(f) the originals of all intervening assignments of mortgage with
evidence of recording thereon, or if any such intervening assignment of
mortgage has not been returned from the applicable recording office or has
been lost or if such public recording office retains the original recorded
assignments of mortgage, a photocopy of such intervening assignment of
mortgage, certified by the Seller to be a true and complete copy of the
original recorded intervening assignment of mortgage;
(g) the original mortgagee title insurance policy or attorney's
opinion of title and abstract or a title commitment or title binder if an
original title insurance policy has not been issued, or a duplicate copy of
an original title insurance policy, including an Environmental Protection
Agency Endorsement and an adjustable-rate endorsement;
(h) the original of any security agreement, chattel mortgage or
equivalent document executed in connection with the Mortgage;
(i) a copy of any applicable power of attorney; and
(j) with respect to each Mortgage Loan which is a Cooperative Loan,
any and all applicable Cooperative Loan Documents.
EXHIBIT 3
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each of
the following items, unless otherwise disclosed to the Purchaser on the data
tape, which shall be available for inspection by the Purchaser and which shall
be retained by the Servicer or delivered to the Purchaser:
(a) Copies of the Mortgage Loan Documents.
(b) Residential loan application.
(c) Mortgage Loan closing statement.
(d) Verification of employment and income, if required.
(e) Verification of acceptable evidence of source and amount of down
payment.
(f) Credit report on Mortgagor, in a form acceptable to either ▇▇▇▇▇▇
Mae or ▇▇▇▇▇▇▇ Mac.
(g) Residential appraisal report.
(h) Photograph of the Mortgaged Property.
(i) Survey of the Mortgaged Property, unless a survey is not required
by the title insurer.
(j) Copy of each instrument necessary to complete identification of
any exception set forth in the exception schedule in the title policy,
i.e., map or plat, restrictions, easements, home owner association
declarations, etc.
(k) Copies of all required disclosure statements.
(l) If applicable, termite report, structural engineer's report, water
potability and septic certification.
(m) Sales Contract, if applicable.
(n) The Primary Mortgage Insurance Policy or certificate of insurance
or electronic notation of the existence of such policy, where required
pursuant to the Agreement.
(o) Evidence of electronic notation of the hazard insurance policy,
and, if required by law, evidence of the flood insurance policy.
EXHIBIT 4
MORTGAGE LOAN SCHEDULE
[Intentionally Omitted]
EXHIBIT 5
UNDERWRITING GUIDELINES
ON FILE WITH THE PURCHASER
[Intentionally Omitted]
EXHIBIT 6
FORM OF LOST NOTE AFFIDAVIT
___________________________________, being first duly sworn upon oath deposes
and states:
That he/she is authorized by Bank of America, N.A. ("B of A") to execute
this Lost Note Affidavit on behalf of B of A. Notwithstanding anything contained
herein, he/she shall have no personal liability pursuant to this Lost Note
Affidavit.
That the note dated _________, executed by ___________ in the original
principal sum of $____________, payable to the order of _________________ and
secured by a mortgage (, or deed of trust or other instrument creating a lien
securing the Note (as defined below)) date on premises commonly known as
_________________________________________, a copy of which is attached hereto as
Exhibit A (the "Note") was lost and /or destroyed and the affiant herein has no
knowledge of the location or whereabouts of said Note and said Note has not been
paid, satisfied, transferred, assigned, pledged, or hypothecated in any way.
NOW THEREFORE, for and in consideration of _______________and its
successors and/or assigns, accepting a certified copy of the Note identified on
Exhibit "A" in lieu of the original Note, B of A does hereby agree to defend,
indemnify and hold harmless _______________ its respective transferees, and
their respective assigns (the "Indemnified") from and against any and all loss
or damage, together with all reasonable costs, charges and expenses (whether or
not a lawsuit is filed) (collectively, the "Loss") incurred as a result of the
inability to enforce the Note in accordance with its terms due to the lack of an
original Note or incurred by reason of any claim, demand, suit, cause of action
or proceeding by a third party arising out of the Indemnified's inability to
enforce the Note according to its terms or the inability to receive any related
insurance proceeds due to the lack of an original Note by a third party. B of A
shall pay any such Loss upon demand provided that B of A is notified of any such
Loss in writing, after __________ or transferee becomes aware of same, at the
following address: Bank of America, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; Attention: Secondary Marketing Manager; with
copy to _______________________; Attention: ________________. B of A does hereby
further agree that should the original Note ever be found by it, it will
promptly notify _________________ or its respective transferees, or their
respective assigns, as applicable, and upon receipt by B of A of the original
Note, will endorse to _______________ or its designee or transferee, as
applicable, without recourse, such original Note and promptly forward said Note
to_______________ or its designee or transferee, as applicable. Upon receipt to
the original Note by __________________ this indemnification agreement shall
become null and void as to any loss accruing subsequent to ___________________'s
receipt of such original Note, however, B of A shall remain liable as to any
loss accruing on or prior to __________________'s receipt of such original Note.
[SIGNATURE ON FOLLOWING PAGE]
Executed this _______day of _________________, 200__.
BANK OF AMERICA, N.A.
By:
-----------------------------------------
Witness:
------------------------------------
Subscribed and sworn to before me this _______ day of_________________,
200__.
-----------------------------------
Notary Public
EXHIBIT 7
FORM OF OPINION OF COUNSEL
August 27, 2002
▇▇▇▇▇▇ Brothers Bank, FSB
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I am Assistant General Counsel to Bank of America Corporation and have
acted as special counsel to Bank of America, N.A. (the "Bank") in connection
with the transactions referred to herein. In that capacity, I am familiar with
the sale by the Bank of the Mortgage Loans pursuant to that certain Mortgage
Loan Sale and Servicing Agreement by and between the Bank, as Seller and as
Servicer, and ▇▇▇▇▇▇ Brothers Bank, FSB, as Purchaser, dated as of August 1,
2002 (the "Sale Agreement"). Capitalized terms not otherwise defined herein have
the meanings set forth in the Sale Agreement.
In connection with rendering this opinion letter, I have examined the Sale
Agreement and such other records and other documents as I have deemed necessary
and relevant. As to matters of fact, I have examined and relied upon
representations of the parties contained in the Sale Agreement and, where I have
deemed appropriate, representations and certifications of officers of the Bank
or public officials. I have assumed the authenticity of all documents submitted
to me as originals, the genuineness of all signatures, the legal capacity of
natural persons and the conformity to the originals of all documents submitted
to me as copies. I have assumed that all parties, except for the Bank, had the
corporate power and authority to enter into and perform all obligations under
such documents, and, as to such parties, I also have assumed the due
authorization by all requisite corporate action, the due execution and delivery
and the validity, binding effect and enforceability of such documents. I have
not examined the Mortgages, the Mortgage Loan Documents or other documents in
the Mortgage Files (such documents, collectively, the "Mortgage Documents"), and
I express no opinion concerning the conformity of any of the Mortgage Documents
to the requirements of the Sale Agreement.
The opinions set forth herein are limited to matters governed by the laws
of the State of North Carolina and the federal laws of the United States of
America, and no opinion is
expressed herein as to the laws of any other jurisdiction. For purposes of these
opinions, I have disregarded the choice of law provision in the Sale Agreement
and, instead, have assumed that the Sale Agreement is governed exclusively by
the internal, substantive laws and judicial interpretation of the State of North
Carolina. I assume no obligation to supplement this opinion if any applicable
laws change after the date of this opinion, or if I become aware of any facts
that might change the opinions expressed herein after the date of this opinion.
I do not express any opinion, either implicitly or otherwise, on any issue not
expressly addressed below.
Based upon the foregoing, I am of the opinion that:
1. The Bank is duly organized and validly existing as a national banking
association in good standing under the federal laws of the United States and has
the requisite power and authority, corporate or other, to own its own properties
and conduct its own business, as presently conducted by it, and to enter into
and perform its obligations under the Sale Agreement.
2. The Bank has authorized the execution, delivery and performance of the
Sale Agreement by all necessary corporate action and the Sale Agreement has been
duly executed and delivered by the Bank.
3. No consent, approval, authorization or order of any State of North
Carolina or federal court or governmental agency or body is required for the
execution, delivery and performance by the Bank of the Sale Agreement or the
consummation by the Bank of the transactions contemplated by the terms of the
Sale Agreement, except for those consents, approvals, authorizations or orders
which previously have been obtained.
4. The Sale Agreement constitutes the legal, valid and binding obligation
of the Bank, enforceable against the Bank in accordance with its terms, subject
to the following:
(a) This opinion is subject to the effect of applicable bankruptcy,
insolvency, receivership, reorganization, fraudulent conveyance, moratorium
and similar laws affecting the enforcement of creditors' rights generally.
(b) The opinion is subject to the effect of general principles of
equity (regardless of whether considered in a proceeding in equity or at
law), which may, among other things, deny rights of specific performance.
5. The consummation of the transactions contemplated by, and the
performance by the Bank of any other of the terms of, the Sale Agreement, will
not result in a breach of any term or provision of the articles of association
or by-laws of the Bank or, to the best of my knowledge, conflict with, result in
a breach, violation or acceleration of, or constitute a default under, the terms
of any material indenture or other material agreement or instrument to which the
Bank is a party or by which it is bound or any order of any State of North
Carolina or federal court, regulatory body, administrative agency or
governmental body having jurisdiction over the Bank.
6. To the best of my knowledge, there are no actions, proceedings or
investigations pending or threatened before any court, administrative agency or
other tribunal (a) asserting the invalidity of the Sale Agreement or (b) seeking
to prevent the consummation of any of the transactions contemplated by the Sale
Agreement, which might materially and adversely affect the performance by the
Bank of its obligations under, or the validity or enforceability of, the Sale
Agreement.
This opinion letter is rendered for the sole benefit of the persons or
entities to which it is addressed, and no other person or entity is entitled to
rely hereon without my prior written consent. Copies of this opinion letter may
not be furnished to any other person or entity, nor may any portion of this
opinion letter be quoted, circulated or referred to in any other document
without my prior written consent.
Very truly yours,
▇▇▇▇ ▇. ▇▇▇▇
Assistant General Counsel
EXHIBIT 8
FORM OF MONTHLY REMITTANCE REPORT
[Intentionally Omitted]
EXHIBIT 9
FORM OF CUSTODIAL ACCOUNT CERTIFICATION
_________ __, 2002
Bank of America, N.A. hereby certifies that it has established the account
described below as a Custodial Account pursuant to Subsection 11.04 of the
Mortgage Loan Sale and Servicing Agreement, dated August 1, 2002,
Adjustable-Rate Mortgage Loans, Loan Package LBB02-4.
Title of Account: "Bank of America, N.A., in trust for ▇▇▇▇▇▇ Brothers
Bank, FSB, as Purchaser of Mortgage Loans and various Mortgagors."
Account Number: __________________________
Address of office or
branch of Bank of America, N.A.
at which the Custodial
Account is maintained: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Center Drive
Charlotte, North Carolina 28255
BANK OF AMERICA, N.A.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
EXHIBIT 10
FORM OF ESCROW ACCOUNT CERTIFICATION
_________ __, 2002
Bank of America, N.A. hereby certifies that it has established the account
described below as an Escrow Account pursuant to Subsection 11.06 of the
Mortgage Loan Sale and Servicing Agreement, dated August 1, 2002,
Adjustable-Rate Mortgage Loans, Loan Package LBB02-4.
Title of Account: "Bank of America, N.A., in trust for ▇▇▇▇▇▇ Brothers Bank,
FSB, as Purchaser of Mortgage Loans and various Mortgagors."
Account Number: __________________________
Address of office or
branch of Bank of America, N.A.
at which the Escrow
Account is maintained: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Center Drive
Charlotte, North Carolina 28255
BANK OF AMERICA, N.A.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
SCHEDULE 7.01(KK)
LIST OF COOPERATIVE LOANS
ORIGINAL CURRENT
LOAN ID # LAST NAME FIRST NAME BALANCE BALANCE
--------- --------- ---------- --------- -----------
6515850383 ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ $375,000 $373,286.48