FLOW SERVICING AGREEMENT
between
▇▇▇▇▇▇ CAPITAL, A DIVISION OF ▇▇▇▇▇▇ BROTHERS HOLDINGS INC.
OWNER
and
AURORA LOAN SERVICES INC.
SERVICER
Dated as of September 1, 1997
Residential Adjustable and Fixed Rate Mortgage Loans
Group No. 1997-ALSI
TABLE OF CONTENTS
ARTICLE I.
DEFINITIONS
ARTICLE II.
OWNER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING
RESPONSIBILITIES
Section Page
------- ----
2.01 Contract for Servicing; Possession
of Servicing Files..........................................13
2.02 Books and Records..............................................13
2.03 Commencement of Servicing Responsibilities..................14
2.04 Owner Covenants Regarding Transfer of Servicing.............14
2.05 Custodial Agreement............................................16
ARTICLE III.
SERVICING THE MORTGAGE LOANS
3.01 Servicer to Service ...........................................18
3.02 Collection of Mortgage Loan Payments...........................20
3.03 Establishment of and Deposits to
Custodial Account ..........................................20
3.04 Permitted Withdrawals From
Custodial Account ..........................................21
3.05 Establishment of and Deposits to
Escrow Account .............................................22
3.06 Permitted Withdrawals From Escrow Account...................22
3.07 Maintenance of FHA Mortgage Insurance and
VA Guaranty.................................................23
3.08 Notification of Adjustments....................................23
3.09 Completion and Recordation of Assignment of
Mortgage and FHA and VA Change Notices......................24
3.10 Protection of Accounts.........................................24
3.11 Title, Management and Disposition of REO Property...........25
3.12 Real Estate Owned Reports .....................................26
ARTICLE IV.
PAYMENTS TO OWNER
4.01 Remittances....................................................27
4.02 Statements to Owner............................................27
4.03 Monthly Advances by Servicer...................................28
ARTICLE V.
GENERAL SERVICING PROCEDURES
5.01 Servicing Compensation.........................................29
5.02 Reimbursement of Servicing Advances............................29
ARTICLE VI.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS;
REMEDIES AND BREACH
6.01 Representations, Warranties and
Agreements of the Servicer..................................30
6.02 Remedies for Breach of Representations
and Warranties of the Servicer..............................31
6.03 Representations and Warranties of
the Owner...................................................32
6.04 Remedies for Breach of Representations
and Warranties of the Owner.................................33
ARTICLE VII.
AGENCY TRANSFER; WHOLE LOAN TRANSFER; PASS-THROUGH TRANSFER
7.01 Removal of Mortgage Loans from
Inclusion under this Agreement upon an Agency Transfer,
a Pass-Through Transfer or a Whole Loan Transfer
on one or more Reconstitution Dates.........................35
7.02 Additional Indemnification by the
Servicer; Third Party Claims................................36
7.03 Monthly Advances, Compensating Interest and
Servicing Fees after Reconstitution.........................37
7.04 Maintenance of Custodial and Escrow Accounts
after Reconstitution........................................37
7.05 Owner's Repurchase and Indemnification Obligations.............38
7.06 Termination Fees after Reconstitution..........................39
7.07 Additional Remittance..........................................39
7.08 Transfer of Servicing Following Reconstitution.................40
ARTICLE VIII.
THE SERVICER
8.01 Merger or Consolidation of the Servicer........................41
8.02 Limitation on Liability of the Servicer
and Others..................................................41
8.03 Limitation on Resignation and Assignment
by the Servicer.............................................41
ARTICLE IX.
TERMINATION
9.01 Termination For Cause..........................................42
9.02 Termination Without Cause......................................43
ARTICLE X.
MISCELLANEOUS PROVISIONS
10.01 Successor to the Servicer......................................45
10.02 Closing........................................................46
10.03 Closing Documents..............................................47
10.04 Costs .........................................................48
10.05 Protection of Confidential Information.........................48
10.06 Notices .......................................................48
10.07 Severability Clause ...........................................49
10.08 No Personal Solicitation.......................................49
10.09 Counterparts...................................................50
10.10 Place of Delivery and Governing Law............................50
10.11 Further Agreements.............................................50
10.12 Intention of the Parties.......................................50
10.13 Successors and Assigns; Assignment of
Servicing Agreement.........................................51
10.14 Waivers........................................................51
10.15 Exhibits.......................................................51
10.16 General Interpretive Principles................................51
10.17 Reproduction of Documents......................................51
EXHIBITS
EXHIBIT A MORTGAGE LOAN SCHEDULE
EXHIBIT B-1 FORM OF ACKNOWLEDGMENT AGREEMENT
EXHIBIT B-2 FORM OF CONFIRMATION AGREEMENT
EXHIBIT C CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT D ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT E-1 OFFICER'S CERTIFICATE FOR FIRST CLOSING
EXHIBIT E-2 OFFICER'S CERTIFICATE FOR SUBSEQUENT CLOSINGS
EXHIBIT F FORM OF CUSTODIAL AGREEMENT
EXHIBIT G FORM OF OPINION OF COUNSEL OF THE SERVICER
EXHIBIT H FORM OF COLLATERAL PLEDGE AND SECURITY AGREEMENT
FLOW SERVICING AGREEMENT
------------------------
This is a Flow Servicing Agreement (the "Agreement"), dated as of
September 1, 1997, by and between ▇▇▇▇▇▇ Capital, A Division of ▇▇▇▇▇▇ Brothers
Holdings Inc., having an office at Three World Financial Center, 12th Floor, New
York, New York 10285 (the "Owner") and Aurora Loan Services Inc., having an
office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Servicer").
W I T N E S S E T H
WHEREAS, the Owner shall acquire from time to time certain ownership
to and the servicing rights for certain fixed and adjustable rate first and
second lien mortgage loans ("Conventional Loans") and/or certain FHA insured
("FHA Loans") and VA guaranteed ("VA Loans") mortgage loans from various third
party sellers and servicers thereof (the Conventional Loans, FHA Loans and VA
Loans collectively referred to herein as the "Mortgage Loans");
WHEREAS, the Owner desires to contract with the Servicer for the
servicing responsibilities associated with the Mortgage Loans and the Servicer
desires to assume the servicing responsibilities to such Mortgage Loans; and
WHEREAS, the Owner desires to sell some or all of the Mortgage Loans
from time to time (a) to FNMA under its Cash Purchase Program or MBS SWAP
Program (Special Servicing Option) (each a "FNMA Transfer"); or (b) to FHLMC
under its ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ Program or Gold PC Program (the "FHLMC Transfer"); or
(c) to GNMA under its MBS Swap Program I (the "GNMA Transfer"); or (d) to one or
more third party purchasers in one or more whole loan pools (each a "Whole Loan
Transfer"); or (e) directly or indirectly, to certain trusts to be formed as
part of publicly-issued or privately placed, rated or unrated, mortgage
pass-through transactions (each a "Pass-Through Transfer"), in any or all cases
(subject to the terms of this Agreement) retaining the Servicer to service the
Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and for other good and reasonable consideration, the receipt and
adequacy of which is hereby acknowledged, the Owner and Servicer hereby agree as
follows:
ARTICLE I
DEFINITIONS
The following terms are defined as follows (except as otherwise agreed
in writing by the parties):
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loans in the
jurisdiction where the related Mortgaged Property is located.
Acknowledgment Agreement: The document to be executed by the Owner and
the Servicer which document shall amend the Mortgage Loan Schedule attached as
Exhibit A hereto to reflect the addition of Mortgage Loans to such Exhibit A and
which document reflects the addition of Mortgage Loans which are subject to the
terms and conditions of this Agreement.
Act: The National Housing Act, as amended from time to time.
Additional Remittance: With respect to each Mortgage Loan subject to
an Agency Transfer, a Whole Loan Transfer or a Pass-Through Transfer, the
portion of the Reconstituted Servicing Fee received by the Servicer under a
Reconstitution Agreement which amount shall be equal to the difference between
such Reconstituted Servicing Fee and the Servicing Fee set forth herein, which
amount shall be remitted to the Owner or its assigns and shall be freely
transferable by the Owner or its assigns.
Additional Remittance Date: The last Business Day of each month of the
related Remittance Date under the applicable Reconstitution Agreement.
Adjustable Rate Mortgage Loan: A Mortgage Loan serviced pursuant to
this Agreement under which the Mortgage Interest Rate is adjusted from time to
time in accordance with the terms and provisions of the Mortgage Note.
Agency Transfer: The sale or transfer by Owner of some or all of the
Mortgage Loans to FNMA under its Cash Purchase Program or its MBS Swap Program
(Special Servicing Option) or to FHLMC under its ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ Program or
Gold PC Program, or to GNMA under its MBS Swap Program, retaining the Servicer
as "servicer" thereunder.
Agreement: This Flow Servicing Agreement and all amendments hereof and
supplements hereto.
Ancillary Income: All income derived from the Mortgage Loans, other
than Servicing Fees, including but not limited to, late charges, fees received
with respect to checks or bank drafts returned by the related bank for
non-sufficient funds, assumption fees, optional insurance administrative fees
and all other incidental fees and charges. The Owner shall retain all Ancillary
Income with the exception of optional insurance and administrative fees payable
as a direct result of the Servicer's efforts.
Applicable Agency: With respect to Conventional Loans, FNMA, and with
respect to FHA Loans or VA Loans, GNMA.
Appraised Value: The value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of the
Mortgaged Property.
Assignment Fee: The Assignment Fee indicated on the applicable
Acknowledgment Agreement, which fee shall be payable within 30 days following
the later to occur of (i) the completion of the transfer of all of the
applicable Mortgage Loan information onto the Servicer's computer system or (ii)
the receipt by the Owner of an invoice from the Servicer for the Assignment Fee.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the transfer of the Mortgage to the party indicated therein, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering the Mortgage Loans secured by Mortgaged Properties
located in the same jurisdiction, if permitted by law.
Best Efforts: Efforts determined to be reasonably diligent by the
Owner or Servicer, as the case may be, in its sole discretion. Such efforts do
not require the Owner or Servicer, as the case may be, to enter into any
litigation, arbitration or other legal or quasi-legal proceeding, nor do they
require the Owner or Servicer, as the case may be, to advance or expend fees or
sums of money in addition to those specifically set forth in this Agreement.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking and savings and loan institutions in the State of New York
are authorized or obligated by law or executive order to be closed.
Code: The Internal Revenue Code of 1986, as it may be amended from
time to time or any successor statute thereto, and applicable U.S. Department of
the Treasury regulations issued pursuant thereto.
Collateral Pledge and Security Agreement: With respect to each
Reconstitution Date, the security agreement to be executed by the Owner and the
Servicer, in the form attached hereto as Exhibit H, which agreement shall serve
to create a security interest in favor of the Owner and its assigns in the
servicing rights related to the Mortgage Loans being reconstituted.
Condemnation Proceeds: All awards of settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan documents.
Confirmation Agreement: The document to be executed by the Owner and
the Servicer and returned by the Servicer to the Owner in accordance with
Section 10.06 within 5 Business Days of receipt of such document from the Owner
which document shall confirm the Servicer's acceptance of its engagement to
perform servicing responsibilities for the Owner with respect to additional
Mortgage Loans.
Conventional Loan: A conventional residential first or second lien
fixed or adjustable rate Mortgage Loan which is neither FHA insured nor VA
guaranteed.
Costs: For any Person, any claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and other costs and expenses of such Person.
Custodial Account: The separate account or accounts created and
maintained pursuant to Section 3.03.
Custodial Agreement: The agreement or agreements governing the
retention of original Mortgage Loan documents which shall be substantially
similar in form and substance to the Custodial Agreement attached as Exhibit F
hereto.
Custodian: The Custodian under the related Custodial Agreement
identified in the related Confirmation Agreement and related Acknowledgment
Agreement, or its successors in interest or assigns or any successor to the
related Custodian under the Custodial Agreement as provided therein.
Determination Date: For each month that this Agreement is in effect,
the last Business Day of such month as determined by the Servicer on a monthly
basis.
Delinquent Mortgage Loan: A Mortgage Loan which is more than 89 days
delinquent (without regard to any applicable grace period).
Due Date: The day of the month on which the Monthly Payment is due on
a Mortgage Loan, exclusive of any days of grace. With respect to the Mortgage
Loans for which payment from the Mortgagor is due on a day other than the first
day of the month, such Mortgage Loans will be treated as if the Monthly Payment
is due on the first day of the month following the actual Due Date.
Due Period: With respect to each Remittance Date, the period
commencing on the second day of the month preceding the month of the Remittance
Date and ending on the first day of the month of the Remittance Date.
Eligible Investments: Any one or more of the obligations and
securities listed below which investment provides for a date of maturity not
later than the Determination Date in each month:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, or any agency or instrumentality of the
United States of America the obligations of which are backed by the
full faith and credit of the United States of America; and
(ii) federal funds, demand and time deposits in, certificates of
deposits of, or bankers' acceptances issued by, any depository
institution or trust company incorporated or organized under the laws
of the United States of America or any state thereof and subject to
supervision and examination by federal and/or state banking
authorities, so long as at the time of such investment or contractual
commitment providing for such investment the commercial paper or other
short-term debt obligations of such depository institution or trust
company (or, in the case of a depository institution or trust company
which is the principal subsidiary of a holding company, the commercial
paper or other short-term debt obligations of such holding company)
are rated "P-1" by ▇▇▇▇▇'▇ Investors Service, Inc. and the long-term
debt obligations of such holding company) are rated "P-1" by ▇▇▇▇▇'▇
Investors Service, Inc. and the long-term debt obligations of such
depository institution or trust company (or, in the case of a
depository institution or trust company which is the principal
subsidiary of a holding company, the long-term debt obligations of
such holding company) are rated at least "Aa" by ▇▇▇▇▇'▇ Investors
Service, Inc.;
provided, however, that no such instrument shall be an Eligible
Investment if such instrument evidences either (i) a right to receive only
interest payments with respect to the obligations underlying such instrument, or
(ii) both principal and interest payments derived from obligations underlying
such instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations.
Errors and Omissions Insurance: Errors and Omissions Insurance to be
maintained by the Servicer pursuant to the FNMA Guides.
Escrow Account: The separate account or accounts created and
maintained pursuant to Section 3.05.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
Event of Default: Any event set forth in Section 9.01.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHA: The Federal Housing Administration, an agency within the United
States Department of Housing and Urban Development, or any successor thereto and
including the Federal Housing Commissioner and the Secretary of Housing and
Urban Development where appropriate under the FHA Regulations.
FHA Approved Mortgagee: A corporation or institution approved as a
mortgagee by FHA under the Act, and applicable HUD regulations, and eligible to
own and service mortgage loans such as the FHA Loans.
FHA Assigned Mortgage Loan: A Mortgage Loan that has been in default
for longer than the applicable FHA grace period and respecting which written
notice of an intention to assign has been filed with the FHA, whether or not
such Mortgage Loan has in fact been assigned to the FHA.
FHA Insurance Contract: The contractual obligation of FHA respecting
the insurance of a Mortgage Loan.
FHA Loan: A residential Mortgage Loan which is the subject of an FHA
Insurance Contract as evidenced by a mortgage insurance certificate.
FHA Mortgage Insurance: Mortgage insurance authorized under the Act
and provided by the FHA.
FHA Regulations: Regulations promulgated by HUD under the National
Housing Act, codified in 24 Code of Federal Regulations, and other HUD issuances
relating to FHA Loans, including the related handbooks, circulars, notices and
mortgagee letters.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
Fidelity Bond: A fidelity bond to be maintained by the Servicer
pursuant to the FNMA Guides.
First Remittance Date: With respect to each Mortgage Loan, the 10th
day of the month following the month in which the related Transfer Date occurs,
or if such 10th day is not a Business Day, the first Business Day immediately
following such 10th day.
Fixed Rate Mortgage Loan: Any individual Mortgage Loan serviced
pursuant to this Agreement wherein the Mortgage Interest Rate set forth in the
Mortgage Note is fixed for the term of such Mortgage Loan.
FNMA: The Federal National Mortgage Association, or any successor
thereto.
FNMA Guides: The FNMA Selling Guide and the FNMA Servicing Guide and
all amendments or additions thereto.
GNMA: The Government National Mortgage Association, or any successor
thereto.
HUD: The Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to FHA Mortgage Insurance. The term "HUD," for purposes of
this Agreement, is also deemed to include subdivisions thereof such as the FHA
and Government National Mortgage Association.
Initial Transfer Date: The first Transfer Date with respect to
servicing of Mortgage Loans hereunder.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property
including FHA insurance proceeds and/or VA guaranty proceeds.
Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the
related REO Property, if the Mortgaged Property is acquired in satisfaction of
the Mortgage Loan.
Monthly Advance: With respect to each Remittance Date and each
Mortgage Loan, an amount equal to the Monthly Payment (with the interest portion
of such Monthly Payment adjusted to the Mortgage Loan Remittance Rate) which was
due on the Mortgage Loan, and (i) which was delinquent at the close of business
on the immediately preceding Determination Date and (ii) which was not the
subject of a previous Monthly Advance.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first or second lien on an unsubordinated estate
in fee simple in real property securing the Mortgage Note.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in the FNMA Guides.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of
this Agreement, each Mortgage Loan subject to this Agreement being identified on
the Mortgage Loan Schedule, which Mortgage Loan includes without limitation the
Mortgage Loan documents, the Monthly Payments, Principal Prepayments,
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition
Proceeds, and all other rights, benefits, proceeds and obligations arising from
or in connection with such Mortgage Loan.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Owner, which shall be equal to the
Mortgage Interest Rate minus the applicable Servicing Fee.
Mortgage Loan Schedule: A schedule of certain Mortgage Loans setting
forth information with respect to such Mortgage Loans, which schedule
supplements this Agreement and becomes part of Exhibit A hereof on the related
Transfer Date to reflect the addition of such Mortgage Loans to the terms of
this Agreement.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property securing repayment of the debt
evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Net Sale Proceeds: The proceeds from the sale of REO Property, net of
all expenses incurred by the Servicer in connection with such sale, including,
without limitation, legal fees and expenses, referral fees, brokerage
commissions, conveyance taxes and any other related expense.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or the President or a Vice President or
an assistant Vice President and by the Treasurer or the Secretary or one of the
Assistant Treasurers or Assistant Secretaries of the Owner, and delivered to the
Servicer as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Servicer, reasonably acceptable to the Owner.
Owner: ▇▇▇▇▇▇ Capital, A Division of ▇▇▇▇▇▇ Brothers Holdings Inc., or
its successors in interest and assigns.
Pass-Through Transfer: The sale or transfer of some or all of the
Mortgage Loans to a trust to be formed as part of a publicly-issued and/or
privately placed, rated or unrated, mortgage pass-through transaction, retaining
the Servicer as "servicer" (with or without a master servicer) thereunder.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
PMI Policy: A policy of primary mortgage guaranty insurance issued by
a Qualified Insurer, as required by this Agreement with respect to certain
Mortgage Loans.
Prepayment Interest Shortfall Amount: With respect to any Mortgage
Loan that was subject to a Principal Prepayment in full during any Due Period,
which Principal Prepayment was applied to such Mortgage Loan prior to such
Mortgage Loan's Due Date in such Due Period, the amount of interest (net the
related Reconstituted Servicing Fee) that would have accrued on the amount of
such Principal Prepayment during the period commencing on the date as of which
such Principal Prepayment was applied to such Mortgage Loan and ending on the
day immediately preceding such Due Date, inclusive.
Prime Rate: The prime rate announced to be in effect from time to
time, as published as the average rate in The Wall Street Journal Northeast
Edition.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any prepayment penalty or premium thereon and which is not accompanied by an
amount of interest representing scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
Prior Servicer: Any prior servicer (other than the Servicer) of any or
all of the Mortgage Loans.
Qualified Depository: A depository the accounts of which are insured
by the FDIC and the debt obligations of which are rated in the two highest
categories by Standard & Poor's Ratings Group and ▇▇▇▇▇'▇ Investors Service,
Inc. and meets such requirements as are necessary for any Reconstitution
Agreement. The Servicer shall be deemed to be a Qualified Depository under this
Agreement so long as it meets the applicable requirements of FNMA.
Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by FNMA, FHLMC and GNMA.
Reconstitution Agreements: The agreement or agreements entered into by
the Owner, the Servicer, FNMA, FHLMC or GNMA or certain third parties on the
Reconstitution Date(s) with respect to any or all of the Mortgage Loans serviced
hereunder, in connection with a Whole Loan Transfer, a Pass-Through Transfer or
an Agency Transfer as set forth in Section 7.01, including, but not limited to,
(i) a FNMA Mortgage Selling and Servicing Contract, a Pool Purchase Contract,
and any and all servicing agreements and tri-party agreements reasonably
required by FNMA with respect to a FNMA Transfer, (ii) a Purchase Contract and
all purchase documents associated therewith as set forth in the ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇' & Servicers' Guide, and any and all servicing agreements and tri-party
agreements reasonably required by FHLMC with respect to a FHLMC Transfer, (iii)
any and all documents as set forth in the GNMA Mortgage-Backed Securities Guide,
and any and all servicing agreements and tri-party agreements reasonably
required by GNMA with respect to a GNMA Transfer, (iv) a pooling and servicing
agreement and/or a subservicing/master servicing agreement and related
custodial/trust agreement and related documents with respect to a Pass-Through
Transfer and (iv) a seller's warranties and servicing agreement or a sale and
servicing agreement and related custodial agreement and closing documents with
respect to a Whole Loan Transfer. Such agreement or agreements shall prescribe
the rights and obligations of the Servicer in servicing the related Mortgage
Loans and shall provide for a Reconstituted Servicing Fee to the Servicer, net
of any guarantee fees due FNMA, FHLMC or GNMA, if applicable, at least equal to
the Servicing Fee due the Servicer in accordance with this Agreement or the
Reconstituted Servicing Fee required pursuant to the Reconstitution Agreement,
whichever is greater. The Reconstituted Servicing Fee and the form of relevant
Reconstitution Agreement to be entered into by the Owner and/or master servicer
or trustee and the Servicer with respect to Pass-Through Transfers and/or Whole
Loan Transfers shall be reasonably satisfactory in form and substance to the
Owner and the Servicer (giving due regard to any rating or master servicing
requirements and the provisions of Section 9.02 hereof) and the representations
and warranties and servicing provisions contained therein shall be substantially
similar to those contained in this Agreement, unless otherwise mutually agreed
by the parties.
Reconstitution Date: The date or dates on which any or all of the
Mortgage Loans serviced under this Agreement shall be removed from this
Agreement and reconstituted as part of an Agency Transfer, a Pass-Through
Transfer or a Whole Loan Transfer pursuant to Section 7.01 hereof. On such date
or dates, the Mortgage Loans transferred shall cease to be covered by this
Agreement and the Servicer's servicing responsibilities shall cease under this
Agreement with respect to the related transferred Mortgage Loans, other than the
obligation to remit the Additional Remittance in accordance with the provisions
set forth in Section 7.07 hereof and the right of the Owner to cause a transfer
of the servicing responsibilities to the Mortgage Loans and/or REO Properties in
accordance with Section 7.08 hereof.
Reconstituted Servicing Fee: With respect to each reconstituted
Mortgage Loan that is subject to a Reconstitution Agreement, the monthly fee to
which the Servicer thereunder is entitled, which shall be equal to the servicing
fee specified in the applicable Reconstitution Agreement.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
Remittance Date: The 10th day (or if such 10th day is not a Business
Day, the first Business Day immediately following) of any month, following the
First Remittance Date.
REO Disposition: The final sale by the Servicer of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 3.11.
REO Property: A Mortgaged Property acquired by the Servicer on behalf
of the Owner through foreclosure or by deed in lieu of foreclosure, pursuant to
Section 3.11.
Servicer: Aurora Loan Services Inc. or its successor in interest or
assigns or any successor to the Servicer under this Agreement as herein
provided.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
administrative or judicial proceedings, including foreclosures, (c) the
management and liquidation of the Mortgaged Property if the Mortgaged Property
is acquired in satisfaction of the Mortgage, (d) taxes, assessments, water
rates, sewer rents and other charges which are or may become a lien upon the
Mortgaged Property, and PMI Policy premiums and fire and hazard insurance
coverage, (e) any losses sustained by the Servicer with respect to the
liquidation of the Mortgaged Property and (f) compliance with the obligations
pursuant to the provisions of the FNMA Guides.
Servicing Fee: With respect to each Mortgage Loan that has not been
removed from this Agreement as part of an Agency Transfer, a Pass-Through
Transfer or a Whole Loan Transfer, and with respect to each Mortgage Loan that
has been removed from this Agreement as part of an Agency Transfer, a
Pass-Through Transfer or a Whole Loan Transfer and subsequently repurchased by
the Owner pursuant to Section 7.05 hereof and again becoming subject to this
Agreement, the servicing fee shall be, with respect to each (i) fixed rate
Mortgage Loan, an amount equal to $10.00 per month; (ii) adjustable rate
Mortgage Loan, an amount equal to $11.00 per month; and (iii) Delinquent
Mortgage Loan, an amount equal to $40.00 per month. Such fee shall be payable
monthly and shall be pro rated for any portion of a month during which the
Mortgage Loan is serviced pursuant to this Agreement.
Servicing File: The items pertaining to a particular Mortgage Loan
including, but not limited to, the computer files, data disks, books, records,
data tapes, notes, and all additional documents generated as a result of or
utilized in originating and/or servicing each Mortgage Loan, which are held in
trust for the Owner by the Servicer.
Servicing Officer: Any officer of the Servicer involved in or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Servicer to the
Owner upon request, as such list may from time to time be amended.
Servicing Rights: Any and all of the following: (a) any and all rights
to service the Mortgage Loans; (b) any payments to or monies received by the
Servicer for servicing the Mortgage Loans; (c) any late fees, penalties or
similar payments with respect to the Mortgage Loans; (d) all agreements or
documents creating, defining or evidencing any such servicing rights to the
extent they relate to such servicing rights and all rights of the Servicer
thereunder; (e) Escrow Payments or other similar payments with respect to the
Mortgage Loans and any amounts actually collected by the Servicer with respect
thereto; (f) all accounts and other rights to payment related to any of the
property described in this paragraph; and (g) any and all documents, files,
records, servicing files, servicing documents, servicing records, data tapes,
computer records, or other information pertaining to the Mortgage Loans or
pertaining to the past, present or prospective servicing of the Mortgage Loans.
Set-Up Fee: The set-up fee indicated on the applicable Acknowledgment
Agreement, which fee shall be payable within 30 days following the later to
occur of (i) the completion of the transfer of all of the applicable Mortgage
Loan information onto the Servicer's computer system or (ii) the receipt by the
Owner of an invoice from the Servicer for the Set-Up Fee.
Transfer Date: The date or dates upon which the Servicer commences the
servicing responsibilities with respect to Mortgage Loans in accordance with the
terms set forth herein which dates shall be as set forth in the related
Confirmation Agreement and Acknowledgment Agreement.
VA: The Veterans Administration, an agency of the United States of
America, or any successor thereto including the Administrator of Veterans
Affairs.
VA Approved Lender: Those lenders which are approved by the VA to act
as a lender in connection with the origination of VA Loans.
VA Loan: A Mortgage Loan which is the subject of a VA Loan Guaranty
Agreement as evidenced by a Loan Guaranty Certificate, or a Mortgage Loan which
is a vendee loan sold by the VA.
VA Loan Guaranty Agreement: The obligation of the United States to pay
a specific percentage of a Mortgage Loan (subject to a maximum amount) upon
default of the Mortgagor pursuant to the Servicemen's Readjustment Act, as
amended.
VA Loan Guaranty Certificate: The certificate evidencing a VA Loan
Guaranty Agreement.
VA Regulations: Regulations promulgated by the Veteran's
Administration pursuant to the Servicemen's Readjustment Act, as amended,
codified in 38 Code of Federal Regulations, and other VA issuances relating to
VA Loans, including related Handbooks, Circulars and Notices.
Whole Loan Transfer: The sale or transfer of some or all of the
Mortgage Loans to a third party purchaser in a whole loan transaction pursuant
to a seller's warranties and servicing agreement or a participation and
servicing agreement, retaining the Servicer as "servicer" thereunder.
ARTICLE II
OWNER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING
RESPONSIBILITIES
Section 2.01. Contract for Servicing; Possession of Servicing Files.
The Owner, by execution and delivery of this Agreement (and the
related Acknowledgment Agreement and Confirmation Agreement), does hereby
contract with the Servicer, subject to the terms of this Agreement, for the
servicing of the Mortgage Loans. On or before each Transfer Date, the Owner
shall cause to be delivered or will use its Best Efforts to cause to be
delivered the Servicing Files with respect to the Mortgage Loans listed on the
related Mortgage Loan Schedule to the Servicer to be held in trust for the Owner
pursuant to this Agreement. On or before each Transfer Date, the Owner shall,
with respect to the Mortgage Loans on the related Mortgage Loan Schedule,
execute and deliver an Acknowledgment Agreement in the form attached hereto as
Exhibit B-1, which Acknowledgment Agreement shall be executed and delivered
simultaneously by the Servicer to the Owner. Each Servicing File delivered to
the Servicer shall be held by the Servicer in order to service the Mortgage
Loans pursuant to this Agreement and are and shall be held in trust by the
Servicer for the benefit of the Owner as the owner thereof. The Servicer's
possession of any portion of the Mortgage Loan documents shall be at the will of
the Owner for the sole purpose of facilitating servicing of the related Mortgage
Loan pursuant to this Agreement, and such retention and possession by the
Servicer shall be in a custodial capacity only. The ownership of each Mortgage
Note, Mortgage, and the contents of the Servicing File shall be vested in the
Owner 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 Owner and shall be retained and maintained, in
trust, by the Servicer at the will of the Owner in such custodial capacity only.
The portion of each Servicing File retained by the Servicer pursuant to this
Agreement shall be segregated from the other books and records of the Servicer
and shall be appropriately marked to clearly reflect the ownership of the
related Mortgage Loan by the Owner. The Servicer shall release from its custody
the contents of any Servicing File retained by it only in accordance with this
Agreement.
Section 2.02. Books and Records.
Record title to each Mortgage and the related Mortgage Note shall, at
the Owner's option, remain in the name of (i) the Servicer or (ii) in the name
as the Owner shall designate. Subject to Section 3.01(a) hereof, the Owner, its
designee or the Servicer shall prepare or cause to be prepared and record or
cause to be recorded any Assignments of Mortgage required pursuant to this
Section 2.02. and shall pay all necessary fees associated with the preparation
and recording of the Assignments of Mortgage. Notwithstanding the foregoing, the
Servicer shall cooperate with the Owner in the Owner's preparation and recording
of any and all Assignments of Mortgage. Additionally, the Servicer shall prepare
and execute, at the direction of the Owner, any note endorsements in connection
with any and all Reconstitution Agreements. All rights arising out of the
Mortgage Loans shall be vested in the Owner. All funds received on or in
connection with a Mortgage Loan shall be received and held by the Servicer in
trust for the benefit of the Owner as the owner of the Mortgage Loans pursuant
to the terms of this Agreement.
Section 2.03. Commencement of Servicing Responsibilities.
On each Transfer Date, the Owner shall appoint the Servicer to
perform, and the Servicer shall assume and accept such appointment for, all
servicing responsibilities for the related Mortgage Loans on the related
Mortgage Loan Schedule. The engagement of the Servicer to perform the servicing
responsibilities hereunder is not mandatory and is expressly conditioned upon
the acquisition of the related Mortgage Loans by the Owner, the election of the
Owner respecting the engagement of the Servicer to perform the related servicing
responsibilities and the election, in the manner hereinafter set forth, of the
Servicer to accept such transfer.
Upon the Owner's determination in its sole discretion to engage the
Servicer to perform the servicing responsibilities with respect to Conventional
Loans, FHA Loans and/or VA Loans pursuant to the terms of this Agreement, the
Owner shall execute a Confirmation Agreement in the form attached as Exhibit B-2
hereto, and deliver the same to the Servicer. The Owner shall notify the
Servicer by telephone of its determination to transfer such servicing
responsibilities to the Servicer and shall deliver the Confirmation Agreement to
the Servicer within 2 Business Days of such verbal notification. The Servicer
may elect to accept or reject on an all or nothing basis such engagement to
perform the servicing responsibilities with respect to the additional
Conventional Loans, FHA Loans and/or VA Loans by either (i) in the case of an
acceptance, executing the Confirmation Agreement and delivering the same to the
Owner in accordance with Section 10.06 within 5 Business Days of receipt of such
Confirmation Agreement, or (ii) in the case of a rejection, by written
notification thereof delivered to the Owner in accordance with Section 10.06
within 5 Business Days of receipt of such Confirmation Agreement.
Section 2.04. Owner Covenants Regarding Transfer of Servicing.
On or before each Transfer Date the Owner shall use its Best Efforts
to cause the Prior Servicer to effectuate and evidence the transfer of the
servicing of the related Mortgage Loans from the Prior Servicer to the Servicer
including the following:
(a) Notice to Mortgagors. The Owner shall use its Best Efforts to
cause the Prior Servicer to mail to the Mortgagor of each Mortgage a letter
advising the Mortgagor of the transfer of the servicing thereof to the Servicer,
in accordance with the relevant provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ National
Affordable Housing Act of 1990, as the same may be amended from time to time,
and the regulations provided in accordance with the Real Estate Settlement
Procedures Act. The Owner shall use its Best Efforts to cause the Prior Servicer
to promptly provide the Servicer with copies of all such notices.
(b) Notice to Taxing Authorities and Insurance Companies and HUD (if
applicable). The Owner shall use its Best Efforts to cause the Prior Servicer to
transmit to the applicable taxing authorities and insurance companies (including
PMI Policy insurers, if applicable) and/or agents, notification of the transfer
of the servicing to the Servicer and instructions to deliver all notices, tax
bills and insurance statements, as the case may be, to the Servicer from and
after the related Transfer Date. The Owner shall use its Best Efforts to cause
the Prior Servicer to promptly provide the Servicer with copies of all such
notices. With respect to FHA Loans, in addition to the requirements set forth
above, the Owner shall use its Best Efforts to cause the Prior Servicer to
provide notice to HUD on HUD Form 92080 or such other form prescribed by HUD.
(c) Delivery of Servicing Records. The Owner shall use its Best
Efforts to cause the Prior Servicer to forward to the Servicer all Servicing
Files and any other Mortgage Loan documents in the Prior Servicer's possession
relating to each Mortgage Loan.
(d) Escrow Payments. The Owner shall use its Best Efforts to cause the
Prior Servicer to provide the Servicer with immediately available funds by wire
transfer in the amount of the net Escrow Payments and suspense balances and all
loss draft balances associated with the Mortgage Loans. The Owner shall use its
Best Efforts to cause the Prior Servicer to provide the Servicer with an
accounting statement of Escrow Payments and suspense balances and loss draft
balances sufficient to enable the Servicer to reconcile the amount of such
payment with the accounts of the Mortgage Loans. Additionally, the Owner shall
use its Best Efforts to cause the Prior Servicer to wire the Servicer the amount
of any agency or trustee Mortgage Loan payments, any prepaid Mortgage Loan
payments and all other similar amounts held by the Prior Servicer.
(e) Payoffs and Assumptions. The Owner shall use its Best Efforts to
cause the Prior Servicer to provide to the Servicer copies of all assumption and
payoff statements generated by the Prior Servicer on the Mortgage Loans.
(f) Mortgage Payments Received Prior to Transfer Date. The Owner shall
use its Best Efforts to cause the Prior Servicer to apply all payments received
by the Prior Servicer on each Mortgage Loan prior to the related Transfer Date
to the account of the particular Mortgagor.
(g) Mortgage Payments Received After Transfer Date. The Owner shall
use its Best Efforts to cause the Prior Servicer to forward the amount of any
Monthly Payments received by the Prior Servicer after the related Transfer Date
to the Servicer by overnight mail on the date of receipt. The Owner shall use
its Best Efforts to cause the Prior Servicer to notify the Servicer of the
particulars of the payment, which notification requirement shall be satisfied if
the Prior Servicer forwards with its payment sufficient information to permit
appropriate processing of the payment by the Servicer. The Owner shall use its
Best Efforts to cause the Prior Servicer to assume full responsibility for the
necessary and appropriate legal application of Monthly Payments received by the
Prior Servicer after the related Transfer Date with respect to Mortgage Loans
then in foreclosure or bankruptcy; provided, for purposes of this Agreement,
necessary and appropriate legal application of such Monthly Payments shall
include, but not be limited to endorsement of a Monthly Payment to the Servicer
with the particulars of the payment such as the account number, dollar amount,
date received and any special Mortgagor application instructions.
(h) Reconciliation. The Owner shall use its Best Efforts to cause the
Prior Servicer to, on or before the related Transfer Date, reconcile principal
balances and make any monetary adjustments required by the Servicer. Any such
monetary adjustments will be transferred between the Prior Servicer and the
Servicer as appropriate.
(i) IRS Forms. The Owner shall use its Best Efforts to cause the Prior
Servicer to file all IRS forms 1098, 1099, 1099A or 1041 and K-1, or any
successor forms thereto, which are required to be filed on or before the related
Transfer Date in relation to the servicing and ownership of the Mortgage Loans
for the current calendar year. The Owner shall use its Best Efforts to cause the
Prior Servicer to provide copies of such forms to the Servicer or the Mortgagors
upon request and shall use its Best Efforts to cause the Prior Servicer to
reimburse the Servicer for any costs or penalties incurred by the Servicer due
to the Prior Servicer's failure to comply with this paragraph.
Section 2.05. Custodial Agreement.
With respect to all Mortgage Loans which become subject to this
Agreement, pursuant to the related Custodial Agreement as identified in the
related Confirmation Agreement and related Acknowledgment Agreement, the Owner
shall deliver and release to the related Custodian on or prior to each Transfer
Date those Mortgage Loan documents required by the Custodial Agreement with
respect to each Mortgage Loan, a list of which is set forth in Section 2 of the
Custodial Agreement. In the event of any conflict, inconsistency or discrepancy
between any of the provisions of this Agreement and any of the provisions of the
Custodial Agreement, the provisions of this Agreement shall control and be
binding upon the Owner and the Servicer.
On or prior to each Transfer Date, the related Custodian shall have
certified its receipt of all Mortgage Loan documents required to be delivered
pursuant to the Custodial Agreement, as evidenced by the trust receipt and
initial certification of the related Custodian in the form annexed to the
Custodial Agreement. The Owner shall be responsible for, as and when due, any
and all initial document review fees, initial and final certification fees and
recertification fees and any costs associated with correcting any deficiencies
identified in connection with such review(s). The Owner shall be responsible for
maintaining the Custodial Agreement and shall pay all other fees and expenses of
the related Custodian including but not limited to, (i) any and all annual and
warehousing fees, (ii) any and all termination fees in the event the related
Custodian is terminated by the Owner, except that the Servicer shall pay such
termination fees in the event the related Custodian is terminated pursuant to
the Servicer's request and (iii) any and all fees due in connection with the
deposit or retrieval of a Mortgage Loan document or documents (collectively, the
"Custodial Fees"). With respect to any Mortgage Loans which become subject to an
Agency Transfer, upon the request of the Servicer the Owner shall terminate the
related Custodian and be responsible for any related termination fees; provided,
however, that the Servicer shall (A) appoint a successor custodian that meets
the requirements of the related Reconstitution Agreement (such successor
custodian may be the Servicer if permitted under such Reconstitution Agreement)
and (B) from and after the date of such termination be responsible for any and
all fees and expenses of the successor custodian. Notwithstanding the foregoing,
in the event that the Servicer acquires the Servicing Rights to any or all the
Mortgage Loans pursuant to Section 7.01, all Custodial Fees associated with such
Mortgage Loans shall be paid by the Servicer.
The Servicer shall forward to the related Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with this Agreement within one week of
their execution, provided, however, that the Servicer shall provide the related
Custodian with a certified true copy of any such document submitted for
recordation within one week of its execution, and shall provide the original of
any document submitted for recordation or a copy of such document certified by
the appropriate public recording office to be a true and complete copy of the
original within sixty days of its submission for recordation. If such copy has
not been returned by the applicable recording office within sixty days of its
submission, the Servicer shall notify the Owner and the related Custodian of
such delinquency, demonstrating that the Servicer has used its Best Efforts to
obtain such copy (the "Delinquent Document"). Upon adequate demonstration of a
Best Efforts attempt by the Servicer to obtain the Delinquent Document, the
Owner shall, in its sole discretion, extend the time period for the receipt of
the Delinquent Document for a reasonable time period by which it is reasonably
expected that the Delinquent Document will be received.
ARTICLE III
SERVICING OF THE MORTGAGE LOANS
Section 3.01. Servicer to Service.
The Servicer, as an independent contractor, shall service and
administer the Mortgage Loans from and after the related Transfer Date and shall
have full power and authority, acting alone, to do any and all things in
connection with such servicing and administration which the Servicer may deem
necessary or desirable, consistent with the terms of this Agreement and with
Accepted Servicing Practices, including taking all actions that a mortgagee is
permitted or required to take by the FHA or VA, with respect to FHA Loans and VA
Loans, as the case may be. Except as set forth in this Agreement, the Servicer
shall service the Mortgage Loans in strict compliance with the servicing
provisions related to the FNMA MBS Program (Special Servicing Option) of the
FNMA Guides, which include, but are not limited to, provisions regarding the
liquidation of Mortgage Loans, the collection of Mortgage Loan payments, the
payment of taxes, insurance and other charges, the maintenance of hazard
insurance, the maintenance of mortgage impairment insurance, the maintenance of
a Fidelity Bond and Errors and Omissions Insurance, inspections, the restoration
of Mortgaged Property, the maintenance of PMI Policies, insurance claims, the
title, management and disposition of REO Property, permitted withdrawals with
respect to REO Property, REO reports, liquidation reports, and reports of
foreclosures and abandonments of Mortgaged Property, the transfer of Mortgaged
Property, the release of Mortgage Loan documents, annual statements, and
examination of records and facilities. In the event of any conflict,
inconsistency or discrepancy between any of the servicing provisions of this
Agreement and any of the servicing provisions of the FNMA Guides, the provisions
of this Agreement shall control and be binding upon the Owner and the Servicer.
It is understood and agreed that the Owner shall approve all
foreclosures for which approval would be necessary by the Applicable Agency
prior to the commencement of any foreclosure proceedings and that the Owner must
approve any and all advances with respect to foreclosures made by the Servicer
in excess of 20% of the outstanding principal balance of the applicable Mortgage
Loan. In the event that Owner does not disapprove of any such advance or
foreclosure within three (3) days of receipt of notice of such advance or
foreclosure, then the Owner is deemed to have approved such advance or
foreclosure.
Notwithstanding the foregoing paragraph, the Owner and the Servicer
hereby agree as follows:
(a) As per the terms of the applicable Acknowledgment Agreement,
either (i) the Owner or the Owner's designee or (ii) the Servicer, for an
Assignment Fee, shall (A) prepare or cause to be prepared all Assignments of
Mortgage, (B) record or cause to be recorded all Assignments of Mortgage, (C)
shall pay the recording costs associated with the Mortgage Loans associated with
this Acknowledgment Agreement and/or (D) shall track such Assignments of
Mortgage to ensure they have been recorded for the Assignment Fee set forth on
the applicable Acknowledgment Agreement.
(b) The Servicer shall, in accordance with the relevant provisions of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ National Affordable Housing Act of 1990, as the same may
be amended from time to time, and the regulations provided in accordance with
the Real Estate Settlement Procedures Act, provide notice to the Mortgagor of
each Mortgage of the transfer of the servicing thereto to the Servicer.
(c) The Servicer shall be responsible for the preparation and costs
associated with notifications to Mortgagors of the assumption of servicing by
the Servicer.
(d) The Owner shall retain all Ancillary Income.
Prior to a Mortgage Loan becoming subject to a Reconstitution
Agreement and consistent with the terms of this Agreement, the Servicer may (i)
waive, modify or vary any term of any Mortgage Loan or (ii) consent to the
postponement of strict compliance with any such term or (iii) in any manner
grant indulgence to any Mortgagor, if such modification would not require the
notification to and/or consent by the Applicable Agency, without the prior
consent of the Owner. Where such notification to and/or consent by the
Applicable Agency is required for any such modification, the Servicer must first
obtain the prior written consent of the Owner before making such modification.
In the event that the Owner does not disapprove of any such modification within
ten (10) days of receipt of a request for consent to such modification, then the
Owner is deemed to have consented to such modification. Notwithstanding the
foregoing, once a Mortgage Loan becomes subject to a Reconstitution Agreement,
the Servicer may not (i) waive, modify or vary any term of any Mortgage Loan or
(ii) consent to the postponement of strict compliance with any such term or
(iii) in any manner grant indulgence to any Mortgagor without first obtaining
the prior written consent of the applicable Persons required thereunder.
Without limiting the generality of the foregoing, the Servicer shall
continue, and is hereby authorized and empowered, to execute and deliver on
behalf of itself and the Owner, all instruments of satisfaction or cancellation,
or of partial or full release, discharge and all other comparable instruments,
with respect to the Mortgage Loans and with respect to the Mortgaged Properties.
If reasonably required by the Servicer, the Owner shall furnish the Servicer
with any powers of attorney and other documents necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties under
this Agreement.
In servicing and administering the FHA Loans and VA Loans, the
Servicer shall comply strictly with the National Housing Act and the FHA
Regulations, the Servicemen's Readjustment Act, the VA Regulations and
administrative guidelines issued thereunder or pursuant thereto, and, to the
extent permitted hereunder, promptly discharge all of the obligations of the
mortgagee thereunder and under each Mortgage including the payment of any fees,
premiums and charges and the timely giving of notices.
In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures (including collection procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, the FNMA Guides, the FHA Regulations and the VA Regulations,
and the Owner's reliance on the Servicer.
Section 3.02. Collection of Mortgage Loan Payments.
Continuously from the related Transfer Date until the date each
Mortgage Loan ceases to be subject to this Agreement, the Servicer shall proceed
diligently to collect all payments due under each of the Mortgage Loans when the
same shall become due and payable and shall take special care in ascertaining
and estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loans and each related Mortgaged Property,
to the end that the installments payable by the Mortgagors will be sufficient to
pay such charges as and when they become due and payable.
Section 3.03. Establishment of and Deposits to Custodial Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to the Mortgage Loans separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts, titled "Aurora Loan Services
Inc., in trust for ▇▇▇▇▇▇ Capital, A Division of ▇▇▇▇▇▇ Brothers Holdings Inc.,
owner of Residential Mortgage Loans, Group No. 1997-ALSI, and various
Mortgagors". The Custodial Account shall be established with a Qualified
Depository. Any funds deposited in the Custodial Account may be invested in
Eligible Investments subject to the provisions of Section 3.10 hereof. Funds
deposited in the Custodial Account may be drawn on by the Servicer in accordance
with Section 3.04. The creation of any Custodial Account shall be evidenced by a
letter agreement in the form of Exhibit C. A copy of such certification or
letter agreement shall be furnished to the Owner and, upon request, to any
subsequent owner of the Mortgage Loans.
The Servicer shall deposit in the Custodial Account on a daily basis,
and retain therein, the following collections received by the Servicer and
payments made by the Servicer after the related Transfer Date:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds;
(v) all Ancillary Income;
(vi) all Condemnation Proceeds that are not applied to the restoration
or repair of the Mortgaged Property or released to the Mortgagor;
(vii) any amount required to be deposited in the Custodial Account;
(viii) any amounts required to be deposited by the Servicer in
connection with the deductible clause in any blanket hazard insurance policy;
and
(ix) any amounts received with respect to or related to any REO
Property or REO Disposition Proceeds.
Any interest paid on funds deposited in the Custodial Account by the
depository institution shall accrue to the benefit of the Servicer and the
Servicer shall be entitled to retain and withdraw such interest from the
Custodial Account pursuant to Section 3.04. Additionally, any other benefit
derived from the Custodial Account associated with the receipt, disbursement and
accumulation of principal, interest, taxes, hazard insurance, mortgage
insurance, etc. shall accrue to the Servicer.
Section 3.04. Permitted Withdrawals From Custodial Account.
The Servicer shall, from time to time, withdraw funds from the
Custodial Account for the following purposes:
(i) to make payments to the Owner in the amounts and in the manner
provided for in Section 4.01;
(ii) in the event the Servicer has elected not to retain the Servicing
Fee out of any Mortgagor payments on account of interest or other recovery of
interest with respect to a particular Mortgage Loan (including late collections
of interest on such Mortgage Loan, or interest portions of Insurance Proceeds or
Liquidation Proceeds) prior to the deposit of such Mortgagor payment or recovery
in the Custodial Account, to pay to itself the related Servicing Fee from all
such Mortgagor payments on account of interest or other such recovery for
interest with respect to that Mortgage Loan;
(iii) to pay itself interest on funds deposited in the Custodial
Account;
(iv) to clear and terminate the Custodial Account upon the termination
of this Agreement;
(v) to transfer funds to another Qualified Depository in accordance
with Section 3.10 hereof; and
(vi) to invest funds in certain Eligible Investments in accordance
with Section 3.10 hereof.
Section 3.05. Establishment of and Deposits to Escrow Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of time deposit or demand accounts, titled,
"Aurora Loan Services Inc., in trust for ▇▇▇▇▇▇ Capital, A Division of ▇▇▇▇▇▇
Brothers Holdings Inc., owner of Residential Mortgage Loans, Group No.
1997-ALSI, and various Mortgagors". The Escrow Accounts shall be established
with a Qualified Depository in a manner that shall provide maximum available
insurance thereunder. Funds deposited in the Escrow Account may be drawn on by
the Servicer in accordance with Section 3.06. The creation of any Escrow Account
shall be evidenced by a letter agreement in the form of Exhibit D. A copy of
such certification or letter agreement shall be furnished to the Owner and, upon
request, to any subsequent owner of the Mortgage Loans.
The Servicer shall deposit in the Escrow Account or Accounts on a
daily basis, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans,
for the purpose of effecting timely payment of any such items as required under
the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or Condemnation
Proceeds which are to be applied to the restoration or repair of any Mortgaged
Property.
The Servicer shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 3.06. The Servicer shall retain any interest paid on funds deposited in
the Escrow Account by the depository institution, other than interest on
escrowed funds required by law to be paid to the Mortgagor. Additionally, any
other benefit derived from the Escrow Account associated with the receipt,
disbursement and accumulation of principal, interest, taxes, hazard insurance,
mortgage insurance, etc. shall accrue to the Servicer. To the extent required by
law, the Servicer shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account may be non-interest bearing or that
interest paid thereon is insufficient for such purposes.
Section 3.06. Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the
Servicer only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, sewer rents, mortgage insurance premiums, condominium charges, fire
and hazard insurance premiums or other items constituting Escrow Payments for
the related Mortgage;
(ii) to refund to any Mortgagor any funds found to be in excess of the
amounts required under the terms of the related Mortgage Loan;
(iii) for transfer to the Custodial Account and application to reduce
the principal balance of the Mortgage Loan in accordance with the terms of the
related Mortgage and Mortgage Note;
(iv) for application to restoration or repair of the Mortgaged
Property in accordance with the FNMA Guides;
(v) for transfer to the Custodial Account of fire and hazard insurance
proceeds and Escrow Payments with respect to any FHA Loan or VA Loan, where the
FHA or the VA, respectively, has directed application of funds as a credit
against the proceeds of the FHA Insurance Contract or VA Loan Guaranty
Agreement;
(vi) to pay to the Servicer, or any Mortgagor to the extent required
by law, any interest paid on the funds deposited in the Escrow Account; and
(vii) to clear and terminate the Escrow Account on the termination of
this Agreement.
Section 3.07. Maintenance of FHA Mortgage Insurance and VA Guaranty.
With respect to FHA Loans and VA Loans, the Servicer shall maintain
and keep the FHA Mortgage Insurance and the VA Guaranty, respectively, in full
force and effect throughout the term of this Agreement and discharge its
obligations arising out of FHA Mortgage Insurance and the VA Guaranty
Certificate. The Servicer hereby agrees that it shall be liable to the Owner for
any loss, liability or expense incurred by the Owner by reason of any FHA
Mortgage Insurance or VA Guaranty being voided, reduced, released or adversely
affected by reason of the negligence or willful misconduct of the Servicer. The
Servicer will service and administer the Mortgage Loans in accordance with the
obligations of mortgagees under the Act and the applicable regulations
thereunder and under the Servicemen's Readjustment Act and VA Regulations and
will discharge all obligations of the mortgagee under each Mortgage Loan
including, with respect to FHA Loans and VA Loans, paying all FHA and VA
insurance premiums, fees or charges, as required, and, subject to the right to
assign the Mortgage Loan to the FHA or VA, as the case may be, will take all
action reasonably necessary to preserve the lien of such Mortgage, including,
the defense of actions to challenge or foreclose such lien.
Section 3.08. Notification of Adjustments.
With respect to each Adjustable Rate Mortgage Loan, the Servicer shall
adjust the Mortgage Interest Rate on the related interest rate adjustment date
and shall adjust the Monthly Payment on the related mortgage payment adjustment
date, if applicable, in compliance with the requirements of applicable law and
the related Mortgage and Mortgage Note. The Servicer shall execute and deliver
any and all necessary notices required under applicable law and the terms of the
related Mortgage Note and Mortgage regarding the Mortgage Interest Rate and
Monthly Payment adjustments. The Servicer shall promptly, upon written request
therefor, deliver to the Owner such notifications and any additional applicable
data regarding such adjustments and the methods used to calculate and implement
such adjustments. Upon the discovery by the Servicer or the receipt of notice
from the Owner that the Servicer has failed to adjust a Mortgage Interest Rate
or Monthly Payment in accordance with the terms of the related Mortgage Note,
the Servicer shall immediately deposit in the Custodial Account from its own
funds the amount of any interest loss or deferral caused the Owner thereby.
Section 3.09. Completion and Recordation of Assignments of Mortgage and FHA
and VA Change Notices.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected (subject to Section 3.01(a)) at either the Servicer's, Owner's or its
designee's expense. At the Owner's direction, the Servicer shall cause the
endorsements on the Mortgage Note, the Assignments of Mortgage (subject to
Section 3.01(a)), the assignment of security agreement and the HUD form 92080
Mortgage Record Change with respect to all FHA Loans to be completed, and shall
give notice to the VA of a transfer of insurance credits, if applicable, with
respect to VA Loans on the form prescribed by the VA.
Section 3.10. Protection of Accounts.
The Servicer may transfer the Custodial Account or the Escrow Account
to a different Qualified Depository from time to time. Such transfer shall be
made only upon obtaining the consent of the Owner, which consent shall not be
withheld unreasonably.
The Servicer shall bear any expenses, losses or damages sustained by
the Owner if the Custodial Account and/or the Escrow Account are not demand
deposit accounts.
Amounts on deposit in the Custodial Account and the Escrow Account may
at the option of the Servicer be invested in Eligible Investments; provided that
in the event that amounts on deposit in the Custodial Account or the Escrow
Account exceed the amount fully insured by the FDIC (the "Insured Amount") the
Servicer shall be obligated to invest the excess amount over the Insured Amount
in Eligible Investments on the same Business Day as such excess amount becomes
present in the Custodial Account or the Escrow Account. Any such Eligible
Investment shall mature no later than the Determination Date next following the
date of such Eligible Investment, provided, however, that if such Eligible
Investment is an obligation of a Qualified Depository (other than the Servicer)
that maintains the Custodial Account or the Escrow Account, then such Eligible
Investment may mature on such Remittance Date. Any such Eligible Investment
shall be made in the name of the Servicer in trust for the benefit of the Owner.
All income on or gain realized from any such Eligible Investment shall be for
the benefit of the Servicer and may be withdrawn at any time by the Servicer.
Any losses incurred in respect of any such investment shall be deposited in the
Custodial Account or the Escrow Account, by the Servicer out of its own funds
immediately as realized.
Section 3.11. Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Owner, or in the event the Owner is not
authorized or permitted to hold title to real property in the state where the
REO Property is located, or would be adversely affected under the "doing
business" or tax laws of such state by so holding title, the deed or certificate
of sale shall be taken in the name of such Person or Persons as shall be
consistent with an Opinion of Counsel obtained by the Servicer from any attorney
duly licensed to practice law in the state where the REO Property is located.
The Person or Persons holding such title other than the Owner shall acknowledge
in writing that such title is being held as nominee for the Owner.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Owner solely for the purpose of its prompt disposition and
sale. The Servicer, either itself or through an agent selected by the Servicer,
shall manage, conserve, protect and operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property for
its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. The Servicer shall attempt to sell the
same (and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the Servicer
deems to be in the best interest of the Owner.
The Servicer shall use its best efforts to dispose of the REO Property
as soon as possible and shall sell such REO Property in any event within two
years after title has been taken to such REO Property, unless (a) a REMIC
election has not been made with respect to the arrangement under which the
Mortgage Loans and the REO Property are held, and (b) the Servicer determines,
and gives an appropriate notice to the Owner to such effect, that a longer
period is necessary for the orderly liquidation of such REO Property. If a
period longer than two years is permitted under the foregoing sentence and is
necessary to sell any REO Property, (i) the Servicer shall report monthly to the
Owner as to the progress being made in selling such REO Property and (ii) if,
with the written consent of the Owner, a purchase money mortgage is taken in
connection with such sale, such purchase money mortgage shall name the Servicer
as mortgagee, and such purchase money mortgage shall not be held pursuant to
this Agreement, but instead a separate participation agreement among the
Servicer and Owner shall be entered into with respect to such purchase money
mortgage. Notwithstanding anything herein to the contrary, the Servicer shall
not be required to provide financing for the sale of any REO Property.
The Servicer shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
Subject to the approval of the Owner as described in this paragraph,
the disposition of REO Property shall be carried out by the Servicer at such
price, and upon such terms and conditions, as the Servicer deems to be in the
best interests of the Owner. Prior to acceptance by the Servicer of an offer to
sell any REO Property, the Servicer shall notify the Owner of such offer in
writing which notification shall set forth all material terms of said offer
(each a "Notice of Sale"). The Owner shall be deemed to have approved the sale
of any REO Property unless the Owner notifies the Servicer in writing, within 1
Business Day after its receipt of the related Notice of Sale, that it
disapproves of the related sale. With respect to any REO Property, upon a REO
Disposition, the Servicer shall be entitled to retain from REO Disposition
Proceeds a disposition fee equal to the lesser of (A) 1.5% of the Net Sale
Proceeds or (B) $1,250; provided, however, that (1) in the event that the REO
Disposition Proceeds exceed $25,000, such disposition fee shall not be less than
$500 and (2) in the event that the REO Disposition Proceeds are $25,000 or less,
such disposition fee shall be equal to $250. The proceeds of sale of the REO
Property shall be promptly deposited in the Custodial Account. After the
expenses of such disposition shall have been paid, the Servicer shall submit a
reasonably detailed invoice for reimbursement of Servicing Advances it incurred
thereunder. Such invoice shall be submitted on a monthly basis according to
Section 5.02 hereof.
The Servicer shall withdraw the Custodial Account funds necessary for
the proper operation, management and maintenance of the REO Property, including
the cost of maintaining any hazard insurance pursuant to the FNMA Guides. The
Servicer shall make monthly distributions on each Remittance Date to the Owner
of the net cash flow from the REO Property (which shall equal the revenues from
such REO Property net of the expenses described in this Section 3.11 and of any
reserves reasonably required from time to time to be maintained to satisfy
anticipated liabilities for such expenses).
Section 3.12. Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 4.02, the
Servicer shall furnish to the Owner on or before the Remittance Date each month
a statement with respect to any REO Property covering the operation of such REO
Property for the previous month and the Servicer's efforts in connection with
the sale of such REO Property and any rental of such REO Property incidental to
the sale thereof for the previous month. That statement shall be accompanied by
such other information as the Owner shall reasonably request.
ARTICLE IV
PAYMENTS TO OWNER
Section 4.01. Remittances.
On each Remittance Date the Servicer shall remit by wire transfer of
immediately available funds to the Owner all amounts deposited in the Custodial
Account as of the close of business on the Determination Date (net of charges
against or withdrawals from the Custodial Account pursuant to Section 3.04).
With respect to any remittance received by the Owner after the
Business Day on which such payment was due, the Servicer shall pay to the Owner
interest on any such late payment at an annual rate equal to the Prime Rate,
adjusted as of the date of each change, plus two percentage points, but in no
event greater than the maximum amount permitted by applicable law. Such interest
shall be deposited in the Custodial Account by the Servicer on the date such
late payment is made and shall cover the period commencing with the day
following such Business Day and ending with the Business Day on which such
payment is made, both inclusive. Such interest shall be remitted along with the
distribution payable on the next succeeding Remittance Date. The payment by the
Servicer of any such interest shall not be deemed an extension of time for
payment or a waiver of any Event of Default by the Servicer.
Section 4.02. Statements to Owner.
Not later than the Remittance Date, the Servicer shall furnish to the
Owner (a) a monthly remittance advice containing such information in the form of
FNMA form 2010 or such other form as shall be required by the FNMA Guides or by
the Owner as to the accompanying remittance and the period ending on the
preceding Determination Date and (b) all such information required pursuant to
clause (a) above on a magnetic tape or other similar media reasonably acceptable
to Owner.
In addition, not more than 60 days after the end of each calendar
year, commencing December 31, 1997, the Servicer shall furnish to each Person
who was an Owner of the Mortgage Loans at any time during such calendar year as
required by applicable law or if not required by applicable law, at the request
of the Owner as to the aggregate of remittances for the applicable portion of
such 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 Internal Revenue Code as from time
to time are in force.
Beginning with calendar year 1998, the Servicer shall prepare and file
any and all tax returns, information statements or other filings for the portion
of the tax year 1997 and the portion of subsequent tax years for which the
Servicer has serviced some or all of the Mortgage Loans hereunder as such
returns, information statements or other filings are required to be delivered to
any governmental taxing authority or to the Owner pursuant to any applicable law
with respect to the Mortgage Loans and the transactions contemplated hereby. In
addition, the Servicer shall provide the Owner with such information concerning
the Mortgage Loans as is necessary for the Owner to prepare its federal income
tax return as the Owner may reasonably request from time to time.
Section 4.03. Monthly Advances by Servicer.
Subject to Section 7.03, the Servicer shall have no obligation to
advance any amounts constituting delinquent principal and interest payments with
respect to the Mortgage Loans.
ARTICLE V
GENERAL SERVICING PROCEDURES
Section 5.01. Servicing Compensation.
As consideration for servicing the Mortgage Loans subject to this
Agreement, the Servicer shall retain the relevant Servicing Fee for each
Mortgage Loan remaining subject to this Agreement during any month. Such
Servicing Fee shall be payable monthly.
The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except as specifically provided for herein.
In addition to the servicing compensation that the Servicer shall
receive pursuant to this Section 5.01, the Owner reserves the right, but not the
obligation, to pay to the Servicer, in the Owner's sole discretion, an incentive
fee based upon the quality level at which the Servicer performs its obligations
pursuant to this Agreement. Such incentive fee shall be payable, if any, in an
amount and at a time specified by the Owner in its sole discretion.
Section 5.02. Reimbursement of Servicing Advances.
The Owner shall reimburse the Servicer for Servicing Advances on a
monthly basis within 10 Business Days following the receipt from the Servicer of
reasonably detailed written invoices for any Servicing Advances along with
reasonably detailed supporting documentation in connection therewith. The
Servicer shall deliver such invoices and documentation, upon the request of the
Owner, at the time it delivers statements to the Owner in accordance with
Section 4.02 hereof.
ARTICLE VI
REPRESENTATIONS, WARRANTIES
AND AGREEMENTS
Section 6.01. Representations, Warranties and Agreements of the Servicer.
The Servicer, as a condition to the consummation of the transactions
contemplated hereby, hereby makes the following representations and warranties
to the Owner as of each Transfer Date:
Due Organization and Authority. The Servicer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware and has all licenses, or is in the process of obtaining all licenses
(which in any event will be received by December 31, 1997), necessary to carry
on its business as now being conducted and is licensed, qualified and in good
standing in each state where a Mortgaged Property is located if the laws of such
state require licensing or qualification in order to conduct business of the
type conducted by the Servicer, and in any event the Servicer is in compliance
with the laws of any such state to the extent necessary to ensure the
enforceability of the terms of this Agreement; the Servicer has the full power
and authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Servicer and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Servicer and all requisite action has been taken
by the Servicer to make this Agreement valid and binding upon the Servicer in
accordance with its terms;
Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Servicer;
No Conflicts. Neither the execution and delivery of this Agreement,
the acquisition of the servicing responsibilities by the Servicer or the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Servicer's organizational
documents or any legal restriction or any agreement or instrument to which the
Servicer is now a party or by which it is bound, or constitute a default or
result in an acceleration under any of the foregoing, or result in the violation
of any law, rule, regulation, order, judgment or decree to which the Servicer or
its property is subject, or impair the ability of the Servicer to service the
Mortgage Loans, or impair the value of the Mortgage Loans;
Ability to Perform. The Servicer does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Servicer which, either in any
one instance or in the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or assets of the
Servicer, or in any material impairment of the right or ability of the Servicer
to carry on its business substantially as now conducted, or in any material
liability on the part of the Servicer, or which would draw into question the
validity of this Agreement or of any action taken or to be taken in connection
with the obligations of the Servicer contemplated herein, or which would be
likely to impair materially the ability of the Servicer to perform under the
terms of this Agreement;
No Consent Required. No consent, approval, authorization or order of
any court or governmental agency or body is required for the execution, delivery
and performance by the Servicer of or compliance by the Servicer with this
Agreement, or if required, such consent, approval, authorization or order will
be obtained prior to December 31, 1997;
Ability to Service. The Servicer is or will be prior to December 31,
1997 an FHA Approved Mortgagee, a VA Approved Lender and an approved
seller/servicer of conventional residential mortgage loans for FNMA, FHLMC or
GNMA, with the facilities, procedures, and experienced personnel necessary for
the sound servicing of mortgage loans of the same type as the Mortgage Loans.
The Servicer is or will be prior to December 31, 1997 in good standing to
service mortgage loans for the FHA and the VA and either FNMA, FHLMC or GNMA;
No Untrue Information. Neither this Agreement nor any statement,
report or other document furnished or to be furnished pursuant to this Agreement
or in connection with the transactions contemplated hereby contains any untrue
statement of fact or omits to state a fact necessary to make the statements
contained therein not misleading; and
No Commissions to Third Parties. The Servicer has not dealt with any
broker or agent or anyone else who might be entitled to a fee or commission in
connection with this transaction other than the Owner.
Section 6.02. Remedies for Breach of Representations and Warranties of the
Servicer.
It is understood and agreed that the representations and warranties
set forth in Section 6.01 shall survive the engagement of the Servicer to
perform the servicing responsibilities as of each Transfer Date hereunder and
the delivery of the Servicing Files to the Servicer and shall inure to the
benefit of the Owner. Upon discovery by either the Servicer or the Owner of a
breach of any of the foregoing representations and warranties which materially
and adversely affects the ability of the Servicer to perform its duties and
obligations under this Agreement or otherwise materially and adversely affects
the value of the Mortgage Loans, the Mortgaged Property or the priority of the
security interest on such Mortgaged Property or the interest of the Owner, the
party discovering such breach shall give prompt written notice to the other.
Within 60 days of the earlier of either discovery by or notice to the
Servicer of any breach of a representation or warranty set forth in Section 6.01
which materially and adversely affects the ability of the Servicer to perform
its duties and obligations under this Agreement or otherwise materially and
adversely affects the value of the Mortgage Loans, the Mortgaged Property or the
priority of the security interest on such Mortgaged Property, the Servicer shall
use its Best Efforts promptly to cure such breach in all material respects and,
if such breach cannot be cured, the Servicer shall, at the Owner's option,
assign the Servicer's rights and obligations under this Agreement (or respecting
the affected Mortgage Loans) to a successor servicer, subject to the approval of
the Owner, which approval shall be in the Owner's sole discretion. Such
assignment shall be made in accordance with Sections 10.01 and 10.02.
In addition, the Servicer shall indemnify the Owner and hold it
harmless against any Costs resulting from any claim, demand, defense or
assertion based on or grounded upon, or resulting from, a breach of the Servicer
representations and warranties contained in this Agreement. It is understood and
agreed that the remedies set forth in this Section 6.02 constitute the sole
remedies of the Owner respecting a breach of the foregoing representations and
warranties.
Any cause of action against the Servicer relating to or arising out of
the breach of any representations and warranties made in Section 6.01 shall
accrue upon (i) discovery of such breach by the Servicer or notice thereof by
the Owner to the Servicer, (ii) failure by the Servicer to cure such breach
within the applicable cure period, and (iii) demand upon the Servicer by the
Owner for compliance with this Agreement.
Section 6.03. Representations and Warranties of the Owner.
The Owner, as a condition to the consummation of the transactions
contemplated hereby, makes the following representations and warranties to the
Servicer as of each Transfer Date:
(a) Due Organization and Authority. The Owner is a Delaware
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation and has all licenses necessary to carry on its
business as now being conducted; the Owner has the full corporate power and
authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement by the Owner
and the consummation of the transactions contemplated hereby have been duly and
validly authorized; this Agreement evidences the valid, binding and enforceable
obligation of the Owner; and all requisite corporate action has been taken by
the Owner to make this Agreement valid and binding upon the Owner in accordance
with its terms;
(b) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Owner;
(c) No Conflicts. Neither the execution and delivery of this
Agreement, the conveyance of the servicing responsibilities to the Servicer or
the transactions contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement, will conflict with or result in a
breach of any of the terms, conditions or provisions of the Owner's charter or
by-laws or any legal restriction or any agreement or instrument to which the
Owner is now a party or by which it is bound, or constitute a default or result
in an acceleration under any of the foregoing, or result in the violation of any
law, rule, regulation, order, judgment or decree to which the Owner or its
property is subject, or impair the value of the servicing contract consummated
hereby;
(d) Ability to Perform. The Owner does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Owner which, either in any one
instance or in the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of the Owner, or
in any material impairment of the right or ability of the Owner to carry on its
business substantially as now conducted, or in any material liability on the
part of the Owner, or which would draw into question the validity of this
Agreement or of any action taken or to be taken in connection with the
obligations of the Owner contemplated herein, or which would be likely to impair
materially the ability of the Owner to perform under the terms of this
Agreement;
(f) No Consent Required. No consent, approval, authorization or order
of any court or governmental agency or body is required for the execution,
delivery and performance by the Owner of or compliance by the Owner with this
Agreement, or if required, such approval has been obtained prior to each
Transfer Date;
(g) Ownership. The Owner is the sole owner and holder of the Mortgage
Loans. With respect to each Mortgage Loan which becomes subject to this
Agreement on a Transfer Date, the servicing responsibilities contracted for as
of the relevant Transfer Date have not been assigned or pledged, and, the Owner
has good and marketable interest therein, and has full right to transfer the
servicing responsibilities to the Servicer free and clear of any encumbrance,
equity, interest, lien, pledge, charge, claim or security interest, and has full
right and authority subject to no interest, or agreement with, any other party,
(other than any notice required by law, regulation or otherwise, to be delivered
to the Mortgagors) to assign the servicing responsibilities pursuant to this
Agreement; and
(h) No Commissions to Third Parties. The Owner has not dealt with any
broker or agent or anyone else who might be entitled to a fee or commission in
connection with this transaction other than the Servicer. Section 1Remedies for
Breach of Representations and Warranties of the Owner.
It is understood and agreed that the representations and warranties
set forth in Section 6.03 shall survive the engagement of the Servicer to
perform the servicing responsibilities as of each Transfer Date and the delivery
of the Servicing Files to the Servicer and shall inure to the benefit of the
Servicer. Upon discovery by either the Servicer or the Owner of a breach of any
of the foregoing representations and warranties which materially and adversely
affects the value of the servicing contract established herein or the interest
of the Servicer, the party discovering such breach shall give prompt written
notice to the other.
Within 60 days of the earlier of either discovery by or notice to the
Owner of any breach of a representation or warranty set forth in Section 6.03
which materially and adversely affects the value of the servicing contract, the
Owner shall use its Best Efforts promptly to cure such breach in all material
respects.
The Owner shall indemnify the Servicer and hold it harmless against
any Costs resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, (i) a breach of the Owner representations and
warranties contained in this Agreement; (ii) actions or omissions of a Prior
Servicer; and (iii) the failure of the Owner to cause any event to occur which
requires its "Best Efforts" under this Agreement. It is understood and agreed
that the obligation of the Owner to indemnify the Servicer pursuant to this
Section 6.04 constitutes the sole remedy of the Servicer respecting a breach of
the foregoing representation and warranties.
Any cause of action against the Owner relating to or arising out of
the breach of any representations and warranties made in Section 6.03 shall
accrue upon (i) discovery of such breach by the Owner or notice thereof by the
Servicer to the Owner, (ii) failure by the Owner to cure such breach within the
applicable cure period, and (iii) demand upon the Owner by the Servicer for
compliance with this Agreement.
ARTICLE VII
AGENCY TRANSFER; WHOLE LOAN TRANSFER; PASS-THROUGH TRANSFER
Section 7.01. Removal of Mortgage Loans from Inclusion Under this
Agreement Upon an Agency Transfer, a Pass-Through Transfer or a Whole Loan
Transfer on One or More Reconstitution Dates.
The Owner and the Servicer agree that with respect to some or all of
the Mortgage Loans, from time to time the Owner may, in its sole discretion
choose to reconstitute a portion or all of the Mortgage Loans effecting any of
the following:
(1) An Agency Transfer, and/or
(2) A Whole Loan Transfer, and/or
(3) A Pass-Through Transfer.
In connection with the foregoing, the Owner shall offer to sell the
Servicing Rights to the Servicer at a price specified by the Owner with respect
to the affected Mortgage Loans (each offer a "Purchase Offer"). The Servicer
shall, upon receipt of a Purchase Offer, have three (3) Business Days to accept
the terms of such Purchase Offer (the "Acceptance Period"). If the Servicer
fails to accept the Purchase Offer by the expiration of the Acceptance Period,
the Purchase Offer shall be deemed rejected by the Servicer and the Owner shall
have the right to offer the Servicing Rights to any third party upon comparable
terms. Subject to Section 10.01, on the related Reconstitution Date, the
Mortgage Loans transferred shall cease to be covered by this Agreement, except
with respect to the obligation to remit the Additional Remittance in accordance
with the provisions set forth herein and the right of the Owner to cause a
transfer of the servicing responsibilities with respect to the Mortgage Loans
and/or REO Properties in accordance with Sections 7.07 and 7.08, respectively.
The Servicer shall cooperate with the Owner in connection with any
Agency Transfer, Pass-Through Transfer or Whole Loan Transfer contemplated by
the Owner pursuant to this Section 7.01. In that connection, the Servicer shall
(a) execute any Reconstitution Agreement within a reasonable period of time
after receipt thereof which time shall be sufficient for the Servicer and
Servicer's counsel to review such Reconstitution Agreement, but such time shall
not exceed ten (10) Business Days after such receipt, and (b) provide to FNMA,
FHLMC, GNMA, the trustee or a third party purchaser, as the case may be, subject
to any Reconstitution Agreement and/or the Owner: (i) any and all information
and appropriate verification of information which may be reasonably available to
the Servicer, whether through letters of its auditors and counsel or otherwise,
as the Owner shall reasonably request; and (ii) such additional representations,
warranties, covenants, opinions of counsel, letters from auditors, and
certificates of public officials or officers of the Servicer as are reasonably
believed necessary by FNMA, FHLMC, GNMA, the trustee, such third party
purchaser, any master servicer, any rating agency or the Owner, as the case may
be, in connection with such transactions. Prior to incurring any out-of-pocket
expenses pursuant to this paragraph, the Servicer shall notify the Owner in
writing of the estimated amount of such expense. The Owner shall reimburse the
Servicer for any such expense following its receipt of appropriate details
thereof.
In accordance with Section 3.01(a) hereof, as per the terms of the
applicable Acknowledgment Agreement, either (i) the Owner or the Owner's
designee or (ii) the Servicer, for an Assignment Fee, shall (A) prepare or cause
to be prepared and record or cause to be recorded all Assignments of Mortgage in
blank from the then mortgagee of record, acceptable to FNMA, FHLMC, GNMA, the
trustee or such third party, as the case may be, for each Mortgage Loan that is
part of an Agency Transfer, Whole Loan Transfer or Pass-Through Transfer and
shall pay the recording costs associated therewith and/or (B) shall track such
Assignments of Mortgage to ensure they have been recorded and deliver them as
required by FNMA, FHLMC, GNMA, the trustee or such third party, as the case may
be, upon the Servicer's receipt thereof. Additionally, the Servicer shall
prepare and execute, at the direction of the Owner, any note endorsements in
connection with any and all Reconstitution Agreements.
With respect to FHA Loans, prior to the related Reconstitution Date,
the Servicer shall prepare a HUD form 92080 Mortgage Record Change for each FHA
Loan. With respect to each VA Loan, prior to the related Reconstitution Date, if
applicable, the Servicer shall give notice to the VA of a transfer of insurance
credits with respect thereto.
All Mortgage Loans not sold or transferred pursuant to an Agency
Transfer, Pass-Through Transfer or Whole Loan Transfer shall be subject to this
Agreement and shall continue to be serviced in accordance with the terms of this
Agreement and with respect thereto this Agreement shall remain in full force and
effect.
Section 7.02. Additional Indemnification by the Servicer; Third Party
Claims.
The Servicer shall indemnify the Owner and hold it harmless against
any and all Costs that the Owner may sustain in any way related to (i) the
failure of the Servicer to perform its duties and service the Mortgage Loans in
material compliance with the terms of this Agreement or any Reconstitution
Agreement entered into pursuant to Section 7.01 or (ii) the failure of the
Servicer to cause any event to occur which requires its "Best Efforts" under
this Agreement. The Servicer shall immediately notify the Owner if a claim is
made by a third party with respect to this Agreement or any Reconstitution
Agreement or the Mortgage Loans, shall promptly notify FNMA, FHLMC, GNMA, the
trustee or other relevant third party with respect to any claim made by a third
party with respect to any Reconstitution Agreement, assume (with the prior
written consent of the Owner) the defense of any such claim and pay all expenses
in connection therewith, including counsel fees, promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or the Owner in
respect of such claim and follow any written instructions received from the
Owner in connection with such claim. The Owner promptly shall reimburse the
Servicer for all amounts advanced by it pursuant to the preceding sentence
except when the claim is in any way related to the Servicer's indemnification
pursuant to Section 6.02, or the failure of the Servicer to service and
administer the Mortgage Loans in material compliance with the terms of this
Agreement or any Reconstitution Agreement. In the event a dispute arises between
the Servicer and the Owner with respect to any of the rights and obligations of
the parties pursuant to this Agreement, and such dispute is adjudicated in a
court of law, by an arbitration panel or any other judicial process, then the
losing party shall indemnify and reimburse the winning party for all attorney's
fees and other costs and expenses related to the adjudication of said dispute.
Section 7.03. Monthly Advances, Compensating Interest and Servicing Fees
after Reconstitution.
Notwithstanding anything contained herein to the contrary, in
connection with (a) a Pass-Through Transfer, the Servicer shall make Monthly
Advances through the Remittance Date immediately preceding the distribution of
all Liquidation Proceeds and other payments or recoveries (including Insurance
Proceeds and Condemnation Proceeds) with respect to the related Mortgage Loans
or such earlier time period as set forth in the related Reconstitution
Agreement, (b) an Agency Transfer, the Servicer shall make Monthly Advances as
required by FNMA, FHLMC or GNMA, as applicable, and (c) a Whole Loan Transfer,
the Servicer shall make Monthly Advances through the Remittance Date immediately
preceding the date that such Mortgage Loan becomes REO Property.
Notwithstanding anything contained herein to the contrary, in
connection with a Reconstitution Agreement, the Servicing Fee as set forth on
the applicable Acknowledgment Agreement and/or Confirmation Agreement of each
reconstituted Mortgage Loan shall be changed upon reconstitution to the
Reconstituted Servicing Fee.
Notwithstanding anything contained herein to the contrary, following a
Reconstitution Agreement, with respect to each Principal Prepayment of
reconstituted Mortgage Loans, the Servicer shall deposit in the Custodial
Account on a daily basis, and retain therein the Prepayment Interest Shortfall
Amount, if any, for the month of distribution. Such deposit shall be made from
the Servicer's own funds, without reimbursement therefor;
Section 7.04. Maintenance of Custodial and Escrow Accounts after
Reconstitution.
Notwithstanding anything herein to the contrary, in connection with
(a) a Pass-Through Transfer, the Servicer shall maintain Custodial Accounts and
Escrow Accounts in accordance with the related master servicer's requirements,
and pursuant to the related Reconstitution Agreement, (b) an Agency Transfer,
the Servicer shall maintain Custodial Accounts and Escrow Accounts in accordance
with the requirements of FNMA, FHLMC or GNMA, as applicable, and (c) a Whole
Loan Transfer, the Servicer shall maintain Custodial Accounts and Escrow
Accounts in accordance with terms that are substantially similar to the terms of
this Agreement. For purposes of this paragraph, the obligation to maintain
Custodial Accounts and Escrow Accounts includes the obligation of the Servicer
to remove amounts from such accounts that exceed the amount fully insured by the
FDIC, if required by the applicable investor. In connection with any
Pass-Through Transfer, Agency Transfer, or Whole Loan Transfer the Servicer
shall be obligated to maintain the related Custodial Accounts and Escrow
Accounts with such institutions required by the applicable investor, which
institutions might not include the Servicer.
Section 7.05. Owner's Repurchase and Indemnification Obligations.
Upon receipt by the Servicer of notice from FNMA, FHLMC, GNMA or other
such third party purchaser of a breach of any Owner representation or warranty
contained in any Reconstitution Agreement or a request by FNMA, FHLMC, GNMA, the
trustee or such third party purchaser, as the case may be, for the repurchase of
any Mortgage Loan transferred to FNMA, FHLMC or GNMA pursuant to an Agency
Transfer or to a trustee pursuant to a Pass-Through Transfer or to a third party
purchaser pursuant to a Whole Loan Transfer, the Servicer shall promptly notify
the Owner of same and shall, at the direction of the Owner, use its Best Efforts
to cure and correct any such breach and to satisfy the requests or concerns of
FNMA, FHLMC, GNMA, the trustee or the third party purchaser related to such
deficiencies of the related Mortgage Loans transferred to FNMA, FHLMC, GNMA, the
trustee or other such third party purchaser.
The Owner shall repurchase from the Servicer any Mortgage Loan
transferred to FNMA, FHLMC or GNMA pursuant to an Agency Transfer or to a
trustee pursuant to a Pass-Through Transfer or to a third party purchaser
pursuant to a Whole Loan Transfer with respect to which the Servicer has been
required by FNMA, FHLMC, GNMA, the trustee or such third party purchaser to
repurchase due to a breach of a representation or warranty made by the Owner
with respect to the Mortgage Loans, or the servicing thereof prior to the
related Transfer Date to FNMA, FHLMC, GNMA, the trustee or any third party
purchaser in any Reconstitution Agreement and not due to a breach of the
Servicer's obligations thereunder or pursuant to this Agreement. The repurchase
price to be paid by the Owner to the Servicer shall equal that repurchase price
paid by the Servicer to FNMA, FHLMC, GNMA, the trustee or the third party
purchaser plus all reasonable costs and expenses borne by the Servicer in
connection with the cure of said breach of a representation or warranty made by
the Owner and in connection with the repurchase of such Mortgage Loan from FNMA,
FHLMC, GNMA, the trustee or the third party purchaser, including, but not
limited to, reasonable and necessary attorneys' fees.
At the time of repurchase, the Custodian and the Servicer shall
arrange for the reassignment of the repurchased Mortgage Loan to the Owner
according to the Owner's instructions and the delivery to the Custodian of any
documents held by FNMA, FHLMC, GNMA, the trustee or other relevant third party
purchaser with respect to the repurchased Mortgage Loan pursuant to the related
Reconstitution Agreement. In the event of a repurchase, the Servicer shall,
simultaneously with such reassignment, give written notice to the Owner that
such repurchase has taken place, and amend the Mortgage Loan Schedule to reflect
the addition of the repurchased Mortgage Loan to this Agreement. In connection
with any such addition, the Servicer and the Owner shall be deemed to have made
as to such repurchased Mortgage Loan the representations and warranties set
forth in this Agreement except that all such representations and warranties set
forth in this Agreement shall be deemed made as of the date of such repurchase.
Section 7.06. Termination Fees after Reconstitution.
In the event that the Servicer acquires the Servicing Rights pursuant
to Section 7.01 hereof, the Servicer shall be entitled to the Reconstituted
Termination Fee (as defined below) set forth in the applicable Reconstitution
Agreement. In all other cases, the Servicer and the Owner hereby agree and
acknowledge that the Owner is the sole owner of the Servicing Rights. In the
event that any Reconstitution Agreement provides for a payment of a termination
fee (a "Reconstituted Termination Fee") to the Servicer upon the termination of
the Servicer as the servicer or as the applicable "seller/servicer" thereunder,
the Servicer shall (a) notify the Owner, in writing, upon receipt of notice that
the Servicer will be terminated as servicer or "seller/servicer" under such
Reconstitution Agreement, and (b) promptly remit to the Owner by wire transfer
of immediately available funds the amount of the related Reconstituted
Termination Fee if it is received by the Servicer. Upon receipt by the Owner of
the Reconstituted Termination Fee, the Owner shall remit to the Servicer, within
10 Business Days, the applicable Termination Fee due to the Servicer, if any,
pursuant to Section 9.02 hereof. In addition, the Servicer shall not modify,
amend or waive the right to receive a Reconstituted Termination Fee under any
Reconstitution Agreement without first obtaining the written consent of the
Owner which consent may be withheld by the Owner in its sole discretion. The
provisions of this Section 7.06 shall survive the termination of this Agreement.
Section 7.07. Additional Remittance.
From the applicable Reconstituted Servicing Fee, the Servicer shall
retain an amount equal to the Servicing Fee and shall remit the Additional
Remittance to the Owner on the Additional Remittance Date. In connection
therewith, the Owner and the Servicer shall agree upon a mutually acceptable
monthly report to be sent to the Owner or its assigns thereof on or prior to the
related Additional Remittance Date. The right to receive the Additional
Remittance shall be freely transferable by the Owner and shall be secured by a
collateral pledge of the servicing rights associated with the Mortgage Loans
being reconstituted.
On each Reconstitution Date, the Owner and the Servicer hereby agree
to execute a Collateral Pledge and Security Agreement in form and substance
reasonably acceptable to both the Owner and the Servicer and such other
agreements and UCC-1's as shall reasonably be required to perfect the Owner's
security interest with respect to the servicing rights related to the Mortgage
Loans being reconstituted.
With respect to the Mortgage Loans subject to one or more Agency
Transfers, Whole Loan Transfers or Pass-Through Transfers, in the event that any
party to the Reconstitution Agreement other than the Owner disapproves or
terminates the Servicer and selects another servicer to replace the Servicer,
then from and after the date of substitution, neither the Servicer nor any
successor servicer hereunder shall be under any obligation to remit to the Owner
or its assigns any Additional Remittance accruing after the date of
substitution. Notwithstanding the foregoing, in the event that the Servicer is
terminated without cause under any Reconstitution Agreement, the Owner shall be
entitled to receive the sum of all fees, amounts or compensation received by the
Servicer under the applicable Reconstitution Agreement in connection with a
termination without cause. Additionally, in the event that the Servicer is
terminated as a consequence of a breach under any applicable Reconstitution
Agreement, the Servicer shall be liable to the Owner for any actual and
consequential damages which the Owner may sustain as a consequence of any such
termination; provided, however, that the Servicer shall not be obligated to pay
such damages to the Owner if the Servicer's termination is directly related to
the quality or suitability of the Mortgage Loans subject to any Reconstitution
Agreement. In the event that the Servicer judicially contests any termination
under a Reconstitution Agreement as a wrongful termination thereunder, the
Servicer shall not be obligated to pay damages to the Owner until such time as a
judicial determination on such claim is made, provided that the Servicer shall
diligently pursue such claim. In the event that the Servicer continues to
receive its Servicing Fee under a Reconstitution Agreement during the time in
which it is contesting a termination as wrongful, the Servicer shall continue to
be obligated to pay the Additional Remittance to the Owner. Notwithstanding the
fact that the Servicer's obligation to pay damages if it contests a termination
under a Reconstitution Agreement as wrongful shall be delayed until a judicial
determination is made, such damages will nevertheless accrue as of the date of
termination.
Section 7.08. Transfer of Servicing Following Reconstitution.
Following a reconstitution of Mortgage Loans or REO Properties, the
Owner shall have the right, in its sole discretion, to cause the Servicer at any
time under any Reconstitution Agreement to transfer the servicing
responsibilities and duties associated therewith to the Owner or any designee of
the Owner; provided, however, that (i) the Owner shall provide the Servicer with
30 days prior written notice, (ii) such transfer shall be subject to the
approval of the Applicable Agency, trustee, master servicer or rating agency
with respect to Agency Transfers, Pass-Through Transfers or any relevant third
party purchaser with respect to Whole Loan Transfers, (iii) the costs associated
with the transfer of servicing pursuant to this Section 7.08 shall not be borne
by the Servicer and (iv) the Servicer shall be entitled to the Termination Fee
as set forth in Section 9.02. The Servicer agrees to cooperate with the Owner in
such transfer of servicing responsibilities and shall comply with the
termination procedures set forth in Sections 9.01 and 10.01 hereof.
ARTICLE VIII
THE SERVICER
Section 8.01. Merger or Consolidation of the Servicer.
The Servicer shall keep in full effect its existence, rights and
franchises as a corporation, and shall obtain and preserve its qualification to
do business as a foreign entity in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall be the successor of the Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding, provided,
however, that the successor or surviving Person shall be an institution (i)
having a net worth of not less than $25,000,000, and (ii) which is a FNMA-,
FHLMC-, and GNMA-approved servicer in good standing and an FHA approved
Mortgagee and a VA Approved Lender.
Section 8.02. Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall be under any liability to the Owner for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment, provided, however, that this
provision shall not protect the Servicer or any such person against any breach
of warranties or representations made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reason of any
breach of the terms and conditions of this Agreement. The Servicer and any
director, officer, employee or agent of the Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Mortgage Loans in accordance with this
Agreement and which in its opinion may involve it in any expense or liability,
provided, however, that the Servicer may, with the consent of the Owner,
undertake any such action which it may deem necessary or desirable in respect of
this Agreement and the rights and duties of the parties hereto. In such event,
the Servicer shall be entitled to reimbursement from the Owner for the
reasonable legal expenses and costs of such action.
Section 8.03. Limitation on Resignation and Assignment by the Servicer.
The Owner has entered into this Agreement with the Servicer and
subsequent transferees of the Owner will purchase the Mortgage Loans in reliance
upon the independent status of the Servicer, and the representations as to the
adequacy of its servicing facilities, plant, personnel, records and procedures,
its integrity, reputation and financial standing, and the continuance thereof.
Therefore, the Servicer shall not assign this Agreement or the servicing
responsibilities hereunder or delegate its rights or duties hereunder or any
portion hereof or sell or otherwise dispose of all or substantially all of its
property or assets without the prior written consent of the Owner, which consent
shall be granted or withheld in the sole discretion of the Owner.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Servicer and the Owner or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Servicer. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered to the Owner which Opinion of
Counsel shall be in form and substance acceptable to the Owner. No such
resignation shall become effective until a successor shall have assumed the
Servicer's responsibilities and obligations hereunder in the manner provided in
Section 10.01.
Without in any way limiting the generality of this Section 8.03, in
the event that the Servicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof or sell or otherwise dispose of all or substantially all of its property
or assets, without the prior written consent of the Owner, then the Owner shall
have the right to terminate this Agreement upon notice given as set forth in
Section 9.01, without any payment of any penalty or damages and without any
liability whatsoever to the Servicer or any third party.
ARTICLE IX
TERMINATION
Section 9.01. Termination for Cause.
(a) This Agreement shall be terminable at the sole option of the
Owner, if any of the following events of default exist on the part of the
Servicer:
(i) any failure by the Servicer to remit to the Owner any payment
required to be made under the terms of this Agreement which continues unremedied
for a period of two 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 Owner; or
(ii) failure by the Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Servicer set forth in this Agreement which continues unremedied for a period of
30 days; or
(iii) failure by the Servicer to maintain its license to do
business or service residential mortgage loans in any jurisdiction where the
Mortgaged Properties are located; or
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, including bankruptcy,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Servicer and such decree or order shall have remained in force undischarged or
unstayed for a period of 60 days; or
(v) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Servicer or of or relating to all or substantially all of its property; or
(vi) the Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an assignment
for the benefit of its creditors, voluntarily suspend payment of its obligations
or cease its normal business operations for three Business Days; or
(v) the Servicer ceases to meet the qualifications of a FNMA,
FHLMC or GNMA lender/servicer or ceases to be an FHA Approved Mortgagee or
ceases to be a VA Approved Lender; or
(vi) the Servicer attempts, without the consent of the Owner, to
assign the servicing of the Mortgage Loans or its right to servicing
compensation hereunder or the Servicer attempts, without the consent of the
Owner, to sell or otherwise dispose of all or substantially all of its property
or assets or to assign this Agreement or the servicing responsibilities
hereunder or to delegate its duties hereunder or any portion thereof; or (vii)
the Company fails to maintain a minimum net worth of $25,000,000.
In each and every such case, so long as an event of default shall not
have been remedied, in addition to whatever rights the Owner may have at law or
equity to damages, including injunctive relief and specific performance, the
Owner, by notice in writing to the Servicer, may terminate all the rights and
obligations of the Servicer under this Agreement and in and to the servicing
contract established hereby and the proceeds thereof.
Upon receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in a successor servicer
appointed by the Owner. Upon written request from the Owner, the Servicer shall
prepare, execute and deliver to the successor entity designated by the Owner any
and all documents and other instruments, place in such successor's possession
all Servicing Files, and do or cause to be done all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
including but not limited to the transfer and endorsement or assignment of the
Mortgage Loans and related documents, at the Servicer's sole expense. The
Servicer shall cooperate with the Owner and such successor in effecting the
termination of the Servicer's responsibilities and rights hereunder, including
without limitation, the transfer to such successor for administration by it of
all cash amounts which shall at the time be credited by the Servicer to the
Custodial Account or Escrow Account or thereafter received with respect to the
Mortgage Loans.
By a written notice, the Owner may waive any default by the Servicer
in the performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
Section 9.02. Termination Without Cause.
This Agreement shall terminate upon: (i) the later of (a) the
distribution of the final payment or liquidation proceeds on the last Mortgage
Loan to the Owner (or advances by the Servicer for the same), and (b) the
disposition of all REO Property acquired upon foreclosure of the last Mortgage
Loan and the remittance of all funds due hereunder, or (ii) mutual consent of
the Servicer and the Owner in writing. Any such notice of termination shall be
in writing and delivered to the Servicer by registered mail to the address set
forth at the beginning of this Agreement. The Owner and the Servicer shall
comply with the termination procedures set forth in Sections 9.01 and 10.01
hereof. In the event that Servicer is terminated as servicer pursuant Sections
7.06, 7.08 and 9.02(ii), it shall be entitled to a termination fee (the
"Termination Fee") equal to $10 per Mortgage Loan then being serviced pursuant
to this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Successor to the Servicer.
Simultaneously with the termination of the Servicer's responsibilities
and duties under this Agreement pursuant to Sections 6.02, 8.03, 9.01 or 9.02,
the Owner shall (i) succeed to and assume all of the Servicer's
responsibilities, rights, duties and obligations under this Agreement, or (ii)
appoint a successor having the characteristics set forth in clauses (i) and (ii)
of Section 8.01 and which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement
simultaneously with the termination of the Servicer's responsibilities, duties
and liabilities under this Agreement. Any successor to the Servicer shall be an
FHA Approved Mortgagee and a VA Approved Lender. In addition, with respect to
all FHA Loans serviced hereunder, the Servicer shall provide notice of such
change in servicers to HUD on HUD form 92080 or such other form as prescribed by
HUD, at least 10 days prior to such transfer of servicing. In connection with
such appointment and assumption, the Owner may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree, provided, however, that no such compensation shall be in
excess of that permitted the Servicer under this Agreement without the consent
of the Owner. In the event that the Servicer's duties, responsibilities and
liabilities under this Agreement should be terminated pursuant to the
aforementioned sections, the Servicer shall discharge such duties and
responsibilities during the period from the date it acquires knowledge of such
termination until the effective date thereof with the same degree of diligence
and prudence which it is obligated to exercise under this Agreement, and shall
take no action whatsoever that might impair or prejudice the rights or financial
condition of its successor. The resignation or removal of the Servicer pursuant
to the aforementioned sections shall not become effective until a successor
shall be appointed pursuant to this Section 10.01 and shall in no event relieve
the Servicer of the representations and warranties made pursuant to Sections
6.01 and the remedies available to the Owner under Section 6.02 and 7.02, it
being understood and agreed that the provisions of such Sections 6.01, 6.02 and
7.02 shall be applicable to the Servicer notwithstanding any such resignation or
termination of the Servicer, or the termination of this Agreement.
Within a reasonable period of time, but in no event longer than 30
days of the appointment of a successor entity by the Owner, the Servicer shall
prepare, execute and deliver to the successor entity any and all documents and
other instruments, place in such successor's possession all Servicing Files, and
do or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including but not limited to
the transfer and endorsement of the Mortgage Notes and related documents, and
the preparation and recordation of Assignments of Mortgage, at the discretion of
the Owner and, at the Owner's sole expense. The Servicer shall cooperate with
the Owner and such successor in effecting the termination of the Servicer's
responsibilities and rights hereunder and the transfer of servicing
responsibilities to the successor servicer, including without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Servicer to the Custodial Account or Escrow
Account or thereafter received with respect to the Mortgage Loans.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Servicer and to the Owner an instrument accepting such
appointment, wherein the successor shall make the representations and warranties
set forth in Section 6.01, whereupon such successor shall become fully vested
with all the rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer, with like effect as if originally named as a party
to this Agreement. Any termination or resignation of the Servicer or termination
of this Agreement pursuant to Sections 6.02, 8.03, 9.01 or 9.02 shall not affect
any claims that the Owner may have against the Servicer arising out of the
Servicer's actions or failure to act prior to any such termination or
resignation.
The Servicer shall deliver promptly to the successor servicer the
funds in the Custodial Account and Escrow Account and all Mortgage Loan
documents and related documents and statements held by it hereunder and the
Servicer shall account for all funds and shall execute and deliver such
instruments and do such other things as may reasonably be required to more fully
and definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer.
Upon a successor's acceptance of appointment as such, the Servicer
shall notify by mail the Owner of such appointment in accordance with the
procedures set forth in Section 10.06.
Section 10.02. Closing.
Each closing for the engagement of the Servicer to perform the
servicing responsibilities respecting Mortgage Loans shall take place on the
related Transfer Date. At the Owner's option, the closing shall be either: by
telephone, confirmed by letter or wire as the parties shall agree; or conducted
in person, at such place as the parties shall agree.
Each closing shall be subject to each of the following conditions:
a) all of the representations and warranties of
the Servicer and the Owner under this Agreement shall be
true and correct as of each Transfer Date and no event shall
have occurred which, with notice or the passage of time,
would constitute a default under this Agreement;
b) the Owner and Servicer each shall have
received, or the Owner's attorneys shall have received in
escrow, (i) with respect to the Initial Transfer Date, all
Closing Documents as specified in Section 10.03 hereof, and
(ii) with respect to all Transfer Dates, the Closing
Documents specified in (b), (c) and (i) of Section 10.03
hereof, in such forms as are agreed upon and acceptable to
the Servicer and the Owner, duly executed by all signatories
as required pursuant to the respective terms thereof; and
c) all other terms and conditions of this
Agreement shall have been complied with and no default or
Event of Default under this Agreement shall have occurred
and be continuing for a period of 30 days or more prior to
the related Transfer Date.
Section 10.03. Closing Documents.
The Closing Documents shall consist of fully executed originals of the
following documents:
with respect to the Initial Transfer Date, this Agreement;
a) with respect to the Initial Transfer Date, the
Mortgage Loan Schedule, with one copy to be attached to each
counterpart of this Agreement as Exhibit A, and with respect
to each subsequent Transfer Date, a Mortgage Loan Schedule
reflecting the additional Mortgage Loans to be serviced by
the Servicer and a cumulative Mortgage Loan Schedule,
reflecting all Mortgage Loans being serviced by the Servicer
from the Initial Transfer Date up to, and including, the
related subsequent Transfer Date;
b) with respect to each subsequent Transfer Date,
an Acknowledgment Agreement in the form of Exhibit B-1
hereto;
c) with respect to the Initial Transfer Date, a
Custodial Account Letter Agreement in the form of Exhibit C
hereto;
d) with respect to the Initial Transfer Date, an
Escrow Account Letter Agreement in the form of Exhibit D
hereto;
e) with respect to the Initial Transfer Date, an
Officer's Certificate of the Servicer, in the form of
Exhibit E-1 hereto, including all attachments thereto, and
with respect to subsequent Transfer Dates, in the event that
any item contained in the most recent Officer's Certificate
becomes untrue or at the request of the Owner, an Officer's
Certificate in the form of Exhibit E-2 hereto, including all
attachments thereto;
f) an Opinion of Counsel delivered following the
Initial Transfer Date upon the request of the Owner, in the
form of Exhibit G hereto;
g) with respect to the Initial Transfer Date, a
Custodial Agreement; and
h) with respect to each Transfer Date, a trust
receipt and initial certification of the related Custodian,
as required under the Custodial Agreement.
Section 10.04. Costs.
The Owner shall pay any commissions due its salesmen and the legal
fees and expenses of its attorneys. Costs and expenses incurred in connection
with the transfer of the servicing responsibilities, including fees for
delivering Servicing Files, shall be paid by the Owner. Subject to Section
3.01(a) the Owner, its designee or the Servicer shall pay the costs associated
with the preparation, delivery and recording of Assignments of Mortgages
required on each Reconstitution Date.
Section 10.05. Protection of Confidential Information.
The Servicer shall keep confidential and shall not divulge to any
party, without the Owner's prior written consent, the purchase price paid by the
Owner for the Mortgage Loans and any information pertaining to the Mortgage
Loans or any borrower thereunder, except to the extent that it is appropriate
for the Servicer to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies.
Section 10.06. Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if sent by facsimile or mailed by
overnight courier, addressed as follows (or such other address as may hereafter
be furnished to the other party by like notice):
(i) if to the Owner:
Lehman Capital, A Division of
▇▇▇▇▇▇ Brothers Holdings Inc.
Three World Financial Center
New York, New York 10285
Attention: Manager, Contract Finance
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Servicer:
Aurora Loan Services Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
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.
Section 10.07. Severability Clause.
Any part, provision, representation or warranty of this Agreement
which is prohibited or which is held to be void or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision,
representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the economic effect of which is as close as
possible to the economic effect of this Agreement without regard to such
invalidity.
Section 10.08. No Personal Solicitation.
From and after each related Transfer Date, the Servicer hereby agrees
that it will not take any action or permit or cause any action to be taken by
any of its agents or affiliates, or by any independent contractors on the
Servicer's behalf, to personally, by telephone or mail, solicit the borrower or
obligor under any Mortgage Loan (on a targeted basis) for any purposes of
prepayment, refinancing or modification of the related Mortgage Loan, provided,
however, that this limitation shall not prohibit Servicer from soliciting such
Mortgagor for purposes of prepayment, refinance or modification of any loan
owned or serviced by Servicer other than a Mortgage Loan. It is understood and
agreed that, among other marketing activities, promotions undertaken by Servicer
which are directed of the general public at large or which are directed
generally to a segment of the then existing customers of Servicer or any of its
direct or indirect subsidiaries (including, without limitation, the mailing of
promotional materials to Servicer's deposit customers by inserting such
materials into customer account statements, mass mailings based on commercially
acquired mailing lists and newspaper, radio and television advertisements) shall
not constitute solicitation under this section. In the event the Servicer does
refinance any Mortgage Loan as a result of a violation of the requirements set
forth in this Section 10.08, Servicer hereby agrees to pay to Owner an amount
equal to the difference, if any, between the amount that the Owner would have
received if it had sold the Mortgage Loan to a third party, and the proceeds
received by the Owner as result of such refinancing.
Section 10.09. 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 10.10. Place of Delivery and Governing Law.
This Agreement shall be deemed in effect when a fully executed
counterpart thereof is received by the Owner in the State of New York and shall
be deemed to have been made in the State of New York. 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, except to the extent
preempted by Federal law.
Section 10.11. Further Agreements.
The Owner and the Servicer each agree to execute and deliver to the
other such reasonable and appropriate additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Agreement.
Section 10.12. Intention of the Parties.
It is the intention of the parties that the Owner is conveying, and
the Servicer is receiving only a contract for servicing the Mortgage Loans.
Accordingly, the parties hereby acknowledge that the Owner remains the sole and
absolute owner of the Mortgage Loans and all rights related thereto.
Section 10.13. Successors and Assigns; Assignment of Servicing Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Servicer and the Owner and the respective successors and
assigns of the Servicer and the Owner. This Agreement shall not be assigned,
pledged or hypothecated by the Servicer to a third party without the prior
written consent of the Owner, which consent shall be given at the sole
discretion of the Owner.
Section 10.14. Waivers.
No term or provision of this Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
Section 10.15. Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 10.16. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean by reason of
enumeration.
Section 10.17. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
IN WITNESS WHEREOF, the Servicer and the Owner have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the date first above written.
▇▇▇▇▇▇ CAPITAL, A DIVISION OF ▇▇▇▇▇▇
BROTHERS HOLDINGS INC.
(Owner)
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
AURORA LOAN SERVICES INC.
(Servicer)
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
EXHIBIT A
MORTGAGE LOAN SCHEDULE
(to be provided)
EXHIBIT B-1
ACKNOWLEDGMENT AGREEMENT
On this ____ day of ____________, 199_, ▇▇▇▇▇▇ Capital, A Division of
▇▇▇▇▇▇ Brothers Holdings Inc. (the "Owner") as the Owner under that certain Flow
Servicing Agreement dated as of September 1, 1997, (the "Agreement"), does
hereby transfer to Aurora Loan Services Inc. (the "Servicer") as Servicer under
the Agreement, the servicing responsibilities related to the Mortgage Loans
listed on the Mortgage Loan Schedule attached hereto as Exhibit A. The Servicer
hereby accepts the servicing responsibilities transferred hereby and on the date
hereof assumes all servicing responsibilities related to the Mortgage Loans
identified on the attached Mortgage Loan Schedule all in accordance with the
Agreement. The contents of each Servicing File required to be delivered to
service the Mortgage Loans pursuant to the Agreement have been or shall be
delivered to the Servicer by the Owner in accordance with the terms of the
Agreement.
With respect to the Mortgage Loans made subject to the Agreement
hereby, the Transfer Date shall be ___________________.
The Custodial Files shall be held by __________________
("_____________") pursuant to that certain Custodial Agreement dated as of
_________ __, 199_, among the Owner, the Servicer and ________________.
All other terms and conditions of this transaction shall be governed
by the Agreement.
The Set-Up Fee per Mortgage Loan shall be: $________
The Termination Fee per Mortgage Loan shall be: $________
The Servicer shall, as indicated below, (i) prepare or cause to be
prepared all Assignments of Mortgage, (ii) record or cause to be recorded all
Assignments of Mortgage, (iii) shall pay the recording costs associated with the
Mortgage Loans associated with this Acknowledgment Agreement and (iv) shall
track such Assignments of Mortgage to ensure they have been recorded for the
Assignment Fee per Mortgage Loan indicated below:
Check the appropriate box: (Check only one box)
All items (i) through (iv) above $_____ plus recording costs.
All items (i) through (iv) above $_____ (which fee includes recording
costs).
Only item (iv) above $_____.
None of the above.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement.
This Acknowledgment 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.
IN WITNESS WHEREOF, the Owner and the Servicer have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
OWNER:
▇▇▇▇▇▇ CAPITAL, A DIVISION
OF ▇▇▇▇▇▇ BROTHERS HOLDINGS INC.
By:___________________________________
Name:
Title:
SERVICER:
AURORA LOAN SERVICES INC.
By:___________________________________
Name:
Title:
EXHIBIT B-2
CONFIRMATION AGREEMENT
On this ____ day of ____________, 199_, ▇▇▇▇▇▇ Capital, A Division of
▇▇▇▇▇▇ Brothers Holdings Inc. (the "Owner") as the Owner under that certain Flow
Servicing Agreement dated as of September 1, 1997, (the "Agreement"), does
hereby express its intention to transfer to Aurora Loan Services Inc. (the
"Servicer") as Servicer under the Agreement, the servicing responsibilities
related to the Mortgage Loans listed on the Mortgage Loan Schedule attached
hereto on ___________ (the "Transfer Date").
The Servicer hereby agrees to accept on the Transfer Date the
servicing responsibilities related to the Mortgage Loans identified on the
attached Mortgage Loan Schedule and shall begin to service such Mortgage Loans
on the Transfer Date in accordance with the provisions of the Agreement.
The Custodial Files shall be held by __________________
("_____________") pursuant to that certain Custodial Agreement dated as of
_________ __, 199_, among the Owner, the Servicer and ________________.
All other terms and conditions of this transaction shall be governed
by the Agreement.
The Set-Up Fee per Mortgage Loan shall be: $________
The Termination Fee per Mortgage Loan shall be: $________
The Servicer shall, as indicated below, (i) prepare or cause to be
prepared all Assignments of Mortgage, (ii) record or cause to be recorded all
Assignments of Mortgage, (iii) shall pay the recording costs associated with the
Mortgage Loans associated with this Acknowledgment Agreement and (iv) shall
track such Assignments of Mortgage to ensure they have been recorded for the
Assignment Fee per Mortgage Loan indicated below:
Check the appropriate box: (Check only one box)
All items (i) through (iv) above $_____ plus recording costs.
All items (i) through (iv) above $_____ (which fee includes recording
costs).
Only item (iv) above $_____
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement.
This Confirmation 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.
IN WITNESS WHEREOF, the Owner and the Servicer have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
OWNER:
▇▇▇▇▇▇ CAPITAL, A DIVISION OF ▇▇▇▇▇▇
BROTHERS HOLDINGS INC.
By:__________________________________
Name:
Title:
SERVICER:
AURORA LOAN SERVICES INC.
By:___________________________________
Name:
Title:
EXHIBIT C
CUSTODIAL ACCOUNT LETTER AGREEMENT
_______ __, 199_
To: ___________________________
___________________________
___________________________
(the "Depository")
As Servicer under the Flow Servicing Agreement, dated as of September
1, 1997 (the "Agreement"), we hereby authorize and request you to establish an
account, as a Custodial Account pursuant to Section 3.03 of the Agreement, to be
designated as "Aurora Loan Services Inc., in trust for ▇▇▇▇▇▇ Capital, A
Division of ▇▇▇▇▇▇ Brothers Holdings Inc., owner of Residential Mortgage Loans,
Group No. 1997-ALSI, and various Mortgagors." All deposits in the account shall
be subject to withdrawal therefrom by order signed by the Servicer. This letter
is submitted to you in duplicate. Please execute and return one original to us.
AURORA LOAN SERVICES INC.
By:____________________________
Name:
Title:
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number __________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.
Depository
By:__________________________________
Name:________________________________
Title:_______________________________
Date:________________________________
EXHIBIT D
ESCROW ACCOUNT LETTER AGREEMENT
_______ ___, 199_
To: _________________________
_________________________
_________________________
(the "Depository")
As servicer under the Flow Servicing Agreement, dated as of September
1, 1997 (the "Agreement"), we hereby authorize and request you to establish an
account, as an Escrow Account pursuant to Section 3.05 of the Agreement, to be
designated as "Aurora Loan Services Inc., in trust for ▇▇▇▇▇▇ Capital, A
Division of ▇▇▇▇▇▇ Brothers Holdings Inc., owner of Residential Mortgage Loans,
Group No. 1997-ALSI, and various Mortgagors." All deposits in the account shall
be subject to withdrawal therefrom by order signed by the Servicer. This letter
is submitted to you in duplicate. Please execute and return one original to us.
AURORA LOAN SERVICES INC.
By:________________________________
Name:
Title:
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number ______, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.
Depository
By:__________________________________
Name:________________________________
Title:_______________________________
Date:________________________________
EXHIBIT E-1
OFFICER'S CERTIFICATE
I, ____________________, hereby certify that I am the duly elected
[Vice] President of Aurora Loan Services Inc., a corporation organized under the
laws of the State of Delaware, (the "Company") and further as follows:
1. Attached hereto as Exhibit 1 is a true, correct and complete copy
of the Articles of Incorporation of the Company which is in full force and
effect on the date hereof and which has been in effect without amendment,
waiver, rescission or modification since ____________.
2. Attached hereto as Exhibit 2 is a true, correct and complete copy
of the bylaws of the Company which are in effect on the date hereof and which
have been in effect without amendment, waiver, rescission or modification.
3. Attached hereto as Exhibit 3 is an original certificate of good
standing of the Company, issued within ____ days of the date hereof, and no
event has occurred since the date thereof which would impair such standing.
4. Attached hereto as Exhibit 4 is a true, correct and complete copy
of a Certificate of an Assistant secretary of the Company setting forth the
Officers of the Company authorizes by a committee of the Company's Board of
Directors to execute and deliver the Flow Servicing Agreement, dated as of
September 1, 1997 (the "Agreement"), by and between the Company and ▇▇▇▇▇▇
Capital, A Division of ▇▇▇▇▇▇ Brothers Holdings Inc. (the "Owner"), and such
authorities are in effect on the date hereof and have been in effect without
amendment, waiver rescission or modification.
5. To the best of my knowledge, either (i) no consent, approval,
authorization or order of any court or governmental agency or body is required
for the execution, delivery and performance by the Company of or compliance by
the Company with the Agreement or the consummation of the transactions
contemplated by the Agreement; or (ii) any required consent, approval,
authorization or order has been obtained by the Company.
6. To the best of my knowledge, neither the consummation of the
transactions contemplated by, nor the fulfillment of the terms of the Agreement,
conflicts or will conflict with or results or will result in a breach of or
constitutes or will constitute a default under the charter or by-laws of the
Company, the terms of any indenture or other agreement or instrument to which
the Company is a party or by which it is bound or to which it is subject, or any
statute or order, rule, regulations, writ, injunction or decree of any court,
governmental authority or regulatory body to which the Company is subject or by
which it is bound.
7. To the best of my knowledge, there is no action, suit, proceeding
or investigation pending or threatened against the Company which, in my
judgment, either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, financial condition,
properties or assets of the Company or in any material impairment of the right
or ability of the Company to carry on its business substantially as now
conducted or in any material liability on the part of the Company or which would
draw into question the validity of the Agreement or of any action taken or to be
taken in connection with the transactions contemplated hereby, or which would be
likely to impair materially the ability of the Company to perform under the
terms of the Agreement.
8. Each person listed on Exhibit 5 attached hereto who, as an officer
or representative of the Company, signed the Agreement and any other document
delivered prior hereto or on the date hereof in connection with the Agreement,
was, at the respective times of such signing and delivery, and is now, a duly
elected or appointed, qualified and acting officer or representative of the
Company, who holds the office set forth opposite his or her name on Exhibit 5,
and the signatures of such persons appearing on such documents are their genuine
signatures.
9. The Company is duly authorized to engage in the transactions
described and contemplated in the Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: September __, 1997
AURORA LOAN SERVICES INC.
By:
Name:
Title:
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated: By:
Name:
[Seal] Title: [Vice] President
I, ________________________, an [Assistant] Secretary of Aurora Loan
Services Inc., hereby certify that ____________ is the duly elected, qualified
and acting [Vice] President of the Company and that the signature appearing
above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: By:
Name:
[Seal] Title: [Vice] President
EXHIBIT 4 to
Company's Officer's Certificate
Name Title Signature
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
EXHIBIT E-2
COMPANY'S OFFICER'S CERTIFICATE
I, ____________________, hereby certify that I am the duly elected
[Vice] President of Aurora Loan Services Inc., a corporation organized under the
laws of the State of Delaware, (the "Company") and further as follows:
1. The charter of the Company in the form attached to that certain
Company's Officer's Certificate dated September __, 1997 by ____________ is in
full force and effect on the date hereof and has been in effect without
amendment, waiver, rescission or modification.
2. The bylaws of the Company in the form attached to that certain
Company's Officer's Certificate dated ____________ by ____________ are in effect
on the date hereof and have been in effect without amendment, waiver, rescission
or modification.
3. Since the last date of issuance of a certificate of good standing
of the Company in the form attached to that certain Company's Officer's
Certificate dated ____________ by ____________, no event has occurred since the
date thereof which would impair such standing.
4. The resolutions of the Board of Directors of the Company in the
form attached to that certain Company's Officer's Certificate dated ____________
by ____________ are in effect on the date hereof and have been in effect without
amendment, waiver, rescission or modification.
5. To the best of my knowledge, neither the consummation of the
transactions contemplated by, nor the fulfillment of the terms of the Flow
Servicing Agreement dated as of September 1, 1997, by and between ▇▇▇▇▇▇
Capital, A Division of ▇▇▇▇▇▇ Brothers Holdings Inc. and the Company, conflicts
or will conflict with or results or will result in a breach of or constitutes or
will constitute a default under the charter or by-laws of the Company, the terms
of any indenture or other agreement or instrument to which the Company is a
party or by which it is bound or to which it is subject, or any statute or
order, rule, regulations, writ, injunction or decree of any court, governmental
authority or regulatory body to which the Company is subject or by which it is
bound.
6. To the best of my knowledge, there is no action, suit, proceeding
or investigation pending or threatened against the Company which, in my
judgment, either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, financial condition,
properties or assets or the Company or in any material impairment of the right
or ability of the Company to carry on its business substantially as now
conducted or in any material liability on the part of the Company or which would
draw into question the validity of the Agreement or of any action taken or to be
taken in connection with the transactions contemplated hereby, or which would be
likely to impair materially the ability of the Company to perform under the
terms of the Agreement.
7. The Company is not currently in material breach of any
representation or warranty, or in material default under any provision of the
Agreement.
8. The Company is duly authorized to engage in the transactions
described and contemplated in the Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated:
[Seal] AURORA LOAN SERVICES INC.
By:
Name:
Title:
I, ________________________, an [Assistant] Secretary of Aurora Loan
Services Inc., hereby certify that ____________ is the duly elected, qualified
and acting [Vice] President of Aurora Loan Services Inc. and that the signature
appearing above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: By:
Name:
[Seal] Title: [Assistant] Secretary
EXHIBIT F
FORM OF CUSTODIAL AGREEMENT
(Intentionally omitted)
EXHIBIT G
FORM OF OPINION OF COUNSEL TO THE SERVICER
(date)
▇▇▇▇▇▇ Capital, A Division of
▇▇▇▇▇▇ Brothers Holdings Inc.
Three World Financial Center
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
You have requested my opinion, as Legal Counsel to Aurora Loan
Services Inc. (the "Servicer"), with respect to certain matters in connection
with the servicing by the Servicer of the Mortgage Loans pursuant to that
certain Flow Servicing Agreement, by and between the Servicer and ▇▇▇▇▇▇
Capital, A Division of ▇▇▇▇▇▇ Brothers Holdings Inc. (the "Owner"), dated as of
September 1, 1997, (the "Flow Servicing Agreement"). Capitalized terms not
otherwise defined herein have the meanings set forth in the Flow Servicing
Agreement.
I have examined the following documents:
1. the Flow Servicing Agreement; and
2. such other documents, records and papers as I have deemed
necessary and relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon
the representations and warranties of the Servicer contained in the Flow
Servicing Agreement. I have assumed the authenticity of all documents submitted
to me as originals, the genuineness of all signatures, the legal capacity of
natural persons and the conformity to the originals of all documents.
Subject to the foregoing, it is my opinion that:
1. The Servicer is a duly organized, validly existing corporation in good
standing under the laws of the state Delaware and is authorized to service and
administer the Mortgage Loans in the states where the Mortgaged Properties are
located.
2. The Servicer has the power to engage in the transactions contemplated by the
Flow Servicing Agreement and all requisite power, authority and legal right to
execute and deliver the Flow Servicing Agreement, and to perform and observe the
terms and conditions of such instrument.
3. The Flow Servicing Agreement has been duly authorized, executed and delivered
by the Servicer and is a legal, valid and binding agreement enforceable in
accordance with its respective terms against the Servicer, subject to bankruptcy
laws and other similar laws of general application affecting rights of creditors
and subject to the application of the rules of equity, including those
respecting the availability of specific performance.
4. Either (i) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of or compliance by the Servicer with the Flow
Servicing Agreement, or the servicing of the Mortgage Loans or the consummation
of the transactions contemplated by the Flow Servicing Agreement; or (ii) any
required consent, approval, authorization or order has been obtained by the
Servicer.
5. Neither the consummation of the transactions contemplated by, nor the
fulfillment of the terms of, the Flow Servicing Agreement conflicts or will
conflict with or results or will result in a breach of, or constitutes or will
constitute a default under, the organization documents of the Servicer, the
terms of any material indenture or other agreement or instrument to which the
Servicer is a party or by which it is bound or to which it is subject, or
violates any statute or order, rule, regulations, writ, injunction or decree of
any court, governmental authority or regulatory body to which the Servicer is
subject or by which it is bound.
6. There is no action, suit, proceeding or investigation pending or, to the best
of my knowledge, threatened against the Servicer which, in my judgment, either
in any one instance or in the aggregate, may result in any material adverse
change in the business, operations, financial condition, properties or assets of
the Servicer or in any material impairment of the right or ability of the
Servicer to carry on its business substantially as now conducted or in any
material liability on the part of the Servicer or which would draw into question
the validity of the Flow Servicing Agreement or of any action taken or to be
taken in connection with the transactions contemplated thereby, or which would
be likely to impair materially the ability of the Servicer to perform under the
terms of the Flow Servicing Agreement.
This opinion is given to you for your sole benefit, and no other
person or entity is entitled to rely hereon except that the purchaser or
purchasers to which you resell the Mortgage Loans may rely on this opinion as if
it were addressed to them as of its date, provided that the Servicer remains the
servicer of the Mortgage Loans under the Flow Servicing Agreement.
Very truly yours,
Name
Legal Counsel
EXHIBIT H
FORM OF COLLATERAL PLEDGE AND SECURITY AGREEMENT
COLLATERAL PLEDGE AND SECURITY AGREEMENT, dated as of _________ __,
199_, by and between Aurora Loan Services Inc. ("Pledgor") and ▇▇▇▇▇▇ Capital, A
Division of ▇▇▇▇▇▇ Brothers Holdings Inc. ("Pledgee").
WHEREAS, heretofore Pledgor and Pledgee executed that certain Flow
Servicing Agreement, dated as of September 1, 1997 (the "Servicing Agreement");
WHEREAS, heretofore Pledgee sold certain of the mortgage loans which
had been subject to the Servicing Agreement to the [Third Party Purchaser]
("Purchaser") pursuant to that certain [Purchase Agreement] (the "Purchase
Agreement"), dated as of _________ __, 199_, by and between Pledgee and
Purchaser, which mortgage loans are listed on Exhibit A attached hereto (the
"Mortgage Loans");
WHEREAS, pursuant to the Purchase Agreement, Pledgor has been retained
to service the Mortgage Loans sold to Purchaser;
WHEREAS, Section 7.07 of the Servicing Agreement obligates Pledgor to
remit to Pledgee the amount of the monthly servicing fee received by Pledgor
with respect to each Mortgage Loan under the Purchase Agreement in excess of the
monthly servicing fee which had been received by Pledgor from Pledgee with
respect to each Mortgage Loan previously subject to the Servicing Agreement and
sold to Purchaser (the "Additional Remittance"), and in connection therewith,
obligates Pledgor to send to Pledgee a monthly report;
WHEREAS, Section 7.08 of the Servicing Agreement permits Pledgee to
cause Pledgor at any time under any Reconstitution Agreement to transfer the
servicing responsibilities and duties associated therewith to Pledgee or any
designee of Pledgee, and in connection therewith, obligates Pledgor to cooperate
with Pledgee in such transfer;
WHEREAS, Pledgor's obligations to (i) remit to Pledgee the Additional
Remittance, (ii) deliver a monthly report in connection with the Additional
Remittance and (iii) cooperate with Pledgor in connection with any transfer of
servicing responsibilities and duties;
WHEREAS, Pledgor desires to pledge to Pledgee all its right, title and
interest in and to the Servicing Rights (as defined below) with respect to each
Mortgage Loan.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor and Pledgee agree as
follows:
1. Pledgor hereby grants, pledges, conveys, transfers and assigns to
Pledgee a first priority security interest in and pledge of all its right title
and interest in and to any and all of the following: (i) all rights to service
the Mortgage Loans; (ii) any payments to or monies received by Pledgor for
servicing the Mortgage Loans; (iii) all Ancillary Income or similar payments
retained by Pledgor with respect to the Mortgage Loans; (iv) all agreements or
documents creating, defining or evidencing any of the servicing rights related
to the Mortgage Loans; (v) Escrow Payments or other similar payments with
respect to the Mortgage Loans and any amounts actually collected by Pledgor with
respect thereto; (vi) all accounts and other rights to payments related to any
of the property described in this paragraph; and (vii) possession and use of any
and all Servicing Files pertaining to the Mortgage Loans or pertaining to the
past, present or prospective servicing of the Mortgage Loans (items (a) through
(g) are collectively referred to herein as the "Servicing Rights").
2. Pledgor covenants and agrees that:
(a) No sale, transfer, assignment, hypothecation or pledge of the
Servicing Rights shall be made by Pledgor except in full compliance with all
applicable laws, rules, regulations and orders, and then only after Pledgor has
first received the prior written consent of Pledgee to such sale; and
(b) The Pledgee's counsel will, deliver, file, record and prepare for
execution by the Pledgor such UCC-1 financing statements, further agreements,
instruments and documents as Pledgee may require to impose, perfect and protect
the security interest created and granted by this Collateral Pledge and Security
Agreement.
3. Each of the following shall constitute an event of default
hereunder:
(i) failure by Pledgor to remit to Pledgee the Additional
Remittance in accordance with Section 7.07 of the Servicing Agreement,
which failure continues for a period of five (5) Business Days after
the date upon which written notice of such failure, requiring the same
to be remedied, shall have been given to Pledgor by Pledgee;
(ii) failure by Pledgor to provide Pledgee with a monthly
report in connection with the Additional Remittance in accordance with
Section 7.07 of the Servicing 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 Pledgor by Pledgee; and
(iii) failure by Pledgor to cooperate with Pledgee in the
transfer of servicing responsibilities and duties to Pledgee or any
designee of Pledgee in accordance with Section 7.08 of the Servicing
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 Pledgor by
Pledgee.
4. Upon the occurrence of an event of default as hereinabove set
forth, (i) Pledgee may, at its option, notify Pledgor that the assignment herein
has become effective and, upon the sending of such notice, the Servicing Rights
shall be deemed absolutely assigned to Pledgee without the need for any further
documentation; (ii) Pledgee shall have all rights and remedies of a secured
party under the Uniform Commercial Code; (iii) Pledgee shall have the right to
sell and transfer the Servicing Rights by any means and upon any terms Pledgee
deems necessary or desirable; (iv) Pledgee shall be entitled to such injunctive
relief as may be granted by any court having equitable jurisdiction over the
Servicing Rights; and (v) Pledgor hereby appoints Pledgee its attorney-in-fact
to endorse any other document or instrument necessary to permit Pledgee to
realize upon the Servicing Rights.
5. Each remedy granted in Paragraph 4 above shall not be deemed
exclusive of any other such remedy.
6. This Collateral Pledge and Security Agreement shall terminate upon
the termination of the obligation of Pledgee to remit the Additional Remittance
in accordance with Section 7.07 of the Servicing Agreement.
7. This Collateral Pledge and Security Agreement contains the full
understanding of the parties in respect of the subject matter hereof, and may
not be amended, altered, discharged or terminated, except by another agreement
in writing, signed by the party sought to be charged therewith.
8. This Collateral Pledge and Security Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
9. Capitalized terms used herein but not otherwise defined shall have
the meanings set forth in the Servicing Agreement.
10. This Collateral Pledge and Security Agreement shall be construed
in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this Collateral Pledge and
Security Agreement to be executed by their duly authorized officers as of the
date first above written.
▇▇▇▇▇▇ CAPITAL, A DIVISION
OF ▇▇▇▇▇▇ BROTHERS HOLDINGS INC.
Pledgee
By:________________________________
Name:______________________________
Title:_____________________________
AURORA LOAN SERVICES INC.
Pledgor
By:________________________________
Name:______________________________
Title:_____________________________