Exhibit 99.2
Execution
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OPTION ONE MORTGAGE CORPORATION,
as Servicer
and
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Master Servicer
and
▇▇▇▇▇▇ CAPITAL, A DIVISION OF
▇▇▇▇▇▇ BROTHERS HOLDINGS INC.,
as Seller
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Structured Asset Securities Corporation
Amortizing Residential Collateral Trust
Mortgage Pass-Through Certificates, Series 2001-BC5
SERVICING AGREEMENT
Dated as of July 1, 2001
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Table of Contents
Page
ARTICLE I. DEFINITIONS............................................................................................2
ARTICLE II. SELLER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING RESPONSIBILITIES................................15
Section 2.01 Contract for Servicing; Possession of Servicing Files......................................15
Section 2.02 Books and Records..........................................................................16
ARTICLE III. SERVICING OF THE SERVICED MORTGAGE LOANS............................................................17
Section 3.01 Servicer to Service........................................................................17
Section 3.02 Collection of Serviced Mortgage Loan Payments..............................................18
Section 3.03 Establishment of and Deposits to Custodial Accounts........................................18
Section 3.04 Permitted Withdrawals From Custodial Accounts..............................................20
Section 3.05 Establishment of and Deposits to Escrow Account............................................22
Section 3.06 Permitted Withdrawals From Escrow Account..................................................23
Section 3.07 Restoration of Mortgaged Property..........................................................24
Section 3.08 Fidelity Bond and Errors and Omissions Insurance...........................................25
Section 3.09 Notification of Adjustments................................................................25
Section 3.10 Payment of Taxes, Insurance and Other Charges..............................................26
Section 3.11 Protection of Accounts.....................................................................26
Section 3.12 Title, Management and Disposition of REO Property..........................................27
Section 3.13 Real Estate Owned Reports..................................................................29
Section 3.14 MERS.......................................................................................29
Section 3.15 Waiver of Prepayment Penalties.............................................................29
Section 3.16 Servicing and Administration of the Radian Master PMI Insurance Policy.....................30
Section 3.17 Maintenance of Hazard Insurance............................................................31
Section 3.18 Realization Upon Defaulted Serviced Mortgage Loans.........................................32
Section 3.19 Enforcement of Due-On-Sale Clauses; Assumption Agreement...................................32
ARTICLE IV. PAYMENTS TO MASTER SERVICER..........................................................................33
Section 4.01 Remittances................................................................................33
Section 4.02 Statements to Master Servicer..............................................................34
Section 4.03 Monthly Advances by Servicer...............................................................35
Section 4.04 Compensating Interest......................................................................36
Section 4.05 Credit Reporting...........................................................................36
ARTICLE V. GENERAL SERVICING PROCEDURES..........................................................................36
Section 5.01 Servicing Compensation; Seller Remittance Amount...........................................36
Section 5.02 Annual Audit Report........................................................................37
Section 5.03 Annual Officer's Certificate...............................................................37
ARTICLE VI. REPRESENTATIONS, WARRANTIES AND AGREEMENTS...........................................................38
Section 6.01 Representations, Warranties and Agreements of the Servicer.................................38
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Section 6.02 Remedies for Breach of Representations and Warranties of the Servicer......................39
Section 6.03 Additional Indemnification by the Servicer; Third Party Claims.............................40
Section 6.04 Indemnification with Respect to Certain Taxes and Loss of REMIC Status.....................41
ARTICLE VII. THE SERVICER........................................................................................41
Section 7.01 Merger or Consolidation of the Servicer....................................................41
Section 7.02 Limitation on Liability of the Servicer and Others.........................................41
Section 7.03 Limitation on Resignation and Assignment by the Servicer...................................42
Section 7.04 Subservicing Agreements and Successor Subservicer..........................................43
Section 7.05 Inspection.................................................................................44
ARTICLE VIII. TERMINATION........................................................................................44
Section 8.01 Termination for Cause......................................................................44
Section 8.02 Termination Without Cause..................................................................46
Section 8.03 Termination for Distressed Mortgage Loans..................................................47
ARTICLE IX. MISCELLANEOUS PROVISIONS.............................................................................47
Section 9.01 Successor to the Servicer..................................................................47
Section 9.02 Costs......................................................................................49
Section 9.03 Notices....................................................................................50
Section 9.04 Severability Clause........................................................................51
Section 9.05 No Personal Solicitation...................................................................51
Section 9.06 Counterparts...............................................................................52
Section 9.07 Place of Delivery and Governing Law........................................................52
Section 9.08 Further Agreements.........................................................................52
Section 9.09 Intention of the Parties...................................................................52
Section 9.10 Successors and Assigns; Assignment of Servicing Agreement..................................52
Section 9.11 Assignment by ▇▇▇▇▇▇ Capital...............................................................52
Section 9.12 Amendment..................................................................................53
Section 9.13 Waivers....................................................................................53
Section 9.14 Exhibits...................................................................................53
Section 9.15 Intended Third Party Beneficiaries.........................................................53
Section 9.16 Confidentiality............................................................................53
Section 9.17 General Interpretive Principles............................................................54
Section 9.18 Reproduction of Documents..................................................................55
▇▇▇▇▇ Fargo Bank Master Servicing Default Reporting...............................................................1
DATA FIELD REQUIREMENTS...........................................................................................1
EXHIBITS & SCHEDULES
EXHIBIT A-1 Mortgage Loan Schedule
EXHIBIT A-2 Monthly Reporting Format to Trustee
EXHIBIT B Custodial Account Letter Agreement
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EXHIBIT C Escrow Account Letter Agreement
EXHIBIT D Master Servicer Data Field Requirements
EXHIBIT E Trust Agreement
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SERVICING AGREEMENT
THIS SERVICING AGREEMENT (this "Agreement"), entered into as of the 1st
day of July, 2001, by and among ▇▇▇▇▇▇ CAPITAL, a Division of ▇▇▇▇▇▇ BROTHERS
HOLDINGS INC., a Delaware corporation (the "Seller"), OPTION ONE MORTGAGE
CORPORATION, a California corporation ("the Servicer"), having its principal
executive offices at 3 ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ FARGO BANK
MINNESOTA, NATIONAL ASSOCIATION, as Master Servicer (the "Master Servicer") and
acknowledged by BANK ONE, NATIONAL ASSOCIATION, as trustee (the "Trustee") under
the Trust Agreement (as defined herein), recites and provides as follows:
RECITAL
WHEREAS, the Servicer and ▇▇▇▇▇▇ Brothers Bank, FSB (the "Bank") are
parties to an Amended and Restated Flow Interim Servicing Agreement, dated as of
May 1, 2000, for Fixed and Adjustable Rate Mortgage Loans (the "Bank Servicing
Agreement");
WHEREAS, pursuant to an Assignment and Assumption Agreement, dated as
of August 9, 2001 and effective as of July 1, 2001, the Bank has assigned all of
its rights, title and interest in and to the Bank Servicing Agreement with
respect to certain Serviced Mortgage Loans (as defined below) serviced
thereunder and delegated all of its obligations under the Bank Servicing
Agreement with respect to such Serviced Mortgage Loans to the Seller, and the
Seller has accepted such assignment and delegation;
WHEREAS, the Seller has conveyed certain of the Mortgage Loans
currently serviced under the Bank Servicing Agreement (as identified on Exhibit
A-1 hereto) (hereafter referred to as the "Serviced Mortgage Loans") on a
servicing-retained basis to Structured Asset Securities Corporation (the
"Depositor"), which in turn has conveyed the Serviced Mortgage Loans to the
Trustee under a trust agreement dated as of July 1, 2001 (the "Trust
Agreement"), among the Trustee, the Depositor, the Seller, the Master Servicer,
and the Murrayhill Company, as loss mitigation advisor;
WHEREAS, multiple classes of certificates (the "Certificates"),
including the Class D, the Class P Certificate and the Class X Certificate will
be issued on the Closing Date pursuant to the Trust Agreement, and ▇▇▇▇▇▇
Brothers Inc. or a nominee thereof is expected to be the initial registered
holder of the Class D, Class P and Class X Certificates;
WHEREAS, subsequent to the Closing Date but no later than August 20,
2001, ▇▇▇▇▇▇ Brothers Inc. intends to convey all of its rights, title and
interest in and to the Class D, the Class P and the Class X Certificate and all
payments and all other proceeds received thereunder to an owner trust in which
it will hold the sole equity interest, which trust will issue net interest
margin securities ("NIM Securities") through an indenture trust, such NIM
Securities secured, in part, by the payments on such Certificates (the "NIMS
Transaction");
WHEREAS, in the event there may be two or more individual insurers it
is intended that the rights extended to the NIMS Insurer pursuant to this
Agreement be allocated among two or more individual insurers that issue
insurance policies in connection with the NIMS Transaction through a NIMS
Insurance Agreement by and among such insurers and the parties hereto.
WHEREAS, one or more insurers (collectively, the "NIMS Insurer") will
each issue insurance policies guaranteeing certain payments under the NIM
Securities to be issued pursuant to the indenture in the NIMS Transaction;
WHEREAS, the Seller desires that the Servicer service the Serviced
Mortgage Loans pursuant to this Agreement, and the Servicer has agreed to do so,
subject to the rights of the Seller and the Master Servicer to terminate the
rights and obligations of the Servicer hereunder without cause, in the case of
the Seller, and with cause, in the case of the Master Servicer as provided
herein;
WHEREAS, the Master Servicer shall be obligated under the Trust
Agreement, among other things, to supervise the servicing of the Serviced
Mortgage Loans on behalf of the Trustee, and shall have the right to terminate
the rights and obligations of the Servicer under this Servicing Agreement upon
the occurrence and continuance of a Servicer Event of Default as provided
herein;
WHEREAS, the Seller and the Servicer intend that the Trustee and the
NIMS Insurer each be an intended third party beneficiary of this Agreement, but
that the rights of the NIMS Insurer set forth in this Agreement shall exist only
so long as the NIM Securities issued pursuant to the NIMS Transaction remain
outstanding or the NIMS Insurer is owed amounts in respect of its guarantee of
payment on the NIM Securities;
WHEREAS, the Seller and the Servicer acknowledge and agree that the
Seller will assign all of its rights and delegate all of its obligations
hereunder (exclusive of the Seller's rights and obligations as owner of the
servicing rights relating to the Serviced Mortgage Loans) to the Trustee, and
that each reference herein to the Seller is intended, unless otherwise
specified, to mean the Seller or the Trustee, as assignee, whichever is the
owner of the Serviced Mortgage Loans from time to time.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Seller and the 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 Serviced Mortgage
Loan, those mortgage servicing practices that prudent mortgage lending
institutions would employ in servicing their own portfolio of mortgage loans of
the same type as the Serviced Mortgage Loans in the jurisdiction where the
related Mortgaged Property is located.
Adjustable Rate Mortgage Loan: A Serviced Mortgage Loan under which the
Mortgage Interest Rate is adjusted from time to time in accordance with the
terms and provisions of the related Mortgage Note.
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Adverse REMIC Event: As defined in Article X of the Trust Agreement.
Advancing Person: As defined in Section 4.03 hereof.
Agreement: This Servicing Agreement and all amendments hereof and
supplements hereto.
Ancillary Income: All income derived from the Serviced Mortgage Loans
(other than the (i) Option One Servicing Fee, (ii) the Seller Remittance Amount,
(iii) any DA Dividends or (iv) Prepayment Charges or Servicer Prepayment Charge
Payment Amounts attributable to the Serviced Mortgage Loans), including but not
limited to late charges, any interest paid on funds deposited in the Trust
Custodial Account and Escrow Account (other than interest on escrowed funds
required by law to be paid to the Mortgagor), fees received with respect to
checks or bank drafts returned by the related bank for non-sufficient funds,
assumption fees, optional insurance administrative fees, any Net Prepayment
Interest Excess Amount due to Principal Prepayments in full and all other
incidental fees and charges.
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 Serviced Mortgage Loans secured by Mortgaged
Properties located in the same jurisdiction, if permitted by law.
Balloon Mortgage Loan: Any Serviced Mortgage Loan that by its original
terms or by virtue of any modification provides for an amortization schedule
extending beyond its originally scheduled Maturity Date.
Bank: As defined in the first RECITAL of the 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 States of California,
New York, Maryland and Minnesota are authorized or obligated by law or executive
order to be closed.
Certificates: Any or all of the Certificates issued pursuant to the
Trust Agreement.
Certificate Registrar: The registrar appointed pursuant to Section
3.02 of the Trust Agreement.
Closing Date: August 13, 2001.
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.
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
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or condemnation, to the extent not required to be released to a Mortgagor in
accordance with the terms of the related Serviced Mortgage Loan documents.
Conventional Loan: A conventional residential first or second lien
fixed or adjustable rate mortgage loan that 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 by the Servicer pursuant to Section 3.03. Initially, the Trust
Custodial Account and the DA Reserve Account will constitute the only Custodial
Accounts established under this Agreement.
Custodial Agreement: The custodial agreement relating to custody of the
Serviced Mortgage Loans between the Custodian and the Trustee, as acknowledged
by the Servicer, dated as of July 1, 2001.
Custodian: U.S. Bank Trust National Association.
DA Anniversary Dates: In the case of Serviced Mortgage Loans originated
under the DA Dividend Program, each of the first four yearly anniversary dates
of the due date of the first Monthly Payment due on such Serviced Mortgage Loan.
DA Dividend: With respect to a DAD Mortgage Loan, that amount of the
Monthly Payment derived from interest collections determined in accordance with
the following formula:
Monthly DA = DA Dividend Rate of the DAD Mortgage Loan x interest collections on the DAD Mortgage Loan received
Dividend Mortgage Interest Rate in effect during the by the Servicer in the immediately preceding Due
immediately preceding Due Period Period
DA Dividend Rate: The percentage rate set forth in the following table
taking into account the DA Anniversary Date and the Rate Type of the DAD
Mortgage Loan:
Rate Type
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DA Anniversary Date 2/28 LIBOR 3/27 LIBOR Fixed Rate
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1 .25% .25% .25%
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2 .25% .25% .25%
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3 1.00% .25% .25%
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4 .25% 1.00% .50%
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DA Forfeiture Event: Any of the following events associated with a DAD
Mortgage Loan: (i) prepayment of the DAD Serviced Mortgage Loan in full prior to
any of its DA Anniversary Dates; (ii) any acceleration of payments due under the
DAD Mortgage Loan instituted by the Servicer or the Trustee, which acceleration
remains in effect on a DA Anniversary Date; (iii) the occurrence of a payment
default under the DAD Mortgage Loan, which default is continuing on a DA
Anniversary Date; or (iv) the failure of the Mortgagor to make a scheduled
Monthly Payment in full on a DAD Mortgage Loan by the 17th day of the month in
which a DA Anniversary Date of the DAD Mortgage Loan occurs.
DA Reserve Account: A Custodial Account established and maintained by
the Servicer under Section 3.03 for the purpose of depositing any Direct Access
Dividends collected under the DAD Mortgage Loans.
DA Withdrawal Date: As defined in Section 3.04(b).
DAD: The Direct Access Dividend Program of First Franklin.
DAD Mortgage Loan: A Serviced Mortgage Loan originated under and
qualifying for DA Dividends under DAD.
Delinquent: For reporting purposes, a Serviced Mortgage Loan is
"delinquent" when any payment contractually due thereon has not been made by the
close of business on the Due Date therefore. Such Serviced Mortgage Loan is "30
days Delinquent" if such payment has not been received by the close of business
on the corresponding day of the month immediately succeeding the month in which
such payment was first due, or, if there is not such corresponding day (e.g., as
when a 30-day month follows a 31-day month in which a payment was due on the
31st day of such month), then on the last day of such immediately succeeding
month. Similarly for "60 days Delinquent" and the second immediately succeeding
month and "90 days Delinquent" and the third immediately succeeding month.
Determination Date: The last day (or if such day is not a Business Day,
the Business Day immediately succeeding such last day) of the Due Period
immediately preceding the related Remittance Date.
Depositor: Structured Asset Securities Corporation, a Delaware
corporation, or any successor in interest.
Distressed Mortgage Loan: As of any Transfer Date, any Serviced
Mortgage Loan that was Delinquent in payment for a period of 90 days or more as
of the first calendar day of the month in which such Transfer Date occurs,
without giving effect to any grace period permitted by the related Mortgage Note
or for which the Servicer has accepted a deed in lieu of foreclosure. No
Serviced Mortgage Loan shall be considered delinquent for the purpose of this
definition by virtue of the related Mortgagor having made payment to the prior
servicer.
Distribution Date: The 25th day of each month (or if such day is not
a Business Day) the next succeeding Business Day).
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Due Date: The day of the calendar month on which the Monthly Payment is
due on a Serviced Mortgage Loan, exclusive of any days of grace. With respect to
the Serviced Mortgage Loans for which payment from the Mortgagor is due on a day
other than the first day of the calendar month, such Serviced Mortgage Loans
will be treated as if the Monthly Payment is due on the first day of the
immediately succeeding month.
Due Period: With respect to each Remittance Date, the period commencing
on the second day of the month immediately 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 as
to timely payment of principal and interest 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,
including Federal Housing Administration debentures, but excluding any of such
securities whose terms do not provide for a payment of a fixed dollar amount
upon maturity or call for redemption ("Direct Obligations") and FHLMC senior
debt obligations;
(ii) federal funds, or demand and time deposits in, certificates
of deposits of, or bankers' acceptances issued by, any depository institution or
trust company (including U.S. subsidiaries of foreign depositories and the
Trustee or any agent of the Trustee, acting in its respective commercial
capacity) incorporated or organized under the laws of the United States of
America or any state thereof and subject to supervision and examination by
federal or state banking authorities, so long as at the time of investment or
the 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 or deposit obligations of such holding company or deposit
institution, as the case may be) have been rated by each Rating Agency in its
highest short-term rating category or one of its two highest long-term rating
categories;
(iii) repurchase agreements collateralized by Direct Obligations
or securities guaranteed by GNMA or FHLMC with any registered broker/dealer
subject to Securities Investors' Protection Corporation jurisdiction or any
commercial bank insured by the FDIC, if such broker/dealer or bank has an
uninsured, unsecured and unguaranteed obligation rated by each Rating Agency in
its highest short-term rating category;
(iv) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of America or
any state thereof which have a credit rating from each Rating Agency, at the
time of investment or the contractual commitment providing for such investment,
at least equal to one of the two highest long-term credit rating categories of
each Rating Agency; provided, however, that securities issued by any particular
corporation will not be Eligible Investments to the extent that investment
therein will
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cause the then outstanding principal amount of securities issued by such
corporation and held as part of the Trust Custodial Account to exceed 20% of the
aggregate principal amount of all Eligible Investments in the Trust Custodial
Account; provided, further, that such securities will not be Eligible
Investments if they are published as being under review with negative
implications from either Rating Agency;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than 180 days after the date of issuance thereof) rated
by each Rating Agency in its highest short-term rating category;
(vi) a Qualified GIC (as defined in the Trust Agreement);
(vii) certificates or receipts representing direct ownership
interests in future interest or principal payments on obligations of the United
States of America or its agencies or instrumentalities (which obligations are
backed by the full faith and credit of the United States of America) held by a
custodian in safekeeping on behalf of the holders of such receipts; and
(vii) any other demand, money market, common trust fund or time
deposit or obligation, or interest-bearing or other security or investment, (A)
rated in the highest rating category by each Rating Agency or (B) that is
acceptable to the NIMS Insurer and would not adversely affect the then current
rating by any Rating Agency then rating the Certificates or the NIM Securities.
Such investments in this subsection (viii) may include money market mutual funds
or common trust funds, including any fund for which the Trustee, the Master
Servicer or any affiliate thereof serves as an investment advisor,
administrator, shareholder servicing agent, and/or custodian or subcustodian,
notwithstanding that (x) the Trustee, the Master Servicer or any affiliate
thereof charges and collects fees and expenses from such funds for services
rendered, (y) the Trustee, the Master Servicer or any affiliate thereof charges
and collects fees and expenses for services rendered pursuant to this Agreement,
and (z) services performed for such funds and pursuant to this Agreement may
converge at any time; 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 in accordance with the FHLMC Guide.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 3.05.
Escrow Payments: With respect to any Serviced 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
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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 of the events which may result in a termination
for cause set forth in Section 8.01.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHA: The Federal Housing Administration, an agency within HUD or any
successor thereto and including the Federal Housing Commissioner and the
Secretary of HUD where appropriate under the FHA Regulation.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
FHLMC Guide: The FHLMC Single Family Seller/Servicer Guide and all
amendments or additions thereto.
Fidelity Bond: A fidelity bond to be maintained by the Servicer in
accordance with the FHLMC Guide.
First Franklin: First Franklin Financial Corporation and its
successors in interest.
Fixed Rate Mortgage Loan: Any Serviced Mortgage Loan as to which the
Mortgage Interest Rate set forth in the Mortgage Note is fixed for the term of
such Serviced Mortgage Loan.
Final Recovery Determination: With respect to any defaulted Serviced
Mortgage Loan or any REO Property (other than any Serviced Mortgage Loan or REO
Property repurchased from the Trust), a determination made by the Servicer that
all Insurance Proceeds, Liquidation Proceeds and other payments or recoveries
which the Servicer, in its reasonable good faith judgment, expect to be finally
recoverable in respect thereof have been so recovered.
Fitch: Fitch, Inc., or any successor in interest.
FNMA: The Federal National Mortgage Association, or any successor
thereto.
FNMA Guide: The FNMA Single Family Seller/Servicer Guide and all
amendments or additions thereto.
General Servicing Fee: With respect to each Due Period and any Serviced
Mortgage Loan, an amount equal to one-twelfth the product of (i) the General
Servicing Fee Rate and (ii) the outstanding principal balance of such Serviced
Mortgage Loan as of the related Determination Date. The obligation of the
Trustee to pay the General Servicing Fee is limited to, and the General
Servicing Fee is payable solely from, the interest portion (including recoveries
with respect to interest from Liquidation Proceeds to the extent permitted by
Section 3.02 of this Agreement) of such Monthly Payments collected by the
Servicer, or as otherwise provided under this Agreement.
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General Servicing Fee Rate: 0.50% per annum.
GNMA: The Government National Mortgage Association, or any successor
thereto.
HOEPA: The Home Ownership and Equity Protection Act, as amended.
Holder or Certificateholder: The registered owner of any Certificate as
recorded on the books of the Certificate Registrar.
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 GNMA.
Insurance Proceeds: With respect to each Serviced Mortgage Loan,
proceeds of insurance policies insuring the Serviced Mortgage Loan or the
related Mortgaged Property, including, but not limited to, proceeds from the
Radian PMI Insurance Policy, to the extent any such proceeds are not to be
applied to the restoration and repair of the related Mortgaged Property or
released to the Mortgagor in accordance with the procedures that the Servicer
would follow in servicing mortgage loans for its own account, subject to the
terms and conditions of the related Mortgage Note and Mortgage.
Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Serviced Mortgage Loan, whether through the sale or assignment of
such Serviced 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 Serviced Mortgage Loan.
Master Servicer: ▇▇▇▇▇ Fargo Bank Minnesota, National Association, or
any successor in interest, or if any successor Master Servicer shall be
appointed as provided in the Trust Agreement, then such successor Master
Servicer.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
MERS Eligible Mortgage Loan: Any Serviced Mortgage Loan that has been
designated by the Servicer as recordable in the name of MERS, as nominee.
MERS Mortgage Loan: Any Serviced Mortgage Loan as to which the related
Mortgage, or an Assignment of Mortgage, has been or will be recorded in the name
of MERS, as nominee for the holder from time to time of the related Mortgage
Note.
Monthly Advance: With respect to each Remittance Date and each Serviced
Mortgage Loan, an amount equal to the Monthly Payment (with the interest portion
of such Monthly Payment adjusted to the Mortgage Loan Remittance Rate) that was
due on the Serviced Mortgage Loan, and that was Delinquent at the close of
business on the first day of the month in which such Remittance Date occurs, but
only to the extent that such amount is expected, in the reasonable judgment of
the Servicer, to be recoverable from collections or other recoveries in respect
of such Serviced Mortgage Loan. To the extent that the Servicer determines that
any
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such amount is not recoverable from collections or other recoveries in respect
of such Serviced Mortgage Loan, such determination shall be evidenced by a
certificate of a Servicing Officer delivered to the Master Servicer and the NIMS
Insurer setting forth such determination and the procedures and considerations
of the Servicer forming the basis of such determination.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Serviced Mortgage Loan.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or any successor in interest.
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 Interest Rate: The annual rate of interest borne on a Mortgage
Note net of any Relief Act Reduction.
Mortgage Loan Remittance Rate: With respect to each Serviced Mortgage
Loan, the annual rate of interest remitted to the Master Servicer, which shall
be equal to the Mortgage Interest Rate minus the General Servicing Fee Rate.
Mortgage Loan Schedule: A schedule of the Serviced Mortgage Loans,
attached hereto as Exhibit A-1, setting forth information with respect to such
Serviced Mortgage Loans as agreed to by the Seller, the Servicer and the Master
Servicer, including, but not limited to (i) any MERS identification number (if
available) with respect to each MERS Mortgage Loan or MERS Eligible Mortgage
Loan, (ii) a data field indicating whether such Serviced Mortgage Loan is
insured under the Radian Master PMI Insurance Policy and (iii) a data field
indicating whether the Serviced Mortgage Loan is a DAD Mortgage Loan.
Mortgage Note: The original, executed 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 Prepayment Interest Excess Amount: With respect to any Due Period,
the amount, if any, by which the Prepayment Interest Excess Amount exceeds the
Prepayment Interest Shortfall Amount for such Due Period.
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.
NIM Securities: As defined in the fifth RECITAL to this Agreement.
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NIMS Insurer: As defined in the sixth RECITAL to this Agreement.
NIMS Transaction: As defined in the fifth RECITAL to this Agreement.
Non-MERS Eligible Mortgage Loan: Any Serviced Mortgage Loan other than
a MERS Eligible Mortgage Loan.
Non-MERS Mortgage Loan: Any Serviced Mortgage Loan other than a MERS
Mortgage Loan.
Notice Date: The fifteenth calendar day preceding each Transfer Date,
or, if such day is not a Business Day, the immediately preceding Business Day.
Officer's Certificate: A certificate signed by the Chairman of the
Board, the President or a vice president (however denominated), and by the
Treasurer, the Secretary, or one of the assistant treasurers or assistant
secretaries of the Servicer, a Servicing Officer, the Master Servicer, or the
Seller, as applicable.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Servicer, reasonably acceptable to the Trustee, the Master
Servicer, the NIMS Insurer and the Seller, provided that any Opinion of Counsel
relating to qualification of the Serviced Mortgage Loans in a REMIC or
compliance with the REMIC Provisions must be an opinion of counsel acceptable to
the Trustee, the Master Servicer, the NIMS Insurer and the Seller, who (i) is in
fact independent of the Seller and the Servicer (ii) does not have any material
direct or indirect financial interest in the Seller or the Servicer any
affiliate of any such entity and (iii) is not connected with the Seller or
Servicer as an officer, employee, director or person performing similar
functions.
Option One Servicing Fee: With respect to each Due Period and any
Serviced Mortgage Loan, an amount equal to the sum of (a) one-twelfth the
product of (i) the Option One Servicing Fee Rate and (ii) the outstanding
principal balance of such Serviced Mortgage Loan as of the related Determination
Date. The obligation of the Trustee to pay the Option One Servicing Fee is
limited to, and the Option One Servicing Fee is payable solely from, the
interest portion (including recoveries with respect to interest from Liquidation
Proceeds to the extent permitted by Section 3.02 of this Agreement) of such
Monthly Payments collected by the Servicer, or as otherwise provided under this
Agreement.
Option One Servicing Fee Rate: 0.40% per annum.
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 Insurer: Radian and its successors in interest.
PMI Policy: A policy of primary mortgage guaranty insurance issued by a
Qualified Insurer, including the Radian Master PMI Insurance Policy, as required
by this Agreement and the Trust Agreement with respect to certain Serviced
Mortgage Loans.
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Prepayment Charge: With respect to any Serviced Mortgage Loan and
Remittance Date, the charges or premiums, if any, due in connection with a full
or partial prepayment of such Serviced Mortgage Loan during the immediately
preceding Prepayment Period in accordance with the terms thereof (but excluding
any Servicer Prepayment Charge Payment Amount).
Prepayment Interest Excess Amount: With respect to any Principal
Prepayment in full or in part received on the first day of the month of the
Remittance Date, all amounts received in respect of interest on such Principal
Prepayment.
Prepayment Interest Shortfall Amount: With respect to any Serviced
Mortgage Loan that was subject to a Principal Prepayment in full or in part
during any Due Period, which Principal Prepayment was applied to such Serviced
Mortgage Loan prior to such Serviced Mortgage Loan's Due Date in such Due
Period, the amount of interest (net of the General Servicing Fee for Principal
Prepayments in full only) 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 Serviced Mortgage Loan and ending on
the day immediately preceding such Due Date, inclusive.
Prepayment Period: With respect to each Distribution Date, the
one-month period beginning on the Cut-off Date, in the case of the first
Distribution Date, and thereafter on the second day of the calendar month
immediately preceding the month in which the related Distribution Date occurs,
in the case of each subsequent Distribution Date, and ending on the first day of
the month in which such Distribution Date occurs.
Prime Rate: The prime rate published from time to time, as published as
the average rate in The Wall Street Journal (Northeast Edition).
Principal Prepayment: Any payment by a Mortgagor of principal (other
than a Balloon Payment) or other recovery of principal on a Serviced Mortgage
Loan that is recognized as having been received or recovered in advance of its
scheduled Due Date and applied to reduce the principal balance of the Serviced
Mortgage Loan in accordance with the terms of the Mortgage Note.
Purchase Price: With respect to any Mortgage Loan or REO Property to be
purchased by the NIMS Insurer pursuant to Section 8.03(c), an amount equal to
the sum of (i) 100% of the principal balance thereof as of the date of purchase,
(ii) accrued interest on such principal balance at the applicable Mortgage
Interest Rate in effect from time to time to the Due Date as to which interest
was last covered by a payment by the Mortgagor or a Monthly Advance by the
Servicer or Master Servicer and (iii) any unreimbursed Servicing Advances,
Monthly Advances and any unpaid General Servicing Fees allocable to such
Distressed Mortgage Loan.
Qualified Depository: Any of (i) a depository the accounts of which are
insured by the FDIC (to the limits established by such corporation) and the debt
obligations of which are rated P-1 by Moody's (or its equivalent) or better by
each Rating Agency; (ii) the corporate trust department of any bank the debt
obligations of which are rated A-1 by S&P and F-1 by Fitch (or its equivalent)
or better by each Rating Agency; or (iii) the Bank.
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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 FHLMC and FNMA.
Radian: Radian Guaranty Inc. and its successors in interest.
Radian Master PMI Insurance Policy: The master primary mortgage
insurance policy (No. 11955), including all related assignments, supplements and
endorsements, acquired by the Seller for the Trust Fund from Radian for certain
of those Serviced Mortgage Loans included in the Trust Fund and listed in
Exhibit A-2 hereto with loan-to-value ratios determined as of the date of
origination of greater than 60%.
Rating Agency: Each of Fitch, Moody's and S&P or their successors. If
such agencies or their successors are no longer in existence, "Rating Agencies"
shall be such nationally recognized statistical rating agencies, or other
comparable Person, designated by the Seller, notice of which designation shall
be given to the Trustee, the NIMS Insurer, the Master Servicer and the Servicer.
Relief Act Reduction: With respect to any Serviced Mortgage Loan as to
which there has been a reduction in the amount of the interest collectible
thereon as a result of the application of the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended, any amount by which interest collectible on such
Serviced Mortgage Loan for the Due Date in the related Due Period is less than
the interest accrued thereon for the applicable one-month period at the Mortgage
Interest Rate without giving effect to such reduction.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
Remittance Date: The 18th day (or if such 18th day is not a Business
Day, the first Business Day immediately following) of any calendar month.
REO Disposition: The final sale or other disposition by the Servicer of
any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 3.12.
REO Property: A Mortgaged Property acquired by the Servicer on behalf
of the Trust Fund through foreclosure or by deed in lieu of foreclosure pursuant
to Section 3.12 hereof.
Residual Certificate: The Class R Certificate.
S&P: Standard & Poor's Rating Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., or any successor in interest.
Seller: ▇▇▇▇▇▇ Capital, a Division of ▇▇▇▇▇▇ Brothers Holdings Inc.,
or its successors in interest and assigns.
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Seller Remittance Amount: With respect to each Due Period and any
Serviced Mortgage Loan, an amount equal to one-twelfth the product of (a) the
Seller Remittance Rate and (b) the outstanding principal balance of the Serviced
Mortgage Loan as of the related Determination Date. The obligation of the
Servicer to pay the Seller Remittance Amount with respect to a Serviced Mortgage
Loan is limited to, and the Seller Remittance Amount is payable solely from, the
interest portion (including recoveries with respect to interest from Liquidation
Proceeds to the extent permitted by Section 3.02 of this Agreement) of the
Monthly Payments collected by the Servicer with respect to such Serviced
Mortgage Loan, or as otherwise provided under this Agreement. The Master
Servicer shall have no obligation to monitor or enforce the obligation of the
Servicer to remit payment of the Seller Remittance Amount to the Seller.
Seller Remittance Rate: With respect to each Serviced Mortgage Loan,
the difference between the General Servicing Fee Rate and the Option One
Servicing Fee Rate.
Serviced Mortgage Loan: An individual mortgage loan that is the subject
of this Agreement, each mortgage loan subject to this Agreement being identified
on the Mortgage Loan Schedule attached as Exhibit A-1 hereto, which mortgage
loan includes without limitation the Serviced 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.
Servicer: Option One Mortgage Corporation or its successor in interest
or assigns or any successor to the Servicer under this Agreement as herein
provided.
Servicer Prepayment Charge Payment Amount: The amount payable by the
Servicer in respect of any waived Prepayment Charges pursuant to Section 3.15
hereof.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses other than Monthly Advances (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, inspection, 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
(including costs incurred in connection with environmental inspections or other
related costs of foreclosure of Mortgaged Property potentially contaminated by
hazardous or toxic substance or wastes in accordance with Section 3.12 hereof)
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 FHLMC Guide.
Servicing File: The items pertaining to a particular Serviced 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 Serviced Mortgage Loan,
which are held in trust for the Trustee by the Servicer.
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Servicing Officer: Any officer of the Servicer involved in or
responsible for, the administration and servicing of the Serviced Mortgage Loans
whose name appears on a list of servicing officers furnished by the Servicer to
the Master Servicer upon request, as such list may from time to time be amended.
Special Servicer: The person designated by the Seller (with the prior
consent of the Trustee, the Master Servicer and the NIMS Insurer) to assume the
servicing of Distressed Mortgage Loans pursuant to Section 8.03 hereof.
Transfer Date: The fourth calendar day of each month, or, if such day
is not a Business Day, the next succeeding Business Day. Each transfer of
servicing on a Transfer Date shall be deemed to be effective immediately
following the close of business on such Transfer Date.
Trust Agreement: As defined in the fourth RECITAL of this Agreement.
Trust Custodial Account: As defined in Section 3.03.
Trust Fund: The trust fund established by the Trust Agreement known as
the "Amortizing Residential Collateral Trust, 2001-BC5", the assets of which
consist of the Serviced Mortgage Loans and any related assets.
Trustee: Bank One, National Association, or any successor in interest,
or if any successor trustee or co-trustee shall be appointed as provided in the
Trust Agreement, then such successor trustee or such co-trustee, as the case may
be.
VA: The Veterans Administration, an agency of the United States of
America, or any successor thereto, including the Administration of Veterans
Affairs.
Any capitalized terms used and not defined in this Agreement shall have
the meanings ascribed to such terms in the Trust Agreement.
ARTICLE II.
SELLER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING
RESPONSIBILITIES
Section 2.01 Contract for Servicing; Possession of Servicing Files.
The Seller, by execution and delivery of this Agreement, does hereby
contract with the Servicer, subject to the terms of this Agreement, for the
servicing of the Serviced Mortgage Loans. On or before the Closing Date, the
Seller shall cause to be delivered the Servicing Files with respect to the
Serviced Mortgage Loans listed on the Mortgage Loan Schedule to the Servicer.
Each Servicing File delivered to the Servicer shall be held in trust by the
Servicer for the benefit of the Trustee; provided, however, that the Servicer
shall have no liability for any Servicing Files (or portions thereof) not
delivered by the Seller. The Servicer's possession of any portion of the
Serviced Mortgage Loan documents shall be at the will of the Trustee for the
sole purpose of facilitating servicing of the related Serviced Mortgage Loan
pursuant to this
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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 Trustee and the ownership
of all records and documents with respect to the related Serviced Mortgage Loan
prepared by or which come into the possession of the Servicer shall immediately
vest in the Trustee and shall be retained and maintained, in trust, by the
Servicer at the will of the Trustee 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 Serviced
Mortgage Loan by the Trustee. 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.
(a) Subject to Section 3.01(a) hereof, as soon as practicable
after the Closing Date or the date on which a Qualifying Substitute Mortgage
Loan is delivered pursuant to Section 2.05 of the Trust Agreement, as applicable
(but in no event more than 90 days thereafter except to the extent delays are
caused by the applicable recording office), the Servicer, at the expense of the
Seller, shall cause the Mortgage or Assignment of Mortgage, as applicable, with
respect to each MERS Eligible Mortgage Loan, to be properly recorded in the name
of MERS in the public recording office in the applicable jurisdiction, or shall
ascertain that such have previously been so recorded.
(b) Subject to Section 3.01(a) hereof, an Assignment of Mortgage
in favor of the Trustee shall be recorded as to each Non-MERS Mortgage Loan
unless instructions to the contrary are delivered to the Servicer and the NIMS
Insurer, in writing, by the Trustee. Subject to the preceding sentence, as soon
as practicable after the Closing Date (but in no event more than 90 days
thereafter except to the extent delays are caused by the applicable recording
office), the Servicer, at the expense of the Seller, shall cause to be properly
recorded in each public recording office where such Non-MERS Eligible Mortgage
Loans are recorded each Assignment of Mortgage.
(c) Additionally, the Servicer shall prepare and execute, at the
direction of the Trustee, any note endorsements relating to any of the Non-MERS
Mortgage Loans.
(d) All rights arising out of the Serviced Mortgage Loans shall
be vested in the Trustee, subject to the Servicer's right to service and
administer the Serviced Mortgage Loans hereunder in accordance with the terms of
this Agreement. All funds received on or in connection with a Serviced Mortgage
Loan, other than the General Servicing Fee and other compensation to which the
Servicer is entitled as set forth herein, including but not limited to in
Section 5.01 below, shall be received and held by the Servicer in trust for the
benefit of the Trustee pursuant to the terms of this Agreement.
(e) Any out-of-pocket costs incurred by the Servicer pursuant to
this Section 2.02 and Section 3.01(a), including (a) a management fee of $0.25
per Serviced Mortgage Loan for tracking, maintaining and managing MERS recording
of the Serviced Mortgage Loans and (ii) any recording or other fees in
connection with the Servicer's obtaining the necessary powers of attorney (and
which are specified herein to be an expense of the Seller), shall be reimbursed
to
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the Servicer by the Seller within five (5) Business Days of receipt by the
Seller of an invoice for reimbursement. The Trust Fund shall not reimburse
Seller for any such reimbursement to the Servicer.
ARTICLE III.
SERVICING OF THE SERVICED MORTGAGE LOANS
3.01 Servicer to Service.
The Servicer, as an independent contractor, shall service and
administer the Serviced Mortgage Loans from and after the Closing 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.
The Seller and the Servicer additionally agree as follows:
(a) The Servicer shall (A) record or cause to be recorded the
Mortgage or the Assignment of Mortgage, as applicable, with respect to all MERS
Eligible Mortgage Loans, in the name of MERS, or shall ascertain that such have
previously been so recorded; (B) prepare or cause to be prepared all Assignments
of Mortgage with respect to all Non-MERS Eligible Mortgage Loans; (C) prepare
for recording or cause to be recorded, subject to Section 2.02(b) hereof, all
Assignments of Mortgage with respect to Non-MERS Mortgage Loans in the name of
the Trustee; (D) pay the recording costs pursuant to Section 2.02 hereof; and/or
(E) track such Mortgages and Assignments of Mortgage to ensure they have been
recorded. The Servicer shall be entitled to be paid by the Seller, on behalf of
the Depositor, its out-of-pocket costs for the preparation and recordation of
the Mortgages and Assignments of Mortgage. After the expenses of such recording
costs pursuant to Section 2.02 hereof shall have been paid by the Servicer, the
Servicer shall submit to the Seller a reasonably detailed invoice for
reimbursement of recording costs it incurred hereunder.
(b) If applicable, 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 Serviced Mortgage Loan of the transfer of the servicing
thereto to the Servicer.
(c) The Servicer shall be responsible for the preparation of and
costs associated with notifications to Mortgagors of the assumption of servicing
by the Servicer.
Consistent with the terms of this Agreement and except as provided in
Section 3.15 hereof, the Servicer may waive any late payment charge, assumption
fee or other fee that may be collected in the ordinary course of servicing the
Serviced Mortgage Loans. The Servicer shall not make any future advances to any
Mortgagor under any Serviced Mortgage Loan, and (unless the Mortgagor is in
default with respect to the Serviced Mortgage Loan or such default is, in the
judgment of the Servicer, reasonably foreseeable) the Servicer shall not permit
any modification of any material term of any Serviced Mortgage Loan, including
any modification that would
17
change the Mortgage Interest Rate, defer or forgive the payment of principal or
interest, reduce or increase the outstanding principal balance (except for
actual payments of principal) or change the final maturity date on such Serviced
Mortgage Loan. In the event of any such modification which permits the deferral
of interest or principal payments on any Serviced Mortgage Loan, the Servicer
shall, on the Business Day immediately preceding the Remittance Date in any
month in which any such principal or interest payment has been deferred, make a
Monthly Advance in accordance with Section 4.03, in an amount equal to the
difference between (a) such month's principal and one month's interest at the
Mortgage Loan Remittance Rate on the unpaid principal balance of such Serviced
Mortgage Loan and (b) the amount paid by the Mortgagor. The Servicer shall be
entitled to reimbursement for such advances to the same extent as for all other
advances made pursuant to Section 4.03. 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 Trustee, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments, with respect to the Serviced Mortgage Loans and
with respect to the Mortgaged Properties. Upon the request of the Servicer, the
Trustee shall execute and deliver to the Servicer, within the later of fifteen
days from the Closing Date or within fifteen days of such Servicer request, any
powers of attorney (one for each county in which any of the Mortgaged Properties
are located) and other documents, furnished to it by the Servicer and reasonably
satisfactory to the Trustee, necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties under this Agreement.
Section 3.02 Collection of Serviced Mortgage Loan Payments.
Continuously from the Closing Date until the date each Serviced
Mortgage Loan ceases to be subject to this Agreement, the Servicer shall proceed
diligently to collect all payments due under each of the Serviced 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 Serviced 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 Accounts.
(a) The Servicer shall segregate and hold all funds collected
and received pursuant to the Serviced Mortgage Loans separate and apart from any
of its own funds and general assets and shall initially establish and maintain
two Custodial Accounts, in the form of time deposit or demand accounts, the
first such Custodial Account titled "[[Name of Servicer]] in trust for Bank One,
National Association, as trustee for ARC 2001-BC5 Trust" and referred to herein
as the "Trust Custodial Account" and the second titled "[[Name of Servicer]] in
trust for ▇▇▇▇▇▇ Brothers Holdings Inc. and the various Mortgagors under the DA
Dividend Program " and referred to herein as the "DA Reserve Account." Each
Custodial Account shall be established with a Qualified Depository. Any funds
deposited in either Custodial Account may be invested in Eligible Investments
subject to the provisions of Section 3.11 hereof. Funds deposited in Trust
Custodial Account may be drawn on by the Servicer in accordance with Section
3.04(a) hereof and funds deposited in the DA Reserve Account may be drawn on by
the Servicer and applied in accordance with Section 3.04(b) hereof. The creation
of either Custodial Account shall be evidenced by a letter agreement in the form
of Exhibit B. A copy of such
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certification or letter agreement shall be furnished to the Trustee, the NIMS
Insurer and, upon request, to any subsequent owner of the Serviced Mortgage
Loans.
(b) The Servicer shall deposit in the Trust Custodial Account on
a daily basis, and retain therein, the following collections received by the
Servicer and payments made by the Servicer after the Closing Date:
(i) all payments on account of principal on the Serviced
Mortgage Loans, including all Principal Prepayments;
(ii) all payments on account of interest on the Serviced
Mortgage Loans (other than the applicable percentage (based on the DA Dividend
Rate) of interest collections constituting DA Dividends, which payments shall be
deposited to the DA Reserve Account pursuant to Section 3.03(c)) adjusted to the
Mortgage Loan Remittance Rate and the Seller Remittance Amount;
(iii) all Prepayment Charges or any Servicer Prepayment
Charge Payment Amounts to be paid by the Servicer to the Trust Fund;
(iv) all Liquidation Proceeds;
(v) all Insurance Proceeds (other than any amounts
immediately applied to the restoration or repair of the Mortgaged Property or
immediately released to the Mortgagor);
(vi) all Condemnation Proceeds that are not applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor;
(vii) any Prepayment Interest Shortfall Amount required to
be paid by the Servicer;
(viii) all Monthly Advances made by the Servicer or an
Advancing Person pursuant to Section 4.03;
(ix) any amounts required to be deposited by the Servicer in
connection with the deductible clause in any blanket hazard insurance policy;
(x) any amounts received with respect to or related to any
REO Property or REO Disposition Proceeds;
(xi) any amounts required to be deposited pursuant to
Section 3.11 in connection with any losses realized on Eligible Investments with
respect to funds held in the Trust Custodial Account;
(xii) any amounts required to be deposited by the Servicer
pursuant to Section 3.16(a) in connection with any unpaid claims that are a
result of a breach by the Servicer or any subservicer of its obligations
hereunder or under the Radian Master PMI Insurance Policy;
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(xiii) any amounts received by it under any PMI Policy; and
(xiv) any other amount required hereunder to be deposited by
the Servicer in the Trust Custodial Account.
The foregoing requirements for deposit into the Trust Custodial Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing payments in the nature of (i) late payment charges
and insufficient fund charges, (ii) assumption fees, (iii) other Ancillary
Income and (iv) the Option One Servicing Fee need not be deposited by the
Servicer into the Trust Custodial Account.
Any interest paid on funds deposited in the Trust Custodial Account by
the depository institution shall accrue to the benefit of the Servicer as
additional servicing compensation and the Servicer shall be entitled to retain
and withdraw such interest from the Trust Custodial Account pursuant to Section
3.04(a). Additionally, any other benefit derived from the Trust Custodial
Account associated with the receipt, disbursement and accumulation of principal,
interest, taxes, hazard insurance, mortgage insurance, etc. shall accrue for the
benefit of the Servicer.
(c) The Servicer shall deposit in the DA Reserve Account on a
daily basis, and retain therein until their required withdrawal and distribution
in accordance with Section 3.04(b), all DA Dividends attributable to a DAD
Mortgage Loan. Any interest paid on funds deposited in the DA Reserve Account
shall accrue to the benefit of the Servicer and the Servicer shall be entitled
to retain and withdraw such interest from the DA Reserve Account in accordance
with Section 3.04(b)
Section 3.04 Permitted Withdrawals From Custodial Accounts.
(a) The Servicer shall, from time to time, withdraw funds from
the Trust Custodial Account for the following purposes:
(i) to make payments to the Trustee in the amounts and in
the manner provided for in Section 4.01;
(ii) to pay the Seller Remittance Amount to the Seller;
(iii) in the event the Servicer has elected not to retain
the Option One Servicing Fee out of any Mortgagor payments on account of
interest or other recovery of interest with respect to a particular Serviced
Mortgage Loan (including late collections of interest on such Serviced Mortgage
Loan, or interest portions of Insurance Proceeds, Liquidation Proceeds or
Condemnation Proceeds) prior to the deposit of such Mortgagor payment or
recovery in the Trust Custodial Account, to pay to itself the related Option One
Servicing Fee from all such Mortgagor payments on account of interest or other
such recovery for interest with respect to that Serviced Mortgage Loan;
(iv) to pay itself investment earnings on funds deposited in
the Trust Custodial Account;
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(v) to clear and terminate the Trust Custodial Account upon
the termination of this Agreement;
(vi) to transfer funds to another Qualified Depository in
accordance with Section 3.11 hereof;
(vii) to invest funds in certain Eligible Investments in
accordance with Section 3.11 hereof;
(viii) to reimburse itself to the extent of funds held in
the Trust Custodial Account for Monthly Advances of the Servicer's funds made
pursuant to Section 4.03. The Servicer's right to reimburse itself pursuant to
this subclause (viii) with respect to any Serviced Mortgage Loan shall be
limited to amounts received on or in respect of the related Serviced Mortgage
Loan which represent late recoveries of payments of principal or interest with
respect to which a Monthly Advance was made, it being understood that in the
case of any such reimbursement the Servicer's right thereto shall be prior to
the rights of the Trust Fund; provided, however, that following the final
liquidation of a Serviced Mortgage Loan, the Servicer may reimburse itself for
previously unreimbursed Monthly Advances in excess of Liquidation Proceeds or
Insurance Proceeds with respect to such Serviced Mortgage Loan from any funds in
the Trust Custodial Account, it being understood, in the case of any such
reimbursement, that the Servicer's right thereto shall be prior to the rights of
the Trust Fund. The Servicer may recover at any time from amounts on deposit in
the Trust Custodial Account the amount of any Monthly Advances that the Servicer
deems nonrecoverable or that remain unreimbursed to the Servicer from related
Liquidation Proceeds after the final liquidation of the Serviced Mortgage Loan.
In addition, the Servicer may, at any time, withdraw from the Trust Custodial
Account funds that were not included in the Total Available Amount (as defined
in the Trust Agreement) for the preceding Distribution Date to reimburse itself
for Monthly Advances previously made by the Servicer; and
(ix) to reimburse itself for unreimbursed Servicing
Advances, and for any unpaid Servicing Fees, the Servicer's right to reimburse
itself pursuant to this subclause (ix) with respect to any Serviced Mortgage
Loan being limited to related Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds, REO Disposition Proceeds and other amounts received in
respect of the related REO Property, and such other amounts as may be collected
by the Servicer from the Mortgagor or otherwise relating to the Serviced
Mortgage Loan, it being understood that, in the case of any such reimbursement,
the Servicer's right thereto shall be prior to the rights of the Trust Fund;
(x) to reimburse the Servicer for expenses incurred by, and
reimbursable to, the Servicer pursuant to Section 6.03, but only to extent such
amounts are determined to be reimbursable by the Trust Fund pursuant to Section
6.03; and
(xi) to reimburse itself for expenses incurred or
reimbursable to the Servicer pursuant to Section 3.12 to the extent not
previously reimbursed under clause (ix) of this Section 3.04;
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(xii) to withdraw funds necessary for the operation,
management and maintenance of any REO related property to the extent not
previously reimbursed under clause (ix) of this Section 3.04; and
(xiii) to withdraw any funds deposited to the Trust
Custodial Account in error.
Notwithstanding the foregoing clauses (viii) and (ix), no Monthly
Advances or Servicing Advances shall be required to be made by the Servicer if
such Monthly Advance or Servicing Advance would, if made, be, in the Servicer's
reasonable judgment, nonrecoverable. The determination by the Servicer that it
has made a nonrecoverable Monthly Advance or Servicing Advance, or that any
proposed Monthly Advance or Servicing Advance would be a nonrecoverable advance,
shall be evidenced by an Officer's Certificate of the Servicer delivered to the
Master Servicer and the NIMS Insurer.
(b) The Servicer shall from, time to time withdraw funds from
the DA Reserve Account to be applied in the following manner:
(i) that amount of DA Dividends on deposit in the DA Reserve
Account which are not refundable to the Mortgagors as a result of a DA
Forfeiture Event with respect to the related DAD Mortgage Loans shall be
withdrawn from the DA Reserve Account on each Remittance Date and paid to the
Master Servicer for deposit into the Collection Account maintained by the Master
Servicer pursuant to Section 4.01 of the Trust Agreement.
(ii) any amount of DA Dividends on deposit in the DA Reserve
Account which is refundable to the Mortgagor of a DAD Mortgage Loan as the
result of the non-occurrence of a DA Forfeiture Event with respect to such
Mortgage Loan shall be withdrawn from the DA Reserve Account and paid to the
related Mortgagor no later than twenty days following the related DA Anniversary
Date on which the determination of eligibility for such refund is determined.
Section 3.05 Establishment of and Deposits to Escrow Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to a Serviced 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 "[Name of Servicer] in trust for Bank One, National
Association, as Trustee for ARC 2001-BC5 Trust." 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
C. A copy of such certification or letter agreement shall be furnished to the
Trustee and the NIMS Insurer and, upon request, to any subsequent owner of the
Serviced Mortgage Loans.
The Servicer shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein:
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(i) all Escrow Payments collected on account of the Serviced
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 that 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 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 Serviced Mortgage
Loan;
(iii) as permitted by applicable state law, for transfer to
the Trust Custodial Account and application to reduce the principal balance of
the Serviced Mortgage Loan in accordance with the terms of the related Mortgage
and Mortgage Note;
(iv) for application to restore or repair the Mortgaged
Property in accordance with the FHLMC Guide;
(v) 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
(vi) to reimburse itself for any Servicing Advances made
with respect to Escrow Payments for a Serviced Mortgage Loan or the related
Mortgaged Properties, but only from amounts received on the related Serviced
Mortgage Loan which represent late collections of Escrow Payments thereunder;
(vii) to withdraw any funds deposited into the Escrow
Account in error; and
(viii) to clear and terminate the Escrow Account on the
termination of this Agreement.
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The Servicer will be responsible for the administration of the Escrow
Accounts and will be obligated to make Servicing Advances to the Escrow Account
in respect of its obligations under this Section 3.06, reimbursable from the
Escrow Accounts or Trust Custodial Account to the extent not collected from the
related Mortgagor, anything to the contrary notwithstanding, when and as
necessary to avoid the lapse of insurance coverage on the Mortgaged Property, or
which the Servicer knows, or in the exercise of the required standard of care of
the Servicer hereunder should know, is necessary to avoid the loss of the
Mortgaged Property due to a tax sale or the foreclosure as a result of a tax
lien. If any such payment has not been made and the Servicer receives notice of
a tax lien with respect to the Mortgage being imposed, the Servicer will, within
ten (10) Business Days of such notice, advance or cause to be advanced funds
necessary to discharge such lien on the Mortgaged Property.
Section 3.07 Restoration of Mortgaged Property.
The Servicer need not obtain the approval of the Master Servicer prior
to releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to
be applied to the restoration or repair of the Mortgaged Property if such
release is in accordance with Accepted Servicing Practices. At a minimum, with
respect to claims of $5,000 or more, the Servicer shall comply with the
following conditions in connection with any such release of Insurance Proceeds
or Condemnation Proceeds:
(i) the Servicer shall receive satisfactory independent
verification of completion of repairs and issuance of any required approvals
with respect thereto;
(ii) the Servicer shall take all steps necessary to preserve
the priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens.
(iii) the Servicer shall verify that the Serviced Mortgage
Loan is not 60 or more days delinquent; and
(iv) pending repairs or restoration, the Servicer shall
place the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
With respect to claims of less than $5,000, the Servicer shall
comply with the following conditions in connection with any such release of
Insurance Proceeds or Condemnation Proceeds:
(v) the related Mortgagor shall provide an affidavit
verifying the completion of repairs and issuance of any required approvals with
respect thereto;
(vi) the Servicer shall verify the total amount of the claim
with the applicable insurance company; and
(vii) pending repairs or restoration, the Servicer shall
place the Insurance Proceeds or Condemnation Proceeds in the Escrow Account. If
the Trustee is named as an additional loss payee, the Servicer is hereby
empowered to endorse any loss draft issued in respect of such a claim in the
name of the Trustee.
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Section 3.08 Fidelity Bond and Errors and Omissions Insurance.
The Servicer shall keep in force during the term of this Agreement a
Fidelity Bond and Errors and Omissions Insurance the minimum coverage of which
shall be at least equal to the coverage required by FHLMC in the FHLMC Guide
(unless a waiver of such requirement has been obtained by the Servicer from
FHLMC). Such Fidelity Bond and Errors and Omissions Insurance shall be
maintained with recognized insurers, shall be in such form and amount as would
permit the Servicer to be qualified as a FHLMC servicer, and shall by its terms
not be cancelable without thirty days' prior written notice to the Trustee, the
Master Servicer and the NIMS Insurer. The Servicer shall be deemed to have
complied with this provision if an affiliate of the Servicer has such errors and
omissions and fidelity bond coverage and, by the terms of such insurance policy
or fidelity bond, the coverage afforded thereunder extends to the Servicer. The
Servicer shall furnish to the Trustee, the Master Servicer and the NIMS Insurer
a copy of each such bond and insurance policy upon their request.
Section 3.09 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 Master Servicer 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 Master Servicer 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 Trust
Custodial Account from its own funds the amount of any interest loss or deferral
caused thereby.
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Section 3.10 Payment of Taxes, Insurance and Other Charges. With
respect to each Serviced Mortgage Loan, the Servicer shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates
and other charges which are or may become a lien upon the Mortgaged Property and
the status of fire and hazard insurance coverage and shall obtain, from time to
time, all bills for the payment of such charges (including renewal premiums) and
shall effect payment thereof prior to the applicable penalty or termination date
and at a time appropriate for securing maximum discounts allowable, employing
for such purpose deposits of the Mortgagor in the Escrow Account which shall
have been estimated and accumulated by the Servicer in amounts sufficient for
such purposes, as allowed under the terms of the Mortgage or applicable
regulations. The Servicer assumes full responsibility for the payment of all
such bills and shall effect payments of all such bills irrespective of the
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments. The Servicer shall employ Accepted Servicing Practices to ensure that
the Mortgaged Property is not subjected to a tax lien as a result of nonpayment
and that such Mortgaged Property is not left uninsured.
Section 3.11 Protection of Accounts.
The Servicer may transfer any Custodial Account or any Escrow Account
to a different Qualified Depository from time to time. The Servicer shall give
notice to the Trustee, the NIMS Insurer and the Master Servicer of the location
of each Custodial Account maintained by it when established and prior to any
change thereof.
The Servicer shall bear any expenses, losses or damages sustained by
the Trustee or the Master Servicer if the Trust Custodial Account and/or the
Escrow Account are not demand deposit accounts.
Amounts on deposit in the Trust 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 Trust 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 Trust Custodial Account or the Escrow
Account. Any such Eligible Investment shall mature no later than the Business
Day immediately preceding the related Remittance Date. Any such Eligible
Investment shall be made in the name of the Servicer in trust for the benefit of
the Trustee. 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 Trust Custodial Account or the Escrow Account by the Servicer
out of its own funds immediately as realized.
Amounts on deposit in the DA Reserve Account shall, at the option of
the Servicer, be invested in Eligible Investments that shall mature no later
than the Business Day immediately preceding the related Remittance Date;
provided, however, that if such Eligible Investment is an obligation of a
Qualified Depository (other than the Servicer) that maintains the DA Reserve
Account, then such Eligible Investment may mature on the related Remittance
Date. Any such Eligible Investment shall be made in the name of the Servicer in
trust for benefit of the Trustee.
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All income or gain realized from any such Eligible Investments 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 DA
Reserve Account by the Servicer out of its own funds immediately as realized.
Section 3.12 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 Trustee (or MERS, as applicable), or in the
event the Trustee 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 Trustee
shall acknowledge in writing that such title is being held as nominee for the
Trustee.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Trustee 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 Trustee.
Notwithstanding anything to the contrary contained in this Section
3.12, in connection with a foreclosure or acceptance of a deed in lieu of
foreclosure, in the event the Servicer has reasonable cause to believe that a
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
or if the Master Servicer or NIMS Insurer otherwise requests, an environmental
inspection or review of such Mortgaged Property to be conducted by a qualified
inspector shall be arranged by the Servicer. Upon completion of the inspection,
the Servicer shall provide the Master Servicer and NIMS Insurer with a written
report of such environmental inspection. In the event that the environmental
inspection report indicates that the Mortgaged Property is contaminated by
hazardous or toxic substances or wastes, the Servicer shall not proceed with
foreclosure or acceptance of a deed in lieu of foreclosure. In the event that
the environmental inspection report is inconclusive as to the whether or not the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
the Servicer shall not, without the prior approval of both the Master Servicer
and the NIMS Insurer proceed with foreclosure or acceptance of a deed in lieu of
foreclosure. In such instance, the Master Servicer and the NIMS Insurer shall be
deemed to have approved such foreclosure or acceptance of a deed in lieu of
foreclosure unless either notifies the Servicer in writing, within five (5) days
after its receipt of written notice of the proposed foreclosure or deed in lieu
of foreclosure from the Servicer, that it disapproves of the related foreclosure
or acceptance of a deed in lieu of foreclosure. The Servicer shall be reimbursed
for all Servicing Advances made pursuant to this paragraph with respect to the
related Mortgaged Property from the Trust Custodial Account.
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In the event that the Trust Fund acquires any REO Property in
connection with a default or imminent default on a Serviced Mortgage Loan, the
Servicer shall dispose of such REO Property not later than the end of the third
taxable year after the year of its acquisition by the Trust Fund unless the
Servicer has applied for and received a grant of extension from the Internal
Revenue Service (and provide a copy of the same to the NIMS Insurer) to the
effect that, under the REMIC Provisions and any relevant proposed legislation
and under applicable state law, the applicable Trust REMIC may hold REO Property
for a longer period without adversely affecting the REMIC status of such REMIC
or causing the imposition of a federal or state tax upon such REMIC. If the
Servicer has received such an extension (and provide a copy of the same to the
NIMS Insurer), then the Servicer shall continue to attempt to sell the REO
Property for its fair market value for such period longer than three years as
such extension permits (the "Extended Period"). If the Servicer has not received
such an extension and the Servicer is unable to sell the REO Property within the
period ending 3 months before the end of such third taxable year after its
acquisition by the Trust Fund or if the Servicer has received such an extension,
and the Servicer is unable to sell the REO Property within the period ending
three months before the close of the Extended Period, the Servicer shall, before
the end of the three year period or the Extended Period, as applicable, (i)
purchase such REO Property at a price equal to the REO Property's fair market
value, as acceptable to the NIMS Insurer or (ii) auction the REO Property to the
highest bidder (which may be the Servicer) in an auction reasonably designed to
produce a fair price prior to the expiration of the three-year period or the
Extended Period, as the case may be. The Trustee shall sign any document or take
any other action reasonably requested by the Servicer which would enable the
Servicer, on behalf of the Trust Fund, to request such grant of extension.
Notwithstanding any other provisions of this Agreement, no REO Property
acquired by the Trust Fund shall be rented (or allowed to continue to be rented)
or otherwise used by or on behalf of the Trust Fund in such a manner or pursuant
to any terms that would: (i) cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code; or
(ii) subject any Trust REMIC to the imposition of any federal income taxes on
the income earned from such REO Property, including any taxes imposed by reason
of Sections 860F or 860G(c) of the Code, unless the Servicer has agreed to
indemnify and hold harmless the Trust Fund and the NIMS Insurer with respect to
the imposition of any such taxes.
The Servicer shall also maintain on each REO Property hazard insurance
with extended coverage in an amount which is at least equal to the lesser of (i)
the maximum insurable value of the improvements which are a part of such
property and (ii) the outstanding Principal Balance of the Serviced Mortgage
Loan at the time it becomes REO Property, to the extent required and available
under the Flood Disaster Protection Act of 1973, as amended, flood insurance in
the amount required above.
The disposition of REO Property shall be carried out by the Servicer at
such price, and upon such terms and conditions, as the Servicer deems to be in
the best interests of the Trust Fund. The proceeds of sale of the REO Property
shall be promptly deposited in the Trust Custodial Account. After the expenses
of such disposition shall have been paid, the Servicer shall reimburse itself
pursuant to Section 3.04 hereof for any Servicing Advances it incurred with
respect to such REO Property.
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The Servicer shall withdraw from the Trust 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
FHLMC Guides. The Servicer shall make monthly distributions on each Remittance
Date to the Trustee 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 3.12 and of any reserves reasonably required from time to time to be
maintained to satisfy anticipated liabilities for such expenses).
Section 3.13 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 4.02, the
Servicer shall furnish by electronic transmission to the Master Servicer and the
NIMS Insurer 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 either the Master Servicer or the NIMS Insurer shall reasonably
request.
Section 3.14 MERS.
(a) The Servicer shall take such actions as are necessary to
cause the Trustee to be clearly identified as the owner of each MERS Mortgage
Loan on the records of MERS for purposes of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS.
(b) The Servicer shall maintain in good standing its membership
in MERS. In addition, the Servicer shall comply with all rules, policies and
procedures of MERS, including the Rules of Membership, as amended, and the MERS
Procedures Manual, as amended.
(c) With respect to all MERS Mortgage Loans serviced hereunder,
the Servicer shall promptly notify MERS as to any transfer of beneficial
ownership or release of any security interest in such Serviced Mortgage Loans.
(d) With respect to all MERS Mortgage Loans serviced hereunder,
the Servicer shall notify MERS as to any transfer of servicing pursuant to
Section 3.15 or Section 9.01 within 10 Business Days of such transfer of
servicing. The Servicer shall cooperate with the Trustee and any successor
Servicer to the extent necessary to ensure that such transfer of servicing is
appropriately reflected on the MERS system.
Section 3.15 Waiver of Prepayment Penalties.
Except as provided below, the Servicer or any designee of the Servicer
shall not waive any Prepayment Charge with respect to any Serviced Mortgage
Loan. If the Servicer or its designee fails to collect a Prepayment Charge at
the time of the related prepayment of any Serviced Mortgage Loan subject to such
Prepayment Charge, the Servicer shall pay to the Trust Fund at such time (by
deposit to the Trust Custodial Account) an amount equal to the amount of the
Prepayment Charge not collected. Notwithstanding the above, the Servicer or its
designee may waive a Prepayment Charge without paying to the Trust Fund the
amount of such
Prepayment Charge only if the related prepayment is not the result of a
refinancing by the Servicer or its designee and such waiver (i) relates to a
defaulted Serviced Mortgage Loan or a reasonably foreseeable default, such
waiver is standard and customary in servicing similar mortgage loans to the
Serviced Mortgage Loans, and such waiver, in the reasonable judgment of the
Servicer, would maximize recovery of total proceeds from the Serviced Mortgage
Loan, taking into account the amount of such Prepayment Charge and the related
Serviced Mortgage Loan, or (ii) relates to a prepayment charge the collection of
which, in the reasonable judgment of the Servicer, would be a violation of
applicable laws.
Section 3.16 Servicing and Administration of the Radian Master PMI
Insurance Policy.
(a) The Servicer shall take all such actions on behalf of the
Trustee as are necessary to service, maintain and administer the Radian Master
PMI Insurance Policy and to perform and enforce the rights under such Policy for
its own account. Except as expressly set forth herein, the Servicer shall have
full authority on behalf of the Trust to do anything it reasonably deems
appropriate or desirable in connection with the servicing, maintenance and
administration of the Radian Master PMI Insurance Policy. The Servicer shall not
take, or permit any subservicer to modify or assume a Serviced Mortgage Loan
covered by the Radian Master PMI Insurance Policy or take any other action with
respect to such Serviced Mortgage Loan which would result in non-coverage under
the Radian Master PMI Insurance Policy of any loss which, but for the actions of
the Servicer or subservicer, would have been covered thereunder. If the PMI
Insurer fails to pay a claim under the Radian Master PMI Insurance Policy as a
result of breach by the Servicer or a sub-servicer of its obligations hereunder
or under the Radian Master PMI Insurance Policy, the Servicer shall be required
to deposit in the Trust Custodial Account on or prior to the next succeeding
Remittance Date an amount equal to such unpaid claim from its own funds without
any right to reimbursement from the Trust Fund. To the extent coverage is
available, the Servicer shall keep or cause to be kept in full force and effect
the Radian Master PMI Insurance Policy for as long as any Certificates are
outstanding. The Servicer shall cooperate with the PMI Insurer and shall use its
best efforts to furnish all reasonable aid, evidence and information in the
possession of the Servicer to which the Servicer has access with respect to any
Serviced Mortgage Loan; provided, however, notwithstanding anything to the
contrary contained in the Radian Master PMI Insurance Policy, the Servicer shall
not be required to submit any reports to the PMI Insurer until a reporting date
that is at least 15 days after the Servicer has received sufficient loan level
information from ▇▇▇▇▇▇ Capital to appropriately code its servicing system in
accordance with the PMI Insurer's requirements.
(b) The Servicer shall deposit into the Trust Custodial Account
pursuant to Section 3.03(xi) hereof all Insurance Proceeds received from the PMI
Insurer under the terms of the Radian Master PMI Insurance Policy.
(c) Notwithstanding the provisions of (a) and (b) above, the
Servicer shall not take any action in regard to the Radian Master PMI Insurance
Policy inconsistent with the interests of the Trustee or the Certificateholders
or with the rights and interests of the Trustee or the Certificateholders under
this Agreement.
(d) The Trustee shall furnish the Servicer with any powers of
attorney and other documents (within fifteen (15) days upon request from the
Servicer) in form as provided to
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it necessary or appropriate to enable the Servicer to service and administer the
Radian Master PMI Insurance Policy; provided, however, that the Trustee shall
not be liable for the actions of the Servicer under such powers of attorney.
Section 3.17 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Serviced Mortgage
Loan hazard insurance such that all buildings upon the Mortgaged Property are
insured by a generally acceptable insurer against loss by fire, hazards of
extended coverage and such other hazards as are customary in the area where the
Mortgaged Property is located in an amount which is at least equal to the lesser
of (i) the current principal balance of such Serviced Mortgage Loan and (ii) the
amount necessary to fully compensate for any damage or loss to the improvements
that are a part of such property on a replacement cost basis, in each case in an
amount not less than the amount as is necessary to avoid the application of any
co-insurance clause contained in the related hazard insurance policy.
Any payments by the Servicer for hazard insurance, other than as set
forth in the last paragraph of this Section 3.17, shall be deemed Servicing
Advances, reimbursable in accordance with Section 3.04(ix), to the extent not
collected from the related Mortgagor. The Servicer will comply in the
performance of this Agreement with all reasonable rules and requirements of each
insurer under any such hazard policies. Any amounts to be collected by the
Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the property or amounts to be released to the Mortgagor
subject to the terms and conditions of the related Mortgage and Mortgage Note)
shall be deposited in the Trust Custodial Account, subject to withdrawal
pursuant to Section 3.04, if received in respect of a Serviced Mortgage Loan.
Any cost incurred by the Servicer in maintaining any such insurance shall not,
for the purpose of calculating distributions to Certificateholders, be added to
the unpaid principal balance of the related Serviced Mortgage Loan,
notwithstanding that the terms of such Serviced Mortgage Loan so permit. It is
understood and agreed that no earthquake or other additional insurance is to be
required of any Mortgagor other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property or REO Property is at any time
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards and flood insurance has been
made available, the Servicer will cause to be maintained a flood insurance
policy in respect thereof. Such flood insurance shall be in an amount equal to
the lesser of (i) the unpaid principal balance of the related Serviced Mortgage
Loan and (ii) the maximum amount of such insurance available for the related
Mortgaged Property under the national flood insurance program (assuming that the
area in which such Mortgaged Property is located is participating in such
program).
In the event that the Servicer shall obtain and maintain a blanket
policy with an insurer having a General Policy Rating of B:III or better in
Best's Key Rating Guide (or such other rating that is comparable to such rating)
insuring against hazard losses on all of the Serviced Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 3.17, it being understood and agreed that
such policy may contain a deductible clause, in which case the Servicer shall,
in the event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying
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with the first two sentences of this Section 3.17, and there shall have been one
or more losses which would have been covered by such policy, deposit to the
Trust Custodial Account from its own funds without right of reimbursement the
amount not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as administrator and servicer of the
Serviced Mortgage Loans, the Servicer agrees to prepare and present, on behalf
of itself, the Trustee and the Certificateholders, claims under any such blanket
policy in a timely fashion in accordance with the terms of such policy.
Section 3.18 Realization Upon Defaulted Serviced Mortgage Loans.
(a) The Servicer shall, consistent with Accepted Servicing
Practices, foreclose upon or otherwise comparably convert the ownership of
properties securing such of the Serviced Mortgage Loans (including selling any
such Serviced Mortgage Loans other than converting the ownership of the related
properties) as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments. The Servicer
shall be responsible for all costs and expenses incurred by it in any such
proceedings; provided, however, that such costs and expenses will be recoverable
as Servicing Advances by the Servicer as contemplated in Section 3.04. The
foregoing is subject to the provision that, in any case in which Mortgaged
Property shall have suffered damage from an uninsured cause, the Servicer shall
not be required to expend its own funds toward the restoration of such Mortgaged
Property unless in its determination such restoration will increase the proceeds
of liquidation of the related Serviced Mortgage Loan after reimbursement to
itself for such expenses.
(b) If the Servicer determines that it is in the best economic
interest of the Trust and the Certificateholders to sell a Distressed Mortgage
Loan rather than foreclosing, the Servicer may effect such a sale. The net
proceeds of such sale shall be Liquidation Proceeds.
(c) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds, Liquidation Proceeds or Condemnation Proceeds, in respect of
any Serviced Mortgage Loan, will be applied in the following order of priority:
first, to unpaid General Servicing Fees; second, to reimburse the Servicer or
any sub-servicer for any related unreimbursed Servicing Advances and Monthly
Advances pursuant to Section 3.04; third, to accrued and unpaid interest on the
Serviced Mortgage Loan, to the date of the Final Recovery Determination, or to
the Due Date prior to the Distribution Date on which such amounts are to be
distributed if not in connection with a Final Recovery Determination; and
fourth, as a recovery of principal of the Serviced Mortgage Loan. The portion of
the recovery so allocated to any unpaid Option One Servicing Fee shall be
reimbursed to the Servicer or any Sub-Servicer pursuant to Section 3.04.
Section 3.19 Enforcement of Due-On-Sale Clauses; Assumption Agreement.
The Servicer will, to the extent it has knowledge of any conveyance or
prospective conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute conveyance or contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Serviced Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto; provided, however,
that the Servicer shall not be required to take such action if in its sole
business
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judgment the Servicer believes it is not in the best interests of the Trust Fund
and shall not exercise any such rights if prohibited by law from doing so. If
the Servicer reasonably believes it is unable under applicable law to enforce
such "due-on-sale" clause, or if any of the other conditions set forth in the
proviso to the preceding sentence apply, the Servicer will enter into an
assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. The Servicer is also
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as the Mortgagor and becomes liable under the Mortgage
Note, provided that no such substitution shall be effective unless such person
satisfies the underwriting criteria of the Servicer and has a credit risk rating
at least equal to that of the original Mortgagor. In connection with any
assumption or substitution, the Servicer shall apply such underwriting standards
and follow such practices and procedures as shall be normal and usual in its
general mortgage servicing activities and as it applies to other mortgage loans
owned solely by it. The Servicer shall not take or enter into any assumption and
modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable hazard insurance policy. Any fee collected by
the Servicer in respect of an assumption, modification or substitution of
liability agreement shall be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including but not limited to the related Mortgage Interest Rate
and the amount of the Monthly Payment) may be amended or modified, except as
otherwise required pursuant to the terms thereof. The Servicer shall notify the
Trustee and the NIMS Insurer that any such substitution, modification or
assumption agreement has been completed by and to the Trustee, the Custodian the
executed original of such substitution, modification or assumption agreement,
which document shall be added to the related Mortgage File and shall, for all
purposes, be considered a part of such Mortgage File to the same extent as all
other documents and instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Serviced Mortgage Loan by operation of law or by the terms of the Mortgage Note
or any assumption which the Servicer may be restricted by law from preventing,
for any reason whatever. For purposes of this Section 3.19, the term
"assumption" is deemed to also include a sale (of the Mortgaged Property)
subject to the Mortgage that is not accompanied by an assumption or substitution
of liability agreement.
PAYMENTS TO MASTER SERVICER
Section 4.01 Remittances.
On each Remittance Date, no later than 3:00 p.m. New York City time,
the Servicer shall remit on a scheduled/scheduled basis by wire transfer of
immediately available funds to the Master Servicer (a) all amounts deposited in
the Trust Custodial Account as of the close of business on the last day of the
related Due Period (net of charges against or withdrawals from the
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Trust Custodial Account pursuant to Section 3.04), plus (b) all Monthly
Advances, if any, which the Servicer or other Advancing Person is obligated to
make pursuant to Section 4.03, minus (c) any amounts attributable to Principal
Prepayments, Liquidation Proceeds, Insurance Proceeds, Condemnation Proceeds or
REO Disposition Proceeds received after the applicable Due Period, which amounts
shall be remitted on the following Remittance Date, together with any additional
interest required to be deposited in the Trust Custodial Account in connection
with such Principal Prepayment in accordance with Section 3.03(vii), and minus
(d) any amounts attributable to Monthly Payments collected but due on a Due Date
or Due Dates subsequent to the first day of the month in which such Remittance
Date occurs, which amounts shall be remitted on the Remittance Date next
succeeding the Due Date related to such Monthly Payment.
With respect to any remittance received by the Master Servicer after
the second Business Day following the Business Day on which such payment was
due, the Servicer shall pay to the Master Servicer 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 (2) percentage points, but in no event greater than the
maximum amount permitted by applicable law. Such interest shall be deposited in
the Trust Custodial Account by the Servicer on the date such late payment is
made and shall cover the period commencing with the day following the Remittance
Date 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 Trustee.
All remittances required to be made to the Master Servicer shall be
made on a scheduled/scheduled basis to the following wire account or to such
other account as may be specified by the Master Servicer from time to time:
▇▇▇▇▇ Fargo Bank Minnesota,
National Association
Minneapolis, Minnesota
ABA# ▇▇▇-▇▇-▇▇▇
Account Name: Corporate Trust Account Number ▇▇▇▇▇▇▇▇▇▇
For further credit to: Custodial Account No. ▇▇▇▇▇▇▇▇
Section 4.02 Statements to Master Servicer.
Not later than the 16th calendar day of August 2001 and the 12th
calendar day of each subsequent month (or if such calendar day is not a Business
Day, the immediately succeeding Business Day), the Servicer shall furnish to the
Master Servicer and the NIMS Insurer (a) a monthly remittance advice in the
format set forth at Exhibit D hereto as to the accompanying remittance and the
period ending on the Determination Date and (b) all such information required
pursuant to clause (a) above on a magnetic tape or other similar media
reasonably acceptable to the Master Servicer and the NIMS Insurer. Such monthly
remittance advice shall also be provided by the Servicer to Aurora Loan Services
Inc. on behalf of the Seller.
Such monthly remittance advice shall also be accompanied with a
supplemental report provided to the Master Servicer, the NIMS Insurer and the
Seller which includes on an aggregate
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basis for the previous Due Period (i) the amount of claims filed, (ii) the
amount of any claim payments made, (iii) the amount of claims denied or
curtailed and (iv) policies cancelled with respect to those Serviced Mortgage
Loans covered by the Radian Master PMI Insurance Policy or any other provider of
primary mortgage insurance purchased by the Trust Fund. Such supplemental report
shall also include the aggregate amount of DA Dividends attributable to DAD
Mortgage Loans deposited into the DA Reserve Account for the related Due Period,
and the amount of DA Dividends remitted to the Master Servicer for the related
Due Period as a result of or relating to a DA Forfeiture Event by the related
Mortgagor. The Master Servicer will convert such data into a format acceptable
to the Trustee and provide monthly reports to the Trustee pursuant to the Trust
Agreement; provided, however, notwithstanding anything to the contrary contained
in the Radian Master PMI Insurance Policy, the Servicer shall not be required to
submit any supplemental reports including the foregoing data with respect to the
Radian Master PMI Insurance Policy until a reporting date that is at least 15
days after the Servicer has received sufficient loan level information from the
Depositor to appropriately code its servicing system in accordance with
requirements.
In addition, not more than 60 days after the end of each calendar year,
commencing December 31, 2001, the Servicer shall provide (as such information
becomes reasonably available to the Servicer) to the Master Servicer and the
NIMS Insurer such information concerning the Serviced Mortgage Loans and annual
remittances to the Master Servicer therefrom as is necessary for each
Certificateholder to prepare its federal income tax return. 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 to the
Master Servicer and the NIMS Insurer pursuant to any requirements of the Code as
from time to time are in force.
Beginning with calendar year 2002, the Servicer shall provide the
Master Servicer and the NIMS Insurer with such information concerning the
Serviced Mortgage Loans as is necessary for the Master Servicer to prepare the
Trust Fund's federal income tax return and for any investor in the Certificates
to prepare any required tax return.
Section 4.03 Monthly Advances by Servicer.
On the Business Day immediately preceding each Remittance Date, the
Servicer shall deposit in the Trust Custodial Account from its own funds or from
amounts held for future distribution, or both, an amount equal to all Monthly
Payments which were due on the Serviced Mortgage Loans during the applicable Due
Period and which were delinquent at the close of business on the immediately
preceding Determination Date. Any amounts held for future distribution and so
used shall be replaced by the Servicer by deposit in the Trust Custodial Account
on or before any future Remittance Date if funds in the Trust Custodial Account
on such Remittance Date shall be less than remittances to the Master Servicer
required to be made on such Remittance Date. The Servicer shall keep appropriate
records of such amounts and will provide such records to the Master Servicer and
the NIMS Insurer upon request. No provision in this Agreement shall be construed
as limiting the Servicer's right to (i) pass through late collections on the
related Serviced Mortgage Loans in lieu of making Monthly Advances (ii)
reimburse itself for such Monthly Advances from late collections on the related
Serviced Mortgage Loans or (iii) utilize an Advancing Person (as defined below).
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The Servicer shall make Monthly Advances through the Distribution 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 Serviced Mortgage Loans.
The Servicer may enter into a facility with any person which provides
that such person (an "Advancing Person") may fund Monthly Advances required
under this Section 4.03 and/or Servicing Advances, although no such facility
shall reduce or otherwise affect the Servicer's obligation to fund such Monthly
Advances and/or Servicing Advances. Any Monthly Advances and/or Servicing
Advances made by an Advancing Person shall be reimbursed to the Advancing Person
in the same manner as reimbursements would be made to the Servicer under Section
3.04 if such Monthly Advances or Servicing Advance were funded by the Servicer.
Section 4.04 Compensating Interest.
The Servicer shall be required to deposit in the Trust Custodial
Account, and retain therein with respect to each Principal Prepayment, the
Prepayment Interest Shortfall Amount, if any, for the related Due Period. Such
deposit shall be made from the Servicer's own funds, without reimbursement
therefore, up to an amount equal to the lesser of (i) the Prepayment Interest
Shortfall Amount or (ii) the General Servicing Fee. To the extent that the
Prepayment Interest Shortfall Amount exceeds the Option One Servicing Fee, the
Seller agrees to subordinate the Seller Remittance Amount to cover such
shortfall in any Compensating Interest Payment. The Servicer shall not be
obligated to pay any Prepayment Interest Shortfall Amount with respect to any
Relief Act Reduction.
Section 4.05 Credit Reporting.
For each Serviced Mortgage Loan, in accordance with its current
servicing practices, the Servicer will accurately and fully report its
underlying borrower credit files to each of the following credit repositories or
their successors: Equifax Credit Information Services, Inc., Trans Union, LLC
and Experian Information Solution, Inc., on a monthly basis in a timely manner.
ARTICLE V.
GENERAL SERVICING PROCEDURES
Section 5.01 Servicing Compensation; Seller Remittance Amount.
As consideration for servicing the Serviced Mortgage Loans subject to
this Agreement, the Servicer shall retain (a) the Option One Servicing Fee for
each Serviced Mortgage Loan remaining subject to this Agreement during any month
and (b) Ancillary Income. The Option One Servicing Fee shall be payable monthly.
The obligation of the Trustee to pay the Option One Servicing Fee is
limited as provided in Section 3.04(a)(iii). The aggregate of the Option One
Servicing Fees for any month with respect to the Serviced Mortgage Loans shall
be reduced by any Prepayment Interest Shortfall Amount with respect to such
month. In addition, the Seller Remittance Amount shall be used to
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pay the Prepayment Interest Shortfall Amount to the extent not covered by the
Option One Servicing Fee. The Servicer shall be entitled to recover any unpaid
Option One Servicing Fee and the Seller shall be entitled to recover the
Servicer Remittance Amount, to the extent not remitted, out of Insurance
Proceeds, Condemnation Proceeds or Liquidation Proceeds to the extent permitted
in Section 3.04 and out of amounts derived from the operation and sale of an REO
Property to the extent permitted by Section 3.12.
Additional servicing compensation in the form of Ancillary Income shall
be retained by the Servicer only to the extent such fees or charges are received
by the Servicer. The Servicer shall also be entitled pursuant to Section 3.04
and Section 3.06 to withdraw from the Trust Custodial Account and Escrow
Account, respectively, as additional servicing compensation, interest or other
income earned on deposits therein, subject to Section 3.11.
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.
Section 5.02 Annual Audit Report.
Not more than ninety days after the end of the Servicer's fiscal year
commencing with the fiscal year ending April 30, 2002, Servicer shall, at its
own expense, cause a firm of independent public accountants (who may also render
other services to Servicer), which is a member of the American Institute of
Certified Public Accountants, to furnish to the Seller, the NIMS Insurer and the
Master Servicer (i) year-end audited (if available) financial statements of the
Servicer and (ii) a statement to the effect that such firm has examined certain
documents and records for the preceding fiscal year (or during the period from
the date of commencement of such Servicer's duties hereunder until the end of
such preceding fiscal year in the case of the first such certificate) and that,
on the basis of such examination conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers, such firm is of the
opinion that Servicer's overall servicing operations have been conducted in
compliance with the Uniform Single Attestation Program for Mortgage Bankers
except for such exceptions that, in the opinion of such firm, the Uniform Single
Attestation Program for Mortgage Bankers requires it to report, in which case
such exceptions shall be set forth in such statement.
Section 5.03 Annual Officer's Certificate.
Not more than ninety days after the end of the Servicer's fiscal year
commencing with the fiscal year ending April 30, 2002 the Servicer, at its own
expense, will deliver to the Seller, the NIMS Insurer and the Master Servicer a
Servicing Officer's certificate stating, as to each signer thereof, that (i) a
review of the activities of the Servicer during such preceding fiscal year and
of performance under this Agreement has been made under such officers'
supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement for
such year, or, if there has been a default in the fulfillment of all such
obligations, specifying each such default known to such officers and the nature
and status thereof including the steps being taken by the Servicer to remedy
such default.
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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 Seller, the Depositor and the Master Servicer as of the Closing Date:
(a) Due Organization and Authority. The Servicer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and in good standing
in each state where a Mortgaged Property is located if the laws of such state
require licensing or qualification in order to conduct business of the type
conducted by the 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;
(b) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Servicer;
(c) 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 Serviced Mortgage Loans, or impair the value of the Serviced
Mortgage Loans;
(d) 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;
(e) No Litigation Pending. There is no action, suit, proceeding
or investigation pending or, to the best of our knowledge, threatened against
the Servicer which, either in any one instance or in the aggregate, may result
in any material adverse change in the
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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;
(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 Servicer of or compliance by the Servicer with
this Agreement;
(g) Ability to Service. The Servicer is an approved
seller/servicer of conventional residential mortgage loans for FNMA and FHLMC,
with the facilities, procedures, and experienced personnel necessary for the
sound servicing of mortgage loans of the same type as the Serviced Mortgage
Loans. The Servicer is in good standing to service mortgage loans for FHLMC. The
Servicer is a member in good standing of the MERS system, if applicable;
(h) No Untrue Information. Neither this Agreement nor any
statement, report or other document furnished or to be furnished by the Servicer
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains any untrue material statement of fact or omits to state a
material fact necessary to make the statements contained therein not misleading;
and
(i) 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 Seller.
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 the Closing Date hereunder and the delivery
of the Servicing Files to the Servicer and shall inure to the benefit of the
Seller, the Depositor, the Master Servicer and the Trustee. Upon discovery by
any of the Servicer, the Master Servicer, the Trustee, the Depositor, the NIMS
Insurer or the Seller 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 Serviced Mortgage Loans, the Mortgaged
Property, the priority of the security interest on such Mortgaged Property or
the interest of the Seller, the Depositor, the Master Servicer, the NIMS Insurer
or the Trustee, the party discovering such breach shall give prompt written
notice to the others.
Within 60 days of the earlier of either discovery by or notice to the
Servicer of a 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 Serviced 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
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such breach cannot be cured, the Servicer shall, at the Master Servicer's
option, assign the Servicer's rights and obligations under this Agreement (or
respecting the affected Serviced Mortgage Loans) to a successor Servicer. Such
assignment shall be made in accordance with Sections 9.01 and 9.02.
In addition, the Servicer shall indemnify the Seller, the Master
Servicer, the NIMS Insurer, the Depositor and the Trustee and hold each of them
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's 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 Seller, the Master Servicer, the Depositor,
the NIMS Insurer and the Trustee hereunder 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 Seller, the Master Servicer, the NIMS Insurer, the Depositor or the Trustee
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 Seller, the
Depositor, the Master Servicer, the NIMS Insurer or the Trustee for compliance
with this Agreement.
Section 6.03 Additional Indemnification by the Servicer; Third Party
Claims.
The Servicer shall indemnify the Seller, the Depositor, the Trustee,
the Master Servicer, the NIMS Insurer and the Trust Fund and hold them harmless
against any and all Costs that any such indemnified party may sustain in any way
related to (i) the failure of the Servicer to perform its duties and service the
Serviced Mortgage Loans in material compliance with the terms of this Agreement
or (ii) the failure of the Servicer to cause any event to occur which would have
occurred if the Servicer were applying Accepted Servicing Practices under this
Agreement. The Servicer shall immediately notify the Seller, Depositor, the
Master Servicer, the Trustee, the NIMS Insurer or any other relevant party if a
claim is made by a third party with respect to this Agreement or the Serviced
Mortgage Loans, assume (with the prior written consent of the indemnified party)
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 any indemnified party in respect of
such claim and follow any written instructions received from such indemnified
party in connection with such claim. The Servicer shall be promptly reimbursed
from the Trust Fund 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 Serviced Mortgage Loans in material compliance with
the terms of this Agreement. In the event a dispute arises between an
indemnified party and the Servicer 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 attorneys' fees and other costs and expenses related to the adjudication
of said dispute.
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Section 6.04 Indemnification with Respect to Certain Taxes and Loss of
REMIC Status.
In the event that any REMIC fails to qualify as a REMIC, loses its
status as a REMIC, or incurs federal, state or local taxes as a result of a
prohibited transaction or prohibited contribution under the REMIC Provisions due
to the negligent performance by the Servicer of its duties and obligations set
forth herein, the Servicer shall indemnify the Holder of the related Residual
Certificate, the NIMS Insurer, the Master Servicer and the Trust Fund against
any and all losses, claims, damages, liabilities or expenses ("Losses")
resulting from such negligence; provided, however, that the Servicer shall not
be liable for any such Losses attributable to the action or inaction of the
Trustee, the Depositor or the Holder of such Residual Certificate, as
applicable, nor for any such Losses resulting from misinformation provided by
the Holder of such Residual Certificate on which the Servicer has relied. The
foregoing shall not be deemed to limit or restrict the rights and remedies of
the Holder of such Residual Certificate, the NIMS Insurer or the Trust Fund now
or hereafter existing at law or in equity or otherwise. Notwithstanding the
foregoing, however, in no event shall the Servicer have any liability (1) for
any action or omission that is taken in accordance with and in compliance with
the express terms of, or which is expressly permitted by the terms of, this
Agreement, (2) for any Losses other than arising out of a negligent performance
by the Servicer of its duties and obligations set forth herein, and (3) for any
special or consequential damages to Certificateholders (in addition to payment
of principal and interest on the Certificates).
ARTICLE VII.
THE SERVICER
Section 7.01 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 Serviced 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, with the prior written consent of the Trustee, the Master
Servicer and the NIMS Insurer, 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 $15,000,000, and (ii) which
is acceptable to the NIMS Insurer and is a FHLMC-approved servicer in good
standing.
Section 7.02 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 Seller, the Master
Servicer, the NIMS Insurer, the Depositor or
41
the Trustee hereunder 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 Serviced 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 NIMS Insurer, the Trustee and the Master Servicer, undertake any
such action which it deems 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 Trust Fund for the reasonable legal
expenses and costs of such action.
Section 7.03 Limitation on Resignation and Assignment by the Servicer.
The Seller has entered into this Agreement with the Servicer 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 neither assign its rights
under this Agreement or the servicing hereunder nor delegate its duties
hereunder or any portion thereof, or sell or otherwise dispose of all or
substantially all of its property or assets without, in each case, the prior
written consent of the Seller, the Master Servicer, the NIMS Insurer and the
Trustee, which consent, in the case of an assignment of rights or delegation of
duties, shall be granted or withheld in the discretion of the Seller, the Master
Servicer, the NIMS Insurer and the Trustee, and which consent, in the case of a
sale or disposition of all or substantially all of the property or assets of the
Servicer, shall not be unreasonably withheld; provided, that in each case, there
must be delivered to the Seller, the Master Servicer, the NIMS Insurer and the
Trustee a letter from each Rating Agency to the effect that such transfer of
servicing or sale or disposition of assets will not result in a qualification,
withdrawal or downgrade of the then-current rating of any of the Certificates or
of the NIM Securities to be issued in the NIMS Transaction. Notwithstanding the
foregoing, the Servicer, without the consent of the Seller, the Master Servicer,
the NIMS Insurer and the Trustee, may retain third-party contractors to perform
certain servicing and loan administration functions, including without
limitation, hazard insurance administration, tax payment and administration,
flood certification and administration, collection services and similar
functions; provided, however, that the retention of such contractors by Servicer
shall not limit the obligation of the Servicer to service the Serviced Mortgage
Loans pursuant to the terms and conditions of this Agreement.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Seller, the Master Servicer, the
NIMS Insurer and the Trustee 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
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to the Seller, the Master Servicer, the NIMS Insurer and the Trustee which
Opinion of Counsel shall be in form and substance acceptable to the Seller, the
Master Servicer, the NIMS Insurer and the Trustee. No such resignation shall
become effective until a successor acceptable to the NIMS Insurer shall have
assumed the Servicer's responsibilities and obligations hereunder in the manner
provided in Section 9.01.
Without in any way limiting the generality of this Section 7.03, 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 Seller, the Master Servicer,
the NIMS Insurer and the Trustee, then such parties shall have the right to
terminate this Agreement upon notice given as set forth in Section 8.01, without
any payment of any penalty or damages and without any liability whatsoever to
the Servicer or any third party.
Section 7.04 Subservicing Agreements and Successor Subservicer.
(a) The Servicer may enter into subservicing agreements for any
servicing and administration of the Serviced Mortgage Loans with any institution
which (i) is an approved ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac Seller/Servicer as indicated
in writing, (ii) which represents and warrants that it is in compliance with the
laws of each state as necessary to enable it to perform its obligations under
such subservicing agreement and (iii) which is acceptable to the NIMS Insurer.
For this purpose, subservicing shall not be deemed to include the use of a tax
service, or services for reconveyance, insurance or brokering REO Property. The
Servicer shall give prior written notice to the Master Servicer, the NIMS
Insurer and the Trustee of the appointment of any subservicer and shall furnish
to the Master Servicer and the NIMS Insurer a copy of such subservicing
agreement. For purposes of this Agreement, the Servicer shall be deemed to have
received payments on Serviced Mortgage Loans immediately upon receipt by any
subservicer of such payments. Any such subservicing agreement shall be
acceptable to the NIMS Insurer and be consistent with and not violate the
provisions of this Agreement. Each subservicing agreement shall provide that a
successor Servicer shall have the option to terminate such agreement without
payment of any fees if the predecessor Servicer is terminated or resigns.
(b) The Servicer, with the prior written consent of the NIMS
Insurer, may terminate any subservicing agreement to which it is a party in
accordance with the terms and conditions of such subservicing agreement and
either itself directly service the related Serviced Mortgage Loans or enter into
a subservicing agreement with a successor subservicer that qualifies under
Section 7.04(a).
(c) Notwithstanding any subservicing agreement or the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a subservicer or reference to actions taken through a subservicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee, the Master Servicer, the NIMS Insurer and the Certificateholders for
the servicing and administering of the Serviced Mortgage Loans in accordance
with the provisions hereof without diminution of such obligation or liability by
virtue of such subservicing agreements or arrangements or by virtue of
indemnification from the subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. The Servicer shall be entitled to
43
enter into any agreement with a subservicer for indemnification of the Servicer
by such subservicer and nothing contained in this Agreement shall be deemed to
limit or modify such indemnification.
Section 7.05 Inspection.
The Servicer shall offer the Trustee, the Master Servicer and the NIMS
Insurer, upon reasonable advance notice, during normal business hours, access to
all records maintained by the Servicer in respect of its rights and obligations
hereunder and access to officers of the Servicer responsible for such
obligations. Upon request, the Servicer shall furnish to the Trustee, the Master
Servicer and the NIMS Insurer its most recent publicly available financial
statements and such other information relating to its capacity to perform its
obligations under this Agreement.
ARTICLE VIII.
TERMINATION
Section 8.01 Termination for Cause.
This Agreement shall be terminable at the option of the Trustee, the
Master Servicer or the NIMS Insurer 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 Master
Servicer any payment required to be made under the terms of this Agreement which
continues unremedied for a period of one Business Day after the date upon which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer by the Master Servicer or the NIMS Insurer; 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 15 days; or
(iii) failure by the Servicer to maintain its license to
do business or service residential mortgage loans in any jurisdiction, if
required by such 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
44
(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
(vii) the Servicer ceases to meet the qualifications of a
FNMA or FHLMC seller/servicer; or
(viii) the Servicer attempts to assign the servicing of
the Serviced Mortgage Loans or its right to servicing compensation hereunder or
the Servicer attempts 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, in each case without complying fully with the provisions of
Section 7.03.
In each and every such case, so long as an event of default shall not
have been remedied within the applicable cure period, in addition to whatever
rights the Trustee, the Master Servicer or the NIMS Insurer may have at law or
equity to damages, including injunctive relief and specific performance, the
Trustee, the Master Servicer or the NIMS Insurer, by notice in writing to the
Servicer, and with the consent of the other parties, 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 Serviced
Mortgage Loans or otherwise, shall pass to and be vested in a successor Servicer
appointed by the Trustee or the Master Servicer, as the case may be, with the
consent of the other party and the NIMS Insurer. Upon written request from the
Master Servicer, the Servicer shall prepare, execute and deliver to the
successor servicer, the Trustee or the NIMS Insurer 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 Serviced Mortgage Loans and
related documents, at the Servicer's sole expense. The Servicer shall cooperate
with the Master Servicer, the NIMS Insurer 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
Trust Custodial Account or Escrow Account or thereafter received with respect to
the Serviced Mortgage Loans.
By a written notice, the Trustee or the Master Servicer, with the
consent of the other party and the NIMS Insurer, or the NIMS Insurer 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.
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Section 8.02 Termination Without Cause.
(a) This Agreement shall terminate upon: (i) the later of (a)
the distribution of the final payment or liquidation proceeds on the last
Serviced Mortgage Loan to the Master Servicer or Trust Fund, and (b) the
disposition of all REO Property acquired upon foreclosure of the last Serviced
Mortgage Loan and the remittance of all funds due hereunder or (ii) mutual
consent of the Servicer and the Master Servicer in writing, provided such
termination is also acceptable to the Rating Agencies and the NIMS Insurer. In
addition, with the prior written consent of the Master Servicer and the NIMS
Insurer, the Seller may terminate this Agreement with respect to all of the
Serviced Mortgage Loans, without cause, provided, that the Seller gives the
Servicer 30 days' notice. Any such notice of termination shall be in writing and
delivered to the Servicer, the Master Servicer and the NIMS Insurer by
registered mail to the address set forth in Section 9.03. The Seller and the
Servicer shall comply with the termination procedures set forth in Section 9.01
hereof. In the case of Serviced Mortgage Loans which have been serviced by the
Servicer under the Bank Servicing Agreements less than six months prior to the
date of termination without cause under this Section 8.02, the termination fee
to be paid by the Seller from its own funds without reimbursement for a
termination of servicing without cause pursuant to this Section 8.02 shall be
equal to $15.00 per Serviced Mortgage Loan, payable no later than five Business
Days following the date of such termination. All unreimbursed Servicing Fees,
Servicing Advances and Monthly Advances still owing the Servicer shall be paid
by the Seller, or successor servicer, from its own funds within 5 Business Days
of the date of such termination without right of reimbursement from the Trust
Fund. In connection with any termination pursuant to clause (ii) of the first
sentence of this Section 8.02(a), all unreimbursed Option One Servicing Fees,
Servicing Advances and Monthly Advances still owing the Servicer shall be paid
at the time of such termination by the Trust Fund.
Upon a termination of the Servicer for cause pursuant to Section 8.01,
all unreimbursed Servicing Fees, Servicing Advances and Monthly Advances still
owing the Servicer shall be paid by the Trust Fund as such amounts are received
from the related Serviced Mortgage Loans. In connection with any termination
pursuant to the second sentence of this Section 8.02(a), the Seller or successor
servicer will be responsible for reimbursing the Servicer for all unreimbursed
out-of-pocket Servicing Advances, Monthly Advances and Servicing Fees and other
reasonable and necessary out-of-pocket costs associated with any transfer of
servicing at the time of such transfer of servicing. Any invoices received by
the Servicer after termination will be forwarded to the Seller, which such
Seller or successor servicer shall pay within five (5) Business Days upon
receipt from the Servicer.
(b) In the event that the Servicer decides to terminate its
obligations under this Agreement as set forth in clause (ii) of Section 8.02(a),
the Servicer agrees that it will continue to service the Serviced Mortgage Loans
beyond the prescribed termination date until such time as the Trustee, using
reasonable commercial efforts, is able to appoint a successor servicer
acceptable to the NIMS Insurer and the Master Servicer and otherwise meeting the
characteristics of Sections 7.01 and 9.01.
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Section 8.03 Termination for Distressed Mortgage Loans.
(a) Subject to the requirements set forth in this Section 8.03, the
Seller may terminate this Agreement with the prior consent of the Trustee, the
NIMS Insurer and the Master Servicer, with respect to the servicing of those
Serviced Mortgage Loans that are determined to be Distressed Mortgage Loans as
of the Notice Date and servicing of such Serviced Mortgage Loans shall be
transferred to the Special Servicer. The appointment of a Special Servicer by
the Seller and the execution of a special servicing agreement between the Seller
and the Special Servicer shall be subject to the consent of the Trustee, the
Master Servicer and the NIMS Insurer and the receipt of confirmation from the
Rating Agencies that the transfer of servicing to the Special Servicer shall not
result in a reduction of any rating previously given by such Rating Agency to
any Certificate or the NIMS Securities to be issued in the NIMS Transaction. Any
monthly fee paid to the Special Servicer in connection with any Serviced
Mortgage Loan serviced by such Special Servicer shall not exceed one-twelfth of
the product of (a) 0.50% and (b) the outstanding principal balance of such
Serviced Mortgage Loan. All unreimbursed Option One Servicing Fees, Servicing
Advances and Monthly Advances owing to the Servicer relating to such Distressed
Mortgage Loans shall be reimbursed and paid to the Servicer upon such transfer
to the Special Servicer.
(b) All reasonable costs and expenses incurred in connection with a
transfer of servicing to the Special Servicer including, without limitation, the
costs and expenses of the Trustee or any other Person in appointing a Special
Servicer, or of transferring the Servicing Files and the other necessary data to
the Special Servicer, shall be paid by the Seller from its own funds without
reimbursement. The Seller shall be responsible for the delivery of all required
Transfer Notices and will send a copy of the Transfer Notice to the Trustee.
(c) Notwithstanding the foregoing provisions of this Section 8.03, the
NIMS Insurer may, at its option, withhold their consent to the transfer of a
Distressed Mortgage Loan to a Special Servicer and elect to purchase such
Distressed Mortgage Loan at a price equal to its Purchase Price. Prior to such
purchase, the Servicer shall be required to continue to make Monthly Advances
with respect to such Distressed Mortgage Loan pursuant to Section 4.03. Any such
purchase of a Distressed Mortgage Loan shall be accomplished by remittance to
the Master Servicer for deposit in the Collection Account established pursuant
to Section 4.01 of the Trust Agreement of the amount of the Purchase Price. The
Servicers on behalf of the Trustee shall immediately effectuate the conveyance
of such Distressed Mortgage Loan to the NIMS Insurer to the extent necessary,
including the prompt delivery of all Servicing Files and other related
documentation to the NIMS Insurer.
ARTICLE IX.
MISCELLANEOUS PROVISIONS
Section 9.01 Successor to the Servicer.
Simultaneously with the termination of the Servicer's responsibilities
and duties under this Agreement (a) pursuant to Sections 6.02, 7.03, 8.01 or
8.02(a)(ii), the Master Servicer shall (i) within 90 days of the Servicer's
receipt of notice of such termination, succeed to and assume
47
all of the Servicer's responsibilities, rights, duties and obligations under
this Agreement (except that the Master Servicer shall immediately assume all of
the obligations of the Servicer to make Monthly Advances), or (ii) appoint a
successor having the characteristics set forth in clauses (i) and (ii) of
Section 7.01 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; or (b) as a result of termination of the
Servicer without cause by the Seller pursuant to Section 8.02 hereof, the Seller
shall appoint a successor having the characteristics set forth in clauses (i)
and (ii) of Section 7.01 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 subject to the approval of the Master Servicer, the NIMS
Insurer and the Trustee and, to the extent required by the Trust Agreement,
shall be a member in good standing of the MERS system (if any of the Serviced
Mortgage Loans are MERS Eligible Mortgage Loans, unless such Serviced Mortgage
Loans are withdrawn from MERS and Assignments of Mortgage are recorded in favor
of the Trustee at the expense of the successor Servicer). The final approval of
a successor servicer shall be conditioned upon the receipt by the Trustee, the
Master Servicer, the NIMS Insurer and the Seller of a letter from each Rating
Agency to the effect that such transfer of servicing will not result in a
qualification, withdrawal or downgrade of the then-current rating of any of the
Certificates or the NIMS Securities to be issued in the NIMS Transaction. In
connection with such appointment and assumption, the Master Servicer or the
Seller, as applicable, may make such arrangements for the compensation of such
successor out of payments on Serviced Mortgage Loans as it and such successor
shall agree, provided, however, that no such compensation shall be in excess of
the General Servicing Fee permitted under this Agreement. 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 servicer shall be appointed pursuant to this Section
9.01, or until the Master Servicer succeeds to and assumes all of the Servicer's
responsibilities, rights, duties and obligations pursuant to this Section 9.01,
and shall in no event relieve the Servicer of the representations and warranties
made pursuant to Section 6.01 and the remedies available to the Trustee, the
Master Servicer, the NIMS Insurer and the Seller under Section 6.02 and 6.03, it
being understood and agreed that the provisions of such Sections 6.01, 6.02 and
6.03 shall be applicable not only to such successor Servicer but also to the
Servicer notwithstanding any such resignation or termination of the Servicer, or
the termination of this Agreement. Notwithstanding the foregoing, the Master
Servicer, in its capacity as successor servicer, shall not be responsible for
the lack of information and/or documents that it cannot obtain through
reasonable efforts.
Within a reasonable period of time, but in no event longer than 30 days
after the appointment of a successor entity, 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
48
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. The Servicer shall
cooperate with the Master Servicer, the NIMS Insurer or the Seller, as
applicable, 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 Trust Custodial Account or
Escrow Account or thereafter received with respect to the Serviced Mortgage
Loans.
Any successor servicer appointed as provided herein shall execute,
acknowledge and deliver to the Trustee, the Servicer, the Master Servicer, the
NIMS Insurer and the Seller an instrument (i) accepting such appointment,
wherein the successor shall make the representations and warranties set forth in
Section 6.01 (including a representation that the successor servicer is a member
of MERS, unless none of the Serviced Mortgage Loans are MERS Mortgage Loans or
MERS Eligible Mortgage Loans or any such Serviced Mortgage Loans have been
withdrawn from MERS and Assignments of Mortgage are recorded in favor of the
Trustee) and provide for the same remedies set forth in Section 6.02 and Section
6.03 herein (ii) an assumption of the due and punctual performance and
observance of each covenant and condition to be performed and observed by the
Servicer under this Agreement, whereupon such successor servicer 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, 7.03, 8.01 or 8.02
shall not affect any claims that the Seller, the Depositor, the Master Servicer,
the NIMS Insurer or the Trustee may have against the Servicer arising out of the
Servicer's actions or failure to act prior to any such termination or
resignation. In addition, in the event any successor Servicer is appointed
pursuant to Section 8.03 of this Agreement, such successor Servicer must satisfy
the conditions relating to the transfer of servicing set forth in the Trust
Agreement.
The Servicer shall deliver promptly to the successor Servicer the funds
in the Trust Custodial Account and Escrow Account and all Serviced 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 the Trustee, the Master Servicer, the NIMS Insurer, the Seller and
the Depositor of such appointment in accordance with the procedures set forth in
Section 9.03.
Section 9.02 Costs.
The Seller shall pay any legal fees and expenses of its attorneys.
Costs and expenses incurred in connection with the transfer of the servicing
responsibilities pursuant to Section 9.01 or pursuant to any other provision of
this Agreement, including fees for delivering Servicing Files, shall be paid by
the Seller. Subject to Sections 2.02 and 3.01(a), the Seller shall pay the costs
associated with the preparation, delivery and recording of Assignments of
Mortgages.
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Section 9.03 Notices.
All demands, notices, consents, reports, directions, instructions,
statements and other 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 parties by like notice):
(i) if to the Seller:
Lehman Capital, A Division of
▇▇▇▇▇▇ Brothers Holdings Inc.
Three World Financial Center
New York, New York 10285
Attention: Manager, Contract Finance
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Servicer:
Option One Mortgage Corporation
3 Ada
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Contract Analyst
Technical Servicing Department
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) if to the Master Servicer:
▇▇▇▇▇ Fargo Bank Minnesota,
National Association
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Group
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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(iv) if to the Trustee:
Bank One, National Association
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Attention: Global Trust Services
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(v) if to the NIMS Insurer, as provided in the Trust
Agreement.
Any such communication hereunder shall be deemed to have been received
on the date delivered to or received at the premises of the addressee.
Section 9.04 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 Serviced 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 9.05 No Personal Solicitation.
From and after the related Closing 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 or
independent mortgage brokerage companies on the Servicer's behalf, to
personally, by telephone or mail, solicit the Mortgagor under any Serviced
Mortgage Loan for the purpose of refinancing such Serviced Mortgage Loan;
provided, that the Servicer may solicit any Mortgagor for whom the Servicer has
received a request for verification of mortgage status, a request for demand for
payoff, a mortgagor initiated written or verbal communication indicating a
desire to prepay the related Serviced Mortgage Loan, or the mortgagor initiates
a title search, provided further, it is understood and agreed that promotions
undertaken by the Servicer or any of its affiliates which (i) concern optional
insurance products or other additional projects or (ii) are directed to the
general public at large, including without limitation, mass mailings based on
commercially acquired mailing lists, newspaper, radio and television
51
advertisements shall not constitute solicitation under this Section 9.05 nor is
the Servicer prohibited from responding to unsolicited requests or inquiries
made by a Mortgagor or an agent of a Mortgagor.
Section 9.06 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 9.07 Place of Delivery and Governing Law.
This Agreement shall be deemed in effect when a fully executed
counterpart thereof is received by the Seller in the State of New York and shall
be deemed to have been made in the State of New York. THIS AGREEMENT SHALL BE
GOVERNED BY, AND 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, NOTWITHSTANDING
NEW YORK OR OTHER CHOICE OF LAW RULES TO THE CONTRARY.
Section 9.08 Further Agreements.
The Seller 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 9.09 Intention of the Parties.
It is the intention of the parties that the Seller is conveying, and
the Servicer is receiving, only a contract for servicing the Serviced Mortgage
Loans. Accordingly, the parties hereby acknowledge that the Trust Fund remains
the sole and absolute owner of the Serviced Mortgage Loans and all rights (other
than the servicing rights) related thereto.
Section 9.10 Successors and Assigns; Assignment of Servicing Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Servicer, the Seller, the Trustee, the NIMS Insurer and the
Master Servicer and their respective successors and assigns. This Agreement
shall not be assigned, pledged or hypothecated by the Servicer to a third party
except in accordance with Section 7.03 and shall not be assigned, pledged or
hypothecated by the Seller without the consent of the NIMS Insurer except as and
to the extent provided in Section 9.11.
Section 9.11 Assignment by ▇▇▇▇▇▇ Capital.
The Seller shall have the right, upon notice to but without the consent
of the Servicer, to assign, in whole or in part (but exclusive of the Seller's
rights and obligations as owner of the servicing rights relating to the Serviced
Mortgage Loans), its interest under this Agreement to the
52
Depositor, which in turn shall assign such rights to the Trustee, and the
Trustee then shall succeed to all rights of the Seller under this Agreement. All
references to the Seller in this Agreement shall be deemed to include its
assignee or designee and any subsequent assignee or designee, specifically
including the Trustee.
Section 9.12 Amendment.
This Agreement may be amended from time to time by the Servicer and the
Seller, with (i) the prior written consent of the Trustee and the NIMS Insurer
and (ii) the written agreement signed by the Master Servicer, the Seller and the
Servicer; provided that the party requesting such amendment shall, at its own
expense, provide the Trustee, the NIMS Insurer, the Master Servicer and the
Seller with an Opinion of Counsel that such amendment will not materially
adversely affect the interest of the Certificateholders in the Serviced Mortgage
Loans or the NIM Securities to be issued in the NIMS Transaction.
Section 9.13 Waivers.
No term or provision of this Agreement may be waived or modified unless
such waiver or modification is in writing, signed by the party against whom such
waiver or modification is sought to be enforced and is consented to by the NIMS
Insurer.
Section 9.14 Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 9.15 Intended Third Party Beneficiaries.
Notwithstanding any provision herein to the contrary, the parties to
this Agreement agree that it is appropriate, in furtherance of the intent of
such parties as set forth herein, that the Trustee and the NIMS Insurer receive
the benefit of the provisions of this Agreement as intended third party
beneficiaries of this Agreement to the extent of such provisions. The Servicer
shall have the same obligations to the Trustee and the NIMS Insurer as if they
were parties to this Agreement, and the Trustee and the NIMS Insurer shall have
the same rights and remedies to enforce the provisions of this Agreement as if
they were parties to this Agreement. The Servicer shall only take direction from
the Master Servicer (if direction by the Master Servicer is required under this
Agreement) unless otherwise directed by this Agreement or the Loss Mitigation
Advisory Agreement. Notwithstanding the foregoing, all rights and obligations of
the Trustee and the Master Servicer hereunder (other than the right to
indemnification) shall terminate upon the termination of the Trust Fund pursuant
to the Trust Agreement and all rights of the NIMS Insurer set forth in this
Agreement (other than the right of indemnification) shall exist only so long as
the NIM Securities issued pursuant to the NIMS Transaction remain outstanding or
the NIMS Insurer is owed amounts in respect of its guarantee of payment on such
NIMS Securities.
Section 9.16 Confidentiality.
The Trustee and the Master Servicer hereby agree to hold and treat all
Confidential Information (as defined below) in confidence and in accordance with
this Section 9.16. Such
53
Confidential Information will not, without the prior written consent of the
Servicer, be disclosed or used by the Trustee or the Master Servicer or by its
subsidiaries, affiliates, directors, officers, employees, agents or controlling
persons (collectively, the "Information Recipients") other than for the purpose
of taking permitted action under this Agreement or any other agreement.
Disclosure that is not in violation of the Right to Financial Privacy Act of
1978, as amended, the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of 1999 (the "G-L-B Act") or other
applicable law by the Trustee or the Master Servicer of any Confidential
Information at the request of its outside auditors or governmental regulatory
authorities in connection with an examination of the Trustee or the Master
Servicer by any such authority shall not constitute a breach of its obligations
under this Section 9.19, and shall not require the prior consent of the
Servicer.
As used herein, "Confidential Information" means non-public personal
information (as defined in the G-L-B Act and its enabling regulations issued by
the Federal Trade Commission) regarding borrowers. Confidential Information
shall not include information which (i) is or becomes generally available to the
public other than as a result of disclosure by the Trustee or the Master
Servicer or any of its Information Recipients; (ii) was available to the Trustee
or the Master Servicer on a non-confidential basis from a person or entity other
than the Servicer prior to its disclosure to the Trustee; (iii) is required to
be disclosed by a governmental authority or related governmental agencies or as
otherwise required by law; or (iv) becomes available to the Trustee or the
Master Servicer on a non-confidential basis from a person or entity other than
the Servicer who, to the best knowledge of the Trustee or the Master Servicer,
is not otherwise bound by a confidentiality agreement with the Servicer, and is
not otherwise prohibited from transmitting the information to the Trustee or the
Master Servicer.
Section 9.17 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
54
(f) the term "include" or "including" shall mean by reason of
enumeration.
Section 9.18 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.
55
IN WITNESS WHEREOF, the Servicer and the Seller have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the date first above written.
▇▇▇▇▇▇ BROTHERS HOLDINGS INC., as Seller
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Authorized Signatory
OPTION ONE MORTGAGE CORPORATION,
as Servicer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Secretary
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Master Servicer
By: /s/ ▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Assistant Vice President
Acknowledged by:
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. Kiernem
Title: Vice President
EXHIBIT A-1
Schedule of Serviced Mortgage Loans
(including data field indicating whether Serviced
Mortgage Loan is eligible to receive DA Dividends)
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
Schedule of Serviced Mortgage Loans
(Isolating those Serviced Mortgage Loans covered
by Radian Master PMI Insurance Policy)
A-2-1
EXHIBIT B
CUSTODIAL ACCOUNT LETTER AGREEMENT
_______ __, 20__
To:
---------------------------
---------------------------
---------------------------
(the "Depository")
As Servicer under the Servicing Agreement, dated as of July 1, 2001
(the "Agreement"), we hereby authorize and request you to establish two accounts
as Custodial Accounts pursuant to Section 3.03 of the Agreement, the first to be
designated as "[Name of Servicer] in trust for Bank One, National Association,
as Trustee for ARC 2001-BC5 Trust" and the second to the designated as " in
trust for ▇▇▇▇▇▇ Brothers Holdings Inc. and the various Mortgagors under the DA
Dividend Program." 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.
OPTION ONE MORTGAGE CORPORATION
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:
B-1
EXHIBIT C
ESCROW ACCOUNT LETTER AGREEMENT
_______ __, 20__
To:
---------------------------
---------------------------
---------------------------
(the "Depository")
As Servicer under the Servicing Agreement, dated as of July 1, 2001
(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 "[Name of Servicer] in trust for Bank One, National Association, as Trustee
for ARC 2001-BC5 Trust." 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.
OPTION ONE MORTGAGE CORPORATION
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:
C-1
EXHIBIT D
Wells Fargo Bank Master Servicing Default Reporting
DATA FIELD REQUIREMENTS
Data must be submitted to ▇▇▇▇▇ Fargo Bank in an Excel spreadsheet format with
fixed field names and data type. The Excel spreadsheet should be used as a
template consistently every month when submitting data.
Table: Delinquency
Name Type Character Size
---- ---- --------------
Servicer Loan # Number (Double) 10
Investor Loan # Number (Double) 10
Servicer Investor # Text 3
Borrower Name Text 20
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇ ▇
▇▇▇ ▇▇▇▇ 10
Due Date Date/Time 8
▇▇▇▇▇ Fargo Action Code Text 2
FC Approval Date Date/Time 8
File Referred to Attorney Date/Time 8
NOD Date/Time 8
Complaint Filed Date/Time 8
Sale Published Date/Time 8
Target Sale Date Date/Time 8
Actual Sale Date Date/Time 8
Loss Mit Approval Date Date/Time 8
Loss Mit Type Text 5
Loss Mit Code Number 2
Loss Mit Estimated Completion Date Date/Time 8
Loss Mit Actual Completion Date Date/Time 8
Loss Mit Broken Plan Date Date/Time 8
BK Chapter Text 6
BK Filed Date Date/Time 8
Post Petition Due Date/Time 8
Motion for Relief Date/Time 8
Lift of Stay Date/Time 8
Reason For Delinquency Text 10
Occupant Code Text 10
Eviction Start Date Date/Time 8
Eviction Completed Date Date/Time 8
List Price Currency 8
List Date Date/Time 8
Accepted Offer Price Currency 8
Accepted Offer Date Date/Time 8
D-1
Estimated REO Closing Date Date/Time 8
Actual REO Sale Date Date/Time 8
Servicer Comments Text 200
Modification Exp. Date Date/Time 8
FNMA Del. Status Code Text 2
FNMA Del. Reason Code Text 2
BK Discharge/Dismissal Date Date/Time 8
Property Damage Date Date/Time 8
Property Repair Amount Currency 8
BK Hearing Date Date/Time 8
POC Date Date/Time 8
POC Amount Currency 8
BK Case Number Text 30 Maximum
F/C Sale Amount Currency 8
Redemption Exp. Date Date/Time 8
Property Value Date Date/Time 8
Current Property Value Currency 8
Repaired Property Value Currency 8
BPO Y/N Text 1
Current LTV Currency 8
Property Condition Code Text 2
Property Inspection Date Date/Time 8
MI Cancellation Date Date/Time 8
MI Claim Filed Date Date/Time 8
MI Claim Amount Currency 8
MI Claim Reject Date Date/Time 8
MI Claim Resubmit Date Date/Time 8
MI Claim Paid Date Date/Time 8
MI Claim Amount Paid Currency 8
Pool Claim Filed Date Date/Time 8
Pool Claim Amount Currency 8
Pool Claim Reject Date Date/Time 8
Pool Claim Paid Date Date/Time 8
Pool Claim Amount Paid Currency 8
Pool Claim Resubmit Date Date/Time 8
FHA Part A Claim Filed Date Date/Time 8
FHA Part A Claim Amount Currency 8
FHA Part A Claim Paid Date Date/Time 8
FHA Part A Claim Paid Amount Currency 8
FHA Part B Claim Filed Date Date/Time 8
FHA Part B Claim Amount Currency 8
FHA Part B Paid Date Date/Time 8
FHA Part B Claim Paid Amount Currency 8
V A Claim Filed Date Date/Time 8
V A Claim Paid Date Date/Time 8
V A Claim Paid Amount Currency 8
D-2
The Action Code Field should show the applicable numeric code to indicate that a
special action is being taken. The Action Codes are the following:
12-Relief Provisions (i.e. Sailors & Soldiers Relief Act)
15-Bankruptcy/Litigation
20-Loss Mitigation-Workout
30-Referred for Foreclosure
▇▇-▇▇▇▇▇▇
▇▇-▇▇▇▇▇▇▇▇▇▇
▇▇-▇▇▇-▇▇▇▇ for Sale
71- Third Party Sale/Condemnation
72-REO-Pending Conveyance-Pool Insurance claim filed
▇▇▇▇▇ Fargo Bank will accept alternative Action Codes to those above, provided
that the Codes are consistent with industry standards. If Action Codes other
than those above are used, the Servicer must supply ▇▇▇▇▇ Fargo Bank with a
description of each of the Action Codes prior to sending the file.
Description of Action Codes:
---------------------------
Action Code 12- To report a Mortgage Loan for which the Borrower has been
granted relief for curing a delinquency.
Action Code 15 - To report a borrower filing bankruptcy and for all active
bankruptcies.
Action Code 20 - To report that the Borrower has agreed to some form of loss
mitigation/workout. Examples of these include Short Sale, Deed-in-Lieu of
Foreclosure, Formal Forbearance Agreements, Modifications, etc.
Action Code 30 - To report a loan that has been referred to attorney for
foreclosure.
Action Code 60 - To report that a Mortgage Loan has been paid in full either at,
or prior to, maturity.
Action Code 65- To report that the Servicer is repurchasing the Mortgage Loan.
Action Code 70 -To report that a Mortgage Loan has been foreclosed or a
deed-in-lieu of foreclosure has been accepted, and the Servicer, on behalf of
the owner of the Mortgage Loan, has acquired the property and may dispose of it.
Action Code 71 -To report that a Mortgage Loan has been foreclosed and a third
party acquired the property, or a total condemnation of the property has
occurred.
Action Code 72 -To report that a Mortgage Loan has been foreclosed, or a
deed-in-lieu has been accepted, and the property may be conveyed to the mortgage
insurer and the pool insurance claim has been filed. Also to be used for
completed HUDNA foreclosures where the property is pending conveyance to HUDNA.
D-3
The Loss Mit Type field should show the approved Loss Mitigation arrangement.
The following are acceptable:
o ASU M - Approved Assumption
o BAP - Borrower Assistance Program
o CO - Charge Off
o DIL - Deed-in-Lieu
o FFA - Formal Forbearance Agreement
o MOD - Loan Modification
o PRE - Pre-Sale
o SS - Short Sale
o MISC - Anything else approved by the PMI or Pool Insurer
▇▇▇▇▇ Fargo Bank will accept alternative Loss Mitigation Types to those above,
provided that they are consistent with industry standards. If Loss Mitigation
Types other than those above are used, the Servicer must supply ▇▇▇▇▇ Fargo Bank
with a description of each of the Loss Mitigation Types prior to sending the
file.
The Occupant Code field should show the current status of the property. The
acceptable codes are:
o Mortgagor
o Tenant
o Unknown
o Vacant
D-4
The RFD field should show the Reason for Default. The acceptable codes below
are; or we can accept FNMA Delinquency Reason Codes.
-------------------------------------- -----------------------------------------
Delinquency Code Delinquency Description
-------------------------------------- -----------------------------------------
AB Abandonment of property
-------------------------------------- -----------------------------------------
AA Arm Adjustment Problem
-------------------------------------- -----------------------------------------
BK Bankruptcy
-------------------------------------- -----------------------------------------
06 Borrower Complaint
-------------------------------------- -----------------------------------------
BOC Borrower Out of Country
-------------------------------------- -----------------------------------------
BU Business Failure
-------------------------------------- -----------------------------------------
CL Casualty Loss
-------------------------------------- -----------------------------------------
JC Change in Job
-------------------------------------- -----------------------------------------
CD Chronic Delinquent
-------------------------------------- -----------------------------------------
CSP Chronic Slow Pay
-------------------------------------- -----------------------------------------
CI Commission Income
-------------------------------------- -----------------------------------------
DIF Death in Family
-------------------------------------- -----------------------------------------
08 Deceased
-------------------------------------- -----------------------------------------
00 Defective Loan
-------------------------------------- -----------------------------------------
DT Delinquent Property Tax
-------------------------------------- -----------------------------------------
FIRE Disability
-------------------------------------- -----------------------------------------
DS Disregard
-------------------------------------- -----------------------------------------
Dl Divorce
-------------------------------------- -----------------------------------------
DD Domestic Difficulties
-------------------------------------- -----------------------------------------
EA Earthquake
-------------------------------------- -----------------------------------------
ENV Environmental
-------------------------------------- -----------------------------------------
ECO Excessive Credit Obligation
-------------------------------------- -----------------------------------------
FA Family Death
-------------------------------------- -----------------------------------------
FE Family Emergency
-------------------------------------- -----------------------------------------
FI Family Illness
-------------------------------------- -----------------------------------------
FD Financial Difficulty
-------------------------------------- -----------------------------------------
05 Foreclosure or Borrower moved or skipped
-------------------------------------- -----------------------------------------
FFP Formal Forbearance Plan
-------------------------------------- -----------------------------------------
FR Fraud
-------------------------------------- -----------------------------------------
G Garnishment
-------------------------------------- -----------------------------------------
HU Hurricane
-------------------------------------- -----------------------------------------
IT Illegal Transfer
-------------------------------------- -----------------------------------------
B1 Illness of Borrower
-------------------------------------- -----------------------------------------
IP Inability to Sell Property
-------------------------------------- -----------------------------------------
IC Incarcerated
-------------------------------------- -----------------------------------------
IN Income Reduction
-------------------------------------- -----------------------------------------
LIT Involved in Litigation
-------------------------------------- -----------------------------------------
IRS IRS Lien
-------------------------------------- -----------------------------------------
JD Judgment
-------------------------------------- -----------------------------------------
LB Language Barrier
-------------------------------------- -----------------------------------------
LM Legal Matter
-------------------------------------- -----------------------------------------
D-5
-------------------------------------- -----------------------------------------
LS Legal Separation
-------------------------------------- -----------------------------------------
MA Marital Difficulties
-------------------------------------- -----------------------------------------
ME Medical
-------------------------------------- -----------------------------------------
03 Medical/Illness in Family
-------------------------------------- -----------------------------------------
MD Mortgagor Death
-------------------------------------- -----------------------------------------
ND Natural Disaster
-------------------------------------- -----------------------------------------
NC No Contact with borrower
-------------------------------------- -----------------------------------------
NSF Non Sufficient Funds
-------------------------------------- -----------------------------------------
09 Other
-------------------------------------- -----------------------------------------
01 Over Obligated
-------------------------------------- -----------------------------------------
OV Overextended
-------------------------------------- -----------------------------------------
PAD Payment Dispute
-------------------------------------- -----------------------------------------
PP Payment Plan Established
-------------------------------------- -----------------------------------------
POP Payoff Pending
-------------------------------------- -----------------------------------------
PE Pending Sale
-------------------------------------- -----------------------------------------
PS Previous Servicer Problem
-------------------------------------- -----------------------------------------
PB Promise to Pay Broken
-------------------------------------- -----------------------------------------
PR Property Damage
-------------------------------------- -----------------------------------------
PD Property Devaluation
-------------------------------------- -----------------------------------------
REFI Refinance Pending
-------------------------------------- -----------------------------------------
RELO Relocation (Job Related)
-------------------------------------- -----------------------------------------
JRP Relocation (Personal)l
-------------------------------------- -----------------------------------------
RE Rental
-------------------------------------- -----------------------------------------
10 REO
-------------------------------------- -----------------------------------------
SI Seasonal Income
-------------------------------------- -----------------------------------------
SE Self Employed
-------------------------------------- -----------------------------------------
SP Servicing Problems
-------------------------------------- -----------------------------------------
SR Slow Receivables
-------------------------------------- -----------------------------------------
02 Unemployed/Reduced Income
-------------------------------------- -----------------------------------------
UE Unemployment
-------------------------------------- -----------------------------------------
UK Unknown
-------------------------------------- -----------------------------------------
UTP Unwilling to Pay
-------------------------------------- -----------------------------------------
D-6
EXHIBIT E
ARC 2001-BC5 TRUST AGREEMENT