EXECUTION COPY
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
EMC Mortgage Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ II, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
December 31, 1999
LIFE Bank
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: PURCHASE OF CERTAIN RESIDUAL SECURITIES AND RELATED SERVICING
Ladies and Gentlemen:
This letter agreement (this "AGREEMENT") sets forth the terms under
which Bear, ▇▇▇▇▇▇▇ & Co. Inc. ("BSC") is purchasing the securities described on
ANNEX A to this letter (the "RESIDUAL SECURITIES") and EMC Mortgage Corporation
("EMC") is purchasing the rights, interests and benefits relating to LIFE Bank
("SELLER" or "COMPANY") in and to each of the Pooling and Servicing Agreements
and/or Sale and Servicing Agreements; Indentures and Trust Agreements pursuant
to which each of the Residual Securities was issued (each, a "PSA"), such that
EMC acquires the rights, duties and obligations described on ANNEX B to this
agreement (the "PSA RIGHTS") from Seller. (BSC and EMC are referred to
collectively as the "PURCHASER"). All capitalized terms used in each annex
hereto shall have the meaning ascribed to them in this Agreement (whether
herein, in SCHEDULE I hereto, or any annex hereto, as applicable) unless
otherwise defined.
Section 1. Seller hereby sells, transfers, assigns and otherwise conveys
to BSC, and BSC hereby purchases, effective on the date hereof, all
of the right, title and interests of the Seller in, to and under the
Residual Securities absolutely and irrevocably (except as set forth
herein), and not for the purpose of security, on the terms and
conditions set forth herein.
Section 2. Seller hereby sells, transfers, assigns and otherwise conveys
to EMC, and EMC hereby purchases, effective on the date hereof, all
of the right, title and interests of the Seller in, to and under the
PSA Rights absolutely and irrevocably (except as set forth herein),
and not for the purpose of security, on the terms and conditions set
forth herein.
Section 3. The purchase price for the Residual Securities is an aggregate
of $5,157,568.00 (the "SECURITIES PURCHASE PRICE"), payable by wire
transfer on the Closing Date, allocated as set forth in ANNEX A,
plus a certain share of the Net Proceeds From Residual Securities
(as described in Section 13 below).
Section 4. The purchase price for the PSA Rights is an aggregate of
$1,969,771.00, payable by wire transfer in the following manner: (a)
90% on the Closing Date; (b) 8% on the Servicing Transfer Date; and
(c) 2% upon delivery to EMC of all completed Servicing Files.
Section 5. The cut-off date for all purposes shall be December 1, 1999
(the "CUT-OFF DATE"). BSC shall be entitled to all cash flow due on
the Residual Securities on and after the Cut-Off Date. The closing
date (the "CLOSING DATE") shall be the earlier of (a) the date
selected by each Purchaser after its satisfaction with its due
diligence review and (b) January 31, 2000, on which date the
transactions described in Sections 1 and 2 above shall be
consummated.
Section 6. For all purposes of this Agreement, the obligations of each of
BSC and EMC shall be several and not joint.
Section 7. Seller represents and warrants to Purchaser, as a material
inducement to Purchaser entering into this Agreement that each
representation, warranty and covenant contained in ANNEX C hereto is
true, correct and complete with respect to each mortgage loan
serviced by Seller pursuant to a PSA (each, a "MORTGAGE LOAN") as of
the date hereof, and will be true, correct and accurate as of the
Closing Date and the Servicing Transfer Date.
Section 8. EMC's acquisition, and Seller's sale, of the servicing of the
Mortgage Loans is subject to the terms, conditions and provisions of
ANNEX D attached hereto. Seller shall execute a credit derivative
not later than the Closing Date with respect to the Residual
Security identified on ANNEX A as LIFE Bank Asset-Backed
Certificates, Series 1998-1 in form and substance reasonably
acceptable to Purchaser and Seller (the "CREDIT DERIVATIVE"). The
Company shall provide EMC with reports with respect to Credit
Derivative Loans and shall provide EMC and the Trustee with any
other reports relating to Credit Derivative Loans required to be
delivered by the Company under the PSAs on the Remittance Date. The
Company shall provide to EMC copies of the investor reporting it
provides to the trustee pursuant to the PSAs with respect to all of
the Mortgage Loans subject to this Agreement. For purposes of this
Section, such reports shall be delivered commencing with the
December 1999 reports and shall be delivered to EMC, Investor
Reporting Department, Attn: ▇▇▇▇ ▇▇▇▇▇▇. Seller shall execute an
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Institutional Account Agreement ("IAA") in substantially the form
annexed hereto as Annex E not later than January 28, 2000. Seller
shall provide each of BSC and EMC with an Opinion of Counsel in form
and substance satisfactory to each, on which each may rely, to the
effect that the transactions described herein would be enforceable
in accordance with their terms notwithstanding the appointment of
the FDIC as a conservator or receiver for Seller.
Section 9. Seller shall sub-service the Mortgage Loans in accordance with
the provisions of ANNEX D attached hereto from the date hereof until
such time as servicing is actually transferred, which shall occur on
February 29, 2000, unless extended in EMC's sole discretion (the
"SERVICING TRANSFER DATE"),(provided that such Servicing Transfer
Date shall occur no later than March 31, 2000) except that Seller
shall continue to sub-service all Mortgage Loans subject to the
Credit Derivative (as defined above) (the "CREDIT DERIVATIVE LOANS")
after servicing is transferred. Seller shall remit to EMC on each
Remittance Date an amount equal to the Servicing Fee for each
Mortgage Loans sub-serviced. EMC shall pay to the Seller on the day
following the Remittance Date the Sub-servicing fee with respect to
the Mortgage Loans sub-serviced. As additional sub-servicing
compensation, the Seller shall retain all ancillary fees with
respect to the Mortgage Loans it sub-services, including payments in
the nature of late payment charges and assumption fees with respect
to the Mortgage Loans Seller sub-services. Notwithstanding that EMC
will be the servicer under the PSAs, Seller, as sub-servicer, shall
continue to make all principal and interest advances, all servicing
or servicer advances, and any such similar advances as may be
required under each PSA with respect to each Mortgage Loan
sub-serviced by Seller. At the time servicing is actually
transferred, EMC will reimburse Seller for all recoverable advances
(except with respect to Credit Derivative Loans) owed to Seller
under each PSA for 100% of the amount of the purchased advances.
Seller shall use good faith efforts to assist in preventing EMC from
being terminated as servicer by MBIA under the relevant PSAs as a
result of the pool of Mortgage Loans exceeding any limitations set
forth in the PSA.
Section 10. (a) The Company agrees to indemnify each Indemnified Party (as
defined below) and hold each Indemnified Party (as defined below)
harmless from and against any and all claims, losses, damages,
penalties, fines, forfeitures, legal fees and related costs,
including expenses and disbursements in giving testimony or
furnishing documents in response to a subpoena or otherwise,
judgments, and any other costs, fees and expenses that each
Indemnified Party may sustain in any way related to (i) any breach
of any representation or warranty contained in this Agreement, or
any acts or omissions on the part of the Company or any other Person
or entity in the origination, receiving, processing, funding or
servicing any Mortgage Loan prior to the Servicing Transfer Date or
otherwise arising from the transfer of servicing of the Mortgage
Loans provided for in this Agreement, (ii) any assertion based on,
grounded upon resulting from a breach of any of the Company's
representations and warranties contained herein, (iii) the Company's
inability to effect or cause the transfer of the servicing to EMC or
its designee on the Servicing Transfer Date, (iv) any breach by the
Company of the provisions of
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this Agreement, and (v) the failure of the Company to perform in any
way its duties and service the Mortgage Loans in strict compliance
with the terms of this Agreement. In addition to the obligations of
the Company set forth in this Section 10, the Purchaser may pursue
any and all remedies otherwise available at law or in equity,
including, but not limited to, the right to seek damages. The
provisions of this Section 10 shall survive termination of this
Agreement. These indemnification provisions shall be in addition to
any liability which the Seller may otherwise have to any Indemnified
Party. For purposes of this Section, losses or damages with respect
to clause (i) and (ii) above shall include the difference between
the unpaid principal balance of the affected Mortgage Loans and the
net amount realized after the liquidation of such affected Mortgage
Loans. In the event of the commencement of a receivership or other
similar proceeding with respect to the Company, the losses or
damages with respect to clauses (i) and (ii) above shall be measured
as of the date of the commencement of such proceeding and shall be
the difference between the unpaid principal balance of the affected
Mortgage Loans and the value of the related Mortgaged Property as
determined by an opinion of value of the related Mortgaged Property
by a broker selected by the Purchaser, minus costs anticipated to be
incurred in the holding and liquidation of the Mortgaged Property,
including legal fees. An "INDEMNIFIED PARTY" shall be each of The
Bear ▇▇▇▇▇▇▇ Companies Inc., Bear, ▇▇▇▇▇▇▇ & Co. Inc., EMC Mortgage
Corporation, and each of their respective affiliated entities,
directors, officers, employees, legal counsel, agents and
controlling persons (within the meaning of the federal securities
laws). All references to "Indemnified Party" in these
indemnification provisions shall be understood to include any and
all of the foregoing. Neither termination nor completion of this
Agreement shall affect these indemnification provisions which shall
then remain operative and in full force and effect.
(b) EMC agrees to indemnify the Seller and hold the Seller harmless
from and against any and all claims, losses, damages, penalties,
fines, forfeitures, legal fees and related costs, including expenses
and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise, judgments, and any other costs,
fees and expenses that the Seller may sustain in any way related to
(i) any breach of any representation or warranty of EMC contained in
this Agreement, or (ii) EMC's failure to pay when due any amounts
owed pursuant to Section 13 hereof.
Section 11. Purchaser may conduct due diligence, including, without
limitation, Mortgage File and Servicing File due diligence, ordering
and evaluating an opinion by a broker selected by Purchaser of the
price of any real estate subject to any Mortgage Loan, verification
of appraisal values, confirmation of loss severity, delinquency
rates, prepayment speeds, document review (including without
limitation, PSAs), and review of servicing facilities, data and
records.
Section 12. Purchaser may at any time prior to the Closing Date, on
written notice to Seller, rescind this Agreement if, in Purchaser's
sole discretion, (i) it is not satisfied with results of its due
diligence review, (ii) EMC has not received all consents required
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for it to service the Mortgage Loans and acquire the other PSA
Rights, (iii) an Event of Default shall have occurred and be
continuing or an event has occurred which, with the passage of time
would constitute an Event if Default, or (iv) there is a breach by
Seller of a representation, warranty or obligation in this
Agreement. If Purchaser rescinds this Agreement, this Agreement and
all of the rights and obligations of Purchaser and Seller hereunder
shall be null and void, except that Section 10 and this Section 12
shall survive and Seller shall remain liable for any damages due to
any breach by it of its obligations under this Agreement. If this
Agreement is rescinded by the Purchaser, Purchaser shall convey to
the Company all of the Purchaser's rights in an to the Residual
Securities and the PSA Rights that were acquired by the Purchaser
hereunder and the Company shall simultaneously convey all rights to
the Purchaser and any other property acquired by the Company
hereunder.
Section 13. (A) (i) On each Distribution Date prior to the Trigger Date
the Purchaser will apply Transaction Available Funds in the
following priority:
(a) to cover the Purchaser Regular Amount, plus the
amount of any Purchaser Amount Carryover;
(b) to the Adjusted Credit Derivative Amount until the
Adjusted Credit Derivative Amount is equal to $0;
(c) to the Adjusted Securities Purchase Price until the
Adjusted Securities Purchase Price is equal to $0;
(ii) On each Distribution Date on or after the Trigger Date
the Purchaser will apply Residual Securities Proceeds in the
following priority:
(a) 50% to Purchaser and 50% to Seller until such time
as Residual Securities Proceeds equal $0.
(B) Prior to any sale or securitization of any Mortgage Loans or
Residual Securities by the Purchaser to any third party not
affiliated with Buyer (each a "THIRD PARTY PURCHASER"), the
Purchaser shall, prior to entering into any commitment to sell or
securitize such Mortgage Loans or Residual Securities with any Third
Party Purchaser, first offer the Seller the right to purchase such
Mortgage Loans or Residual Securities on terms and conditions at
least as favorable for Purchaser as those to be provided by the
Third Party Purchaser). The Seller shall have no more than 2
Business Days to accept or reject such offer. At that time, the
Seller shall notify the Purchaser in writing of its decision to
accept or reject the offer. If the Seller accepts such offer, the
Purchaser shall sell such Mortgage Loans or Residual Securities to
the Seller pursuant to such terms and conditions (provided, that in
addition to the purchase price agreed upon by the Purchaser and the
Third Party Purchaser, the Seller shall pay to the Purchaser the
costs of any due diligence performed by the Purchaser or the Third
Party
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Purchaser with respect to the potential sale of such Mortgage Loans
or Residual Securities to the Third Party Purchaser).
Section 14. Company and Purchaser will each, at the request of the other,
execute and deliver to each other all such documents that either may
reasonably request in order to perfect the transfer, assignment and
delivery to Purchaser of the rights to be sold, transferred,
assigned and delivered as of the consummation of this Agreement.
Section 15. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if
delivered personally, telecopied (which is confirmed), or sent by an
overnight courier service, such as Federal Express, at the address
as follows:
(i) if to the Company:
LIFE Bank
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: W. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to EMC:
EMC Mortgage Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ II, Suite 200
Irving, Texas 75039
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
And
(iii) if to BSC:
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
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▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
Section 16. BSC may assign its rights under this Agreement, and may convey
the Residual Securities to EMC, in which case EMC shall be the
Purchaser under this Agreement with respect to the Residual
Securities for all purposes, and shall therefore succeed to all of
the rights and obligations of BSC under this Agreement.
Section 17. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors, and no
other Person or entity shall have any rights or obligations
hereunder. Except for an assignment by BSC to EMC as permitted by
Section 16 hereof, no party to this Agreement may assign any rights
or obligations hereunder without the prior written consent of the
other party.
Section 18. No amendment, modification, supplement, termination, consent
or waiver of this Agreement or any term or provision of this
Agreement shall be effective and binding unless in writing and
signed by Purchaser and Seller. Any such waiver shall be effective
only in the specific instance and for the specific purpose for which
it is given.
Section 19. This Agreement (i) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
Section 20. The parties shall negotiate in good faith to complete any
documentation necessary or appropriate to effect the transactions
described in this Agreement, including, but not limited to,
documentation required to be delivered under the PSAs to transfer
the servicing to EMC.
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Section 21. Each of Purchaser and Seller represents and warrants to the
other that it intends and will treat the transactions described
herein as a sale of the Residual Securities and PSA Rights. However,
if all or any portion of the transactions described in this
Agreement are determined to be a loan or loans, Seller shall be
deemed to have pledged to Purchaser as security for the performance
by Seller of its obligations under this Agreement and for any such
deemed loan, all of the Residual Securities, and the PSA Rights,
together with all Collateral under the IAA executed by Seller.
Section 22. Seller hereby grants a security interest in, and pledges to
Purchaser as security for the performance of Seller's obligations
under this Agreement, the Collateral described in the IAA.
Section 23. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
Section 24. THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION,
INTERPRETATION AND ENFORCEMENT HEREOF AND THE RIGHTS OF THE PARTIES
HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF. EACH OF THE
PARTIES HERETO SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF, AND
AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT MAY BE TRIED AND LITIGATED IN FEDERAL OR, IN THE
ABSENCE OF FEDERAL SUBJECT MATTER JURISDICTION, STATE COURTS LOCATED
IN THE COUNTY OF NEW YORK, STATE OF NEW YORK UNLESS SUCH ACTIONS OR
PROCEEDINGS ARE REQUIRED TO BE BROUGHT IN ANOTHER COURT TO OBTAIN
SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH OF
THE PARTIES WAIVES, TO THE FULLEST EXTENT PERMISSIBLE UNDER
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO ASSERT BY WAY OF MOTION, AS
A DEFENSE OR OTHERWISE, THE DOCTRINE OF FORUM NON CONVENIENS OR TO
OBJECT TO VENUE IN ANY PROCEEDING BROUGHT IN ACCORDANCE WITH THE
IMMEDIATELY PRECEDING SENTENCE. SERVICE OF PROCESS, SUFFICIENT FOR
PERSONAL JURISDICTION IN ANY ACTION AGAINST SUCH PARTY, MAY BE MADE
BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS
ADDRESS INDICATED IN SECTION 15.
Section 25. MERGER OR CONSOLIDATION OF THE COMPANY.
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The Company shall keep in full force and effect its existence,
rights and franchises as a federal savings bank under the laws of
its formation in the United States except as permitted herein, and
shall obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability
of this Agreement or any of the Mortgage Loans, and to enable the
Company to perform its duties under this Agreement.
Any Person into which the Company may be merged or consolidated, or
any corporation resulting from any merger, conversion or
consolidation to which the Company shall be a party, or any Person
succeeding to the business of the Company, shall be the successor of
the Company hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 26. COMPANY NOT TO RESIGN.
The Company shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by mutual consent
of the Company and the Purchaser or upon the determination that its
servicing duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Company in
which event the Company may resign as sub-servicer. Any such
determination permitting the resignation of the Company as
sub-servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Purchaser which Opinion of Counsel shall be
in form and substance acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have
assumed the Company's responsibilities and obligations hereunder in
the manner provided in Section 30.
Section 27. INTENTIONALLY OMITTED.
Section 28. DEFAULT
(a) EVENTS OF DEFAULT. In case one or more of the following Events
of Default by the Company in its capacity as sub-servicer
shall occur and be continuing, that is to say:
(i) any failure by the Company to remit to the Purchaser any
payment required to be made under the terms of this
Agreement which continues unremedied for a period of two
(2) Business Days; or
(ii) failure on the part of the Company duly to observe or
perform in any material respect any other of the
covenants or agreements on the part of the Company set
forth in this Agreement which continues unremedied for a
period of thirty (30) days (except that such number of
days shall be fifteen (15) in the case of a failure to
pay any premium for any insurance policy required to be
9
maintained under this Agreement) after the date on which
written notice of such failure, requiring the same to be
remedied, shall have been given to the Company by the
Purchaser; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a
conservator or receiver or liquidator in any insolvency,
bankruptcy, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have
been entered against the Company and such decree or
order shall have remained in force undischarged or
unstayed for a period of sixty (60) days; or
(iv) the Company shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency,
bankruptcy, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of, or relating
to, the Company or of, or relating to, all or
substantially all of its property; or
(v) the Company 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 or
reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment
of its obligations; or
(vi) failure by the Company to be in compliance with the
"doing business" or licensing laws of any jurisdiction
where a Mortgaged Property is located; or
(vii) the Company ceases to be approved by both of ▇▇▇▇▇▇ ▇▇▇
and ▇▇▇▇▇▇▇ Mac as a mortgage loan seller or servicer
for more than thirty days; or
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(viii) the Company attempts to assign its right to
sub-servicing compensation hereunder or the Company
attempts, without the consent of the Purchaser, 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; then, and in
each and every such case, so long as an Event of Default
shall not have been remedied, the Purchaser, by notice
in writing to the Company may, in addition to whatever
rights the Purchaser may have at law or equity to
damages, including injunctive relief and specific
performance, terminate all the rights and obligations of
the Company as sub-servicer under this Agreement. On or
after the receipt by the Company of such written notice,
all authority and power of the Company to sub-service
the Mortgage Loans under this Agreement shall on the
date set forth in such notice pass to and be vested in
the successor appointed pursuant to Section 30.
(b) WAIVER OF DEFAULTS. The Purchaser may waive in writing any
default by the Company in the performance of its obligations
hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any
right consequent thereon except to the extent expressly so
waived.
Section 29. TERMINATION; SERVICING TRANSFER.
(a) The respective obligations and responsibilities of the
Company, as sub-servicer, shall terminate at the expiration of
the Interim Servicing Period unless terminated on an earlier
date at the option of EMC or pursuant to Section 18. The
Company shall follow the servicing transfer instructions of
EMC, which are attached hereto as Annex D with respect to
servicing transfer procedures.
(b) Company shall assign to EMC its guaranteed life of loan tax
service contracts with Fidelity National Tax Service for each
Mortgage Loan on which servicing is transferred and, in the
event that Company does not presently have such lifetime
contracts for any or all of such Mortgage Loans or such
contracts are not assignable to EMC (or are not assignable to
EMC's real estate tax service firm) or such contracts are not
assignable to EMC without the payment of a fee or other cost,
Company agrees to pay all costs and fees necessary to obtain
such lifetime tax service contracts.
(c) Company shall assign to EMC its guaranteed life of loan flood
certification contracts with Chicago Title Flood Services for
each
11
Mortgage Loan on which servicing is transferred and, in the
event that Company does not presently have such lifetime
contracts for any or all of such Mortgage Loans or such
contracts are not assignable to EMC (or are not assignable to
EMC's flood certification firm) or such contracts are not
assignable to EMC without the payment of a fee or other cost,
Company agrees to pay all costs and fees necessary to obtain
such lifetime flood certification contracts.
(d) Company shall provide EMC with sufficient documentation and
information prior to the Servicing Transfer Date and shall
cooperate with EMC to the extent necessary to allow the
transfer of the lifetime tax service contracts and lifetime
flood certification contracts contemplated by this Section
within thirty (30) days after the Servicing Transfer Date so
as to prevent any lapse in coverage under such contracts.
(e) From time to time prior to the Servicing Transfer Date for the
servicing of any given Mortgage Loan, Company shall furnish to
EMC such reasonable and customary information supplementary to
the information contained in the documents and schedules
delivered pursuant hereto and file such reports as purchaser
may reasonably request.
Section 30. SUCCESSOR TO THE COMPANY.
(a) Prior to termination of the Company's sub-servicing
responsibilities and duties under this Agreement pursuant to
Section 18 or 29, EMC shall (i) succeed to and assume all of
the Company's sub-servicing responsibilities, rights, duties
and obligations under this Agreement, or (ii) appoint a
successor which shall succeed to all sub-servicing rights and
assume all of the responsibilities, duties and liabilities of
the Company as sub-servicer under this Agreement. In
connection with such appointment and assumption, the Purchaser
may make such arrangements for the compensation of such
successor out of payments on Mortgage Loans as it and such
successor shall agree. In the event that the Company's duties,
responsibilities and liabilities as sub-servicer under this
Agreement should be terminated pursuant to the aforementioned
Sections, the Company shall discharge such duties and
responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof
with the same degree of diligence and prudence which it is
obligated to exercise under this Agreement, and shall take no
action whatsoever that might impair or prejudice the rights or
financial condition of the Purchaser or such successor. The
termination of the Company as sub-servicer pursuant to the
aforementioned Sections shall not become effective until a
successor shall be appointed pursuant to this Section 30 and
shall in no event relieve the Company of the representations
and warranties made pursuant to Section 7 and the remedies
available to the Purchaser under this Agreement, it being
understood and agreed that the provisions of such
12
Sections shall be applicable to the Company notwithstanding
any such resignation or termination of the Company, or the
termination of this Agreement.
(b) The Company shall timely deliver to the successor the funds in
the custodial account, or other accounts established in
connection with servicing the Mortgage Loans under the PSAs
and such other accounts as the Company may hold as
sub-servicer for the Purchaser, and the Servicing Files and
related documents and statements held by it hereunder and the
Company shall account for all funds. The Company shall execute
and deliver such instruments and do such other things all as
may reasonably be required to more fully and definitely vest
and confirm in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Company
as sub-servicer. The successor shall make arrangements as it
may deem appropriate to reimburse the Company for amounts the
Company actually expended as sub-servicer pursuant to this
Agreement which the successor is entitled to retain hereunder
and which would otherwise have been recovered by the Company
pursuant to this Agreement but for the appointment of the
successor servicer.
Section 31. REPORTS.
The Purchaser agrees to provide to the Seller on a timely basis, (a)
any reports received by the Purchaser from the Trustee with respect
to the Residual Securities and the Mortgage Loans and (b) any
reports or files provided to the Trustee by EMC with respect to the
Residual Securities and the Mortgage Loans.
Section 32. SEVERABILITY CLAUSE.
Any part, provision, representation or warranty of this Agreement
which is prohibited or which is held to be void or unenforceable
shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this
Agreement which is prohibited or unenforceable or is held to be void
or unenforceable in any jurisdiction shall be ineffective, as to
such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereto waive any
provision of law which prohibits or renders void or unenforceable
any provision hereof. If the invalidity of any part, provision,
representation or warranty of this Agreement shall deprive any party
of the economic benefit intended to be conferred by this Agreement,
the parties shall negotiate, in good-faith, to develop a structure
the economic effect of which is nearly as possible the same as the
economic effect of this Agreement without regard to such invalidity.
Section 33. COUNTERPARTS.
13
This Agreement may be executed simultaneously in any number of
counterparts, and by facsimile, each of which shall be an original,
but all of which shall together constitute one and the same
instrument.
Section 34. INTENTION OF THE PARTIES.
It is the intention of the parties that the Purchaser is purchasing,
and the Company is selling the Residual Securities and PSA Rights,
and not a debt instrument of the Company or another security.
Accordingly, the parties hereto shall treat the transaction for
federal income tax purposes as a sale by the Company, and a purchase
by the Purchaser, of the Residual Securities and PSA Rights.
Section 35. WAIVERS.
No term or provision of this Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the
party against whom such waiver or modification is sought to be
enforced.
Section 36. EXHIBITS AND ANNEXES.
The exhibits and annexes to this Agreement are hereby incorporated
and made a part hereof and are an integral part of this Agreement.
Section 37. 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 "Sections," "Subsections," "Paragraphs,"
and other subdivisions without reference to a document are to
designated Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
(d) reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the
same Section in which the reference appears, and this rule
shall also apply to Paragraphs and other subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to
any particular provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
14
Section 38. 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.
Section 39. NONSOLICITATION.
The Company covenants and agrees that, it will not during the
remaining term of any of the individual Mortgage Loans take any
action or cause any action to be taken by any of its agents or
affiliates, or independent contractors working on its behalf, to
personally, by telephone or by mail, solicit the prepayment of any
Mortgage Loans, without the prior written consent and approval of
the Purchaser. It is understood and agreed that promotions
undertaken by Company which are directed to the general public at
large, including, without limitation, mass mailings based on
commercially acquired mailing lists, newspaper, radio and television
advertisements shall not constitute solicitation under this Section
38.
Section 40. SURVIVAL.
All covenants, agreements, representations and warranties and
indemnities made herein shall survive the execution and delivery of
this Agreement, the transfer of the Residual Securities and the PSA
Rights to the Purchaser and any subsequent transfer of the Residual
Securities or PSA Rights.
Section 41. SET-OFF.
In addition to any rights and remedies of the Purchaser provided by
this Agreement and by law, the Purchaser shall have the right,
without prior notice to the Seller, any such notice being expressly
waived by the Seller to the extent permitted by applicable law, upon
any amount becoming due and payable by the Seller hereunder or under
any PSA, to set-off and appropriate and apply against such amount
any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct
or indirect, absolute or contingent, matured or unmatured, at any
time held or owing by the Purchaser or any Affiliates thereof to or
for the credit or the account of the Seller. The Purchaser agrees
promptly to notify the Seller after any such set-off and application
made by the Purchaser; provided that the failure to give such notice
shall not affect the validity of such set-off and application.
15
Section 42. AUTHORIZATION.
It is a condition precedent to the effectiveness of this Agreement
that the Seller shall have delivered to the Purchaser a certified
true copy of the written authorization by the board of directors of
the Bank or its loan committee of the execution of the Agreement,
that such approval is reflected in the minutes of the board or such
committee, and that such record is an official record of the Seller
continuously from the time of its execution.
Section 43. ASSIGNMENT AND ASSUMPTION AGREEMENT.
The Assignment and Assumption Agreement dated as of January 28, 2000
by and between the Seller and EMC shall constitute the assignment by
the Seller to EMC of the Servicer Obligations (as defined in the
Assignment and Assumption Agreement). The foregoing such assignment
shall in no way supersede the additional agreements and
understandings set forth in this Agreement.
Section 44. LEGAL FEES
The Seller agrees to pay as and when billed by the Purchaser all the
fees, disbursements and expenses of counsel to the Purchaser in
connection with the development, preparation, negotiation and
execution of, and any amendment, supplement or modification to, this
Agreement, the Assignment and Assumption Agreement, the Credit
Derivative or any other documents prepared in connection herewith or
therewith.
16
Very truly yours,
EMC MORTGAGE CORPORATION
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
Accepted and Agreed:
LIFE BANK
By:
------------------------------------
Name: W. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Senior Vice President and CFO
17
SCHEDULE I
DEFINITIONS
For purposes of this Agreement the following capitalized terms shall have the
respective meanings set forth below.
"ACCEPTED SERVICING PRACTICES" shall mean, with respect to any
Mortgage Loan, those mortgage servicing practices (including collection
procedures) of prudent mortgage banking institutions which service mortgage
loans of the same type as such Mortgage Loan in the jurisdiction where the
related Mortgaged Property is located, giving due consideration to Purchaser's
reliance on Company, and which are in accordance with the applicable PSAs.
"ADJUSTED CREDIT DERIVATIVE AMOUNT" shall mean, as of any date of
determination, the Credit Derivative Amount plus any Credit Derivative IRR minus
any amounts applied pursuant to Section 13(A) or 13(B).
"ADJUSTED SECURITIES PURCHASE PRICE " shall mean, as of any date of
determination, the Securities Purchase Price plus any Adjusted Securities Price
IRR minus any amount applied pursuant to Section 13(A) or 13(B).
"ADJUSTED SECURITIES PURCHASE PRICE IRR" shall mean an amount equal to
a fifteen percent (15%) yield on the Adjusted Securities Purchase Price,
calculated as a bond equivalent yield.
"ALTA" means the American Land Title Association.
"APPRAISED VALUE" shall mean, with respect to any Mortgaged Property,
the lesser of (i) the value thereof as determined by an appraisal made for the
originator of the Mortgage Loan at the time of origination of the Mortgage Loan
by an appraiser who met the underwriting requirements of the originator, and
(ii) the purchase price paid for the related Mortgaged Property by the Mortgagor
with the proceeds of the Mortgage Loan.
"AGREEMENT" shall mean this letter agreement including all exhibits,
schedules, amendments and supplements hereto.
"BUSINESS DAY" shall mean any day other than a Saturday or Sunday, or
a day on which banking and savings and loan institutions in the States of either
New York or California are authorized or obligated by law or executive order to
be closed.
"CLOSING DATE" shall have the meaning provided in Section 5 hereof.
"CREDIT DERIVATIVE" shall have the meaning provided in Section 8 of
this Agreement.
"CREDIT DERIVATIVE AMOUNT" shall mean $3,000,000.
18
"CREDIT DERIVATIVE IRR" shall mean an amount equal to a fifteen
percent (15%) yield on the Adjusted Credit Derivative Amount, calculated as a
bond equivalent yield.
"CREDIT DERIVATIVE LOANS" shall have the meaning provided in Section 9
of this Agreement.
"CUT-OFF DATE" shall have the meaning provided in Section 5 of this
Agreement.
"DISTRIBUTION DATE" shall mean the tenth (10th) day of each month,
commencing on the tenth (10th) day of the month next following the month in
which the Cut-Off Date occurs, or if such tenth (10th) day is not a Business
Day, the first Business Day immediately following such tenth (10th) day.
"DUE DATE" shall mean the day of the month on which the Monthly
Payment is due on a Mortgage Loan, exclusive of any days of grace.
"ESCROW PAYMENTS" shall mean the amounts constituting ground rents,
taxes, assessments, water charges, sewer rents, fire and hazard insurance
premiums and other payments as may be required to be escrowed by the Mortgagor
with the Mortgagee pursuant to the terms of any Mortgage Note or Mortgage.
"EVENT OF DEFAULT" shall have the meaning provided in Section 28
hereof.
"▇▇▇▇▇▇ ▇▇▇" shall mean ▇▇▇▇▇▇ Mae or any successor thereto.
"FHA" shall mean the Federal Housing Administration, an agency within
the United States Department of Housing and Urban Development, or any successor
thereto and including the Federal Housing Commissioner and the Secretary of
Housing and Urban Development where appropriate under the FHA regulations.
"▇▇▇▇▇▇▇ MAC" shall mean ▇▇▇▇▇▇▇ Mac or any successor thereto.
"FIRREA" shall mean The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, as amended and in effect from time to time.
"HUD" shall mean 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 insurance. The term "HUD," for the
purposes of this Loan Agreement, is also deemed to include subdivisions thereof
such as the FHA.
"INSURANCE PROCEEDS" shall mean with respect to each Mortgage Loan,
proceeds of any insurance policy insuring the related Mortgaged Property.
"IAA" shall have the meaning provided in Section 8 hereof.
19
"INSURED DEPOSITORY INSTITUTION" shall have the meaning ascribed to
such term by Section 1813(c)(2) of Title 12 of the United States Code, as
amended from time to time.
"INTERIM SERVICING PERIOD" shall mean with respect to any Mortgage
Loan, the period during which the Company shall service the Mortgage Loans in
accordance with the provisions of this Agreement, commencing on the Closing Date
and ending on the Servicing Transfer Date, except, with respect to a Mortgage
Loan subject to the Credit Derivative, such period shall end on the date on
which such Mortgage Loan is fully and finally liquidated and all proceeds
distributed, and not on the Servicing Transfer Date.
"LOAN-TO-VALUE RATIO" or "LTV" shall mean with respect to any Mortgage
Loan as of origination, the ratio on such date of the outstanding principal
amount of the Mortgage Loan to the lesser of the Appraised Value of the
Mortgaged Property as of the origination date or the purchase price of the
Mortgaged Property.
"MONTHLY PAYMENT" shall mean with respect to any Mortgage Loan, the
scheduled combined payment of principal and interest payable by a Mortgagor
under the related Mortgage Note on each Due Date.
"MORTGAGE" shall mean the mortgage, deed of trust or other instrument
creating a first lien on the Mortgaged Property securing the Mortgage Note.
"MORTGAGEE" shall mean the mortgagee or beneficiary named in the
Mortgage and the successors and assigns of such mortgagee or beneficiary.
"MORTGAGE FILE" shall mean the items pertaining to a particular
Mortgage Loan.
"MORTGAGE LOAN" shall mean each fixed rate mortgage loan which backs a
Residual Security and is subject to a PSA.
"MORTGAGE LOAN DOCUMENTS" shall mean the documents listed in the PSA
pertaining to any Mortgage Loan.
"MORTGAGE NOTE" shall mean the original executed note or other
evidence of the Mortgage Loan indebtedness of a Mortgagor.
"MORTGAGED PROPERTY" shall mean the Mortgagor's real property securing
repayment of a related Mortgage Note.
"MORTGAGOR" shall mean the obligor on a Mortgage Note, the owner of
the Mortgaged Property and the grantor or mortgagor named in the related
Mortgage and such grantor's or mortgagor's successor(s) in title to the
Mortgaged Property.
"NET PROCEEDS FROM RESIDUAL SECURITIES" shall have the meaning
provided in Section 13 hereof.
20
"OFFICER'S CERTIFICATE" shall mean a certificate signed by the
Chairman of the Board or the Vice Chairman of the Board or a President or a Vice
President and by the Treasurer or the Secretary or one of the Assistant
Treasurers or Assistant Secretaries of the Person on behalf of whom such
certificate is being delivered.
"OPINION OF COUNSEL" shall mean a written opinion of counsel for the
Company, who may be salaried counsel for the Company, reasonably acceptable to
the Purchaser and the Company.
"PERSON" shall mean an individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PRIMARY MORTGAGE INSURANCE POLICY" shall mean each primary policy of
mortgage insurance represented to be in effect by the Company and issued by a
Qualified Insurer.
"PSA PURCHASE PRICE" shall have the meaning provided in Section 4
hereof.
"PSA RIGHTS" shall have the meaning provided in paragraph one hereof.
"PURCHASER AMOUNT CARRYOVER" shall mean with respect to any
Distribution Date, any accrued but unpaid Purchaser Regular Amount.
"PURCHASER RATE" on each day during the related period, shall mean one
month LIBOR plus 150 basis points per annum.
"PURCHASER REGULAR AMOUNT" shall mean, with respect to any
Distribution Date, an amount equal to the sum of (a) the product of (i) the
Purchaser Rate for the related period, (ii) the actual number of days in such
period divided by 365 and (iii) for each day within such period, the lesser of
(A) the Securities Purchase Price and (B) the Adjusted Securities Purchase
Price, minus, in each case, the Adjusted Securities Purchase Price IRR and (b)
the product of (i) the Purchaser Rate for the related interest period, (ii) the
actual number of days in such period divided by 365 and (iii) any Purchaser
Amount Carryover.
"QUALIFIED APPRAISER" shall mean a licensed appraiser, duly appointed
by the Company and acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, who had no interest,
direct or indirect in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or disapproval
of the Mortgage Loan, and such appraiser and the appraisal made by such
appraiser both satisfy the requirements of Title XI of FIRREA and the
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated.
"QUALIFIED INSURER" shall mean an insurance company duly qualified as
such under the laws of the states in which the Mortgaged Properties are located,
duly authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, approved as an insurer by ▇▇▇▇▇▇
Mae or ▇▇▇▇▇▇▇ Mac.
21
"REO PROPERTY" shall mean a Mortgaged Property acquired as a result of
the liquidation of a Mortgage Loan.
"REMITTANCE DATE" shall mean the 5th Business Day of each calendar
month.
"RESIDUAL SECURITIES" shall have the meaning provided in paragraph one
hereof.
"RESIDUAL SECURITIES PROCEEDS" is (a) the sum of (i) all amounts
received by Purchaser as distributions on the Residual Securities, (ii) all net
proceeds of any sale of a Residual Security, (iii) all net cash proceeds
attributable to any securitization of a Residual Security in a transaction that
is not recourse to Purchaser or any affiliate, (iv) amounts and cash flows
received by Purchaser from any security the Purchaser receives upon the sale or
securitization of a Residual Security (such security, a "SECURITIZED RESIDUAL")
but such amounts and cash flows shall be limited to any amounts and cash flows
received from such Securitized Residual that are allocable to the Residual
Securities (The amount allocable to a Residual Security in such a securitization
is to be determined by the Purchaser in its sole discretion) and (v) amounts and
cash flows received by the Purchaser in connection with owning or from any sale
of whole loans, following the optional termination of the Residual Securities.
"SECURITIES PURCHASE PRICE" shall have the meaning provided in Section
3 hereof.
"SELLER CREDIT DERIVATIVE PROCEEDS" shall mean payments made by LIFE
Bank pursuant to the Credit Derivative.
"SERVICING ADVANCES" shall mean all customary, reasonable and
necessary "out-of-pocket" costs and expenses incurred by the Company in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) preservation, restoration and repair of a Mortgaged Property, (ii)
any enforcement or judicial proceedings with respect to a Mortgage Loan,
including foreclosure actions and (iii) the management and liquidation of REO
Property.
"SERVICING FEE: shall mean the servicing fee for each Mortgage Loan
pursuant to the related PSA.
"SERVICING FILE" shall mean with respect to each Mortgage Loan, the
file retained by the Company consisting of originals of all documents in the
Mortgage File which are not held by a trustee or custodian under the applicable
PSA and copies of all documents held by a trustee or custodian under the
applicable PSA.
"SERVICING TRANSFER DATE" shall have the meaning provided in Section 9
of this Agreement, except with respect to Mortgage Loans subject to the Credit
Derivative.
"STATED PRINCIPAL BALANCE" shall mean as to each Mortgage Loan (i) the
principal balance of such Mortgage Loan as of the Cut-off Date, MINUS (ii) all
amounts thereafter distributed to the Purchaser with respect to the related
Mortgage Loan representing payments or recoveries of principal.
22
"SUB-SERVICING FEE" shall mean $15 per month for each Mortgage Loan
sub-serviced on the first day of each month, pro rated for any portion of such
month actually sub-serviced.
"TRANSACTION AVAILABLE FUNDS" shall mean, with respect to any monthly
period, an amount equal to the sum of (a) Seller Credit Derivative Proceeds and
(b) Residual Securities Proceeds.
"TRIGGER DATE" shall mean the date on which the Adjusted Securities
Purchase Price is equal to zero.
23
SCHEDULE II
UNDERWRITING GUIDELINES
ANNEX A
NAME OF SECURITY ORIGINAL PRINCIPAL CURRENT PRINCIPAL PURCHASE PRICE PERCENTAGE OF THE
---------------- ------------------ ------------------ --------------------------------
AMOUNT OF AMOUNT OF SECURITY CURRENT PRINCIPAL AMOUUNT OF SECURITY
--------- ------------------ -------------------------------------
SECURITY
---------
LIFE FINANCIAL HOME LOAN
CERTIFICATES, SERIES 1997-2
$125,000,000 $77,109,504 0.5%
RESIDUAL INTEREST CERTIFICATE
LIFE FINANCIAL HOME LOAN ASSET-
BACKED CERTIFICATES,
SERIES 1997-3 $250,000,000 $173,847,984 0.375%
RESIDUAL INTEREST CERTIFICATE
LIFE BANK ASSET-BACKED
CERTIFICATES,
SERIES 1998-1 $400,000,000 $285,993,272 1.44063%
RESIDUAL INTEREST CERTIFICATE
NAME OF SECURITY PRICE OF SERVICING SERVICING FEES
---------------- ------------------ --------------
LIFE FINANCIAL HOME LOAN
CERTIFICATES, SERIES 1997-2
50 BPS 100 BPS
RESIDUAL INTEREST CERTIFICATE
LIFE FINANCIAL HOME LOAN ASSET-
BACKED CERTIFICATES,
SERIES 1997-3 50 BPS 100BPS
RESIDUAL INTEREST CERTIFICATE
LIFE BANK ASSET-BACKED
CERTIFICATES,
SERIES 1998-1 25 BPS 50BPS
RESIDUAL INTEREST CERTIFICATE
ANNEX B
1. All of Seller's rights, interests and benefits in and to the
pooling and servicing agreements associated with the Residual
Securities, such that EMC acquires, among other things, (i) all of
Seller's rights to purchase the mortgage loans in each
securitization pool in accordance with the terms of the applicable
pooling and servicing agreements, other than with respect to the
Credit Derivative Loans, and (ii) all rights of Seller as
sub-servicer.
2. The Company shall assign to EMC all of its rights under (a) the
transferable life of loan flood service contracts relating to the
Mortgage Loans, including without limitation, flood service
contracts with Chicago Title and (b) the transferable guaranteed
life of loan tax service contracts relating to each Mortgage Loan,
including without limitation the tax service contracts with Fidelity
National Tax Service.
3. Assignment of Insurance. The Seller shall assign to EMC all of
its rights under all insurance relating to the Mortgage Loans,
including without limitation, hazard and flood policies, credit life
policies, and force-placed policies.
4. Other Income. All rights to receive income from or with respect
to Mortgage Loans, including, but not limited to, any fees, whether
as servicer, in certificated forms or otherwise.
5. Servicing Rights. The right to service the securitizations in
connection with which the Residual Securities were issued,
including, but not limited to, with respect to each Mortgage Loan,
any and all of the following: (a) all rights to service the Mortgage
Loan; (b) all rights to receive servicing fees, additional servicing
compensation (including without limitation any late fees, assumption
fees, penalties or similar payments with respect to the Mortgage
Loan), reimbursements or indemnification for servicing the Mortgage
Loan, and any payments received in respect of the foregoing and
proceeds thereof; (c) the right to collect, hold and disburse Escrow
Payments or other similar payments with respect to the Mortgage
Loans and any amounts actually collected with respect thereto and to
receive interest income on such amounts to the extent permitted by
applicable law; (d) all accounts and other rights to payment related
to any of the property described in this paragraph; (e) possession
or use of any and all Servicing Files pertaining to the Mortgage
Loans or pertaining to the past, present or prospective servicing of
the Mortgage Loans; (f) possession and use of any and all Servicing
Files pertaining to the Mortgage Loans or pertaining to the past,
present or prospective servicing of the Mortgage Loans; (g) all
rights and benefits
relating to the direct solicitation of the related Mortgagors for
refinance or modification of the Mortgage Loans and the attendant
right, title and interest in and to the list of such Mortgagors and
data relating to their respective Mortgage Loans; (h) all rights,
powers and privileges incident to any of the foregoing; and (i) all
agreements or documents creating, defining or evidencing any of the
foregoing rights to the extent they relate to such rights and all
rights of the Company thereunder.
6. All recoverable Servicing Advances with respect to Mortgage
Loans that are not Credit Derivative Loans.
27
ANNEX C
I. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
i. The Company is and will remain in compliance with the laws of each
state in which any Mortgaged Property is located to the extent necessary to
ensure the enforceability of each Mortgage Loan and the servicing of the
Mortgage Loan in accordance with the terms of this Agreement and each PSA;
ii. The Company has the full power and authority to hold each Mortgage
Loan, to sell each Residual Security, and to execute, deliver and perform, and
to enter into and consummate, all transactions contemplated by this Agreement.
The Company has duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this Agreement,
assuming due authorization, execution and delivery by BSC and EMC, and all
necessary transfer documents, and any agreements contemplated hereby,
constitutes a legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms except as the enforceability thereof may
be limited by bankruptcy, insolvency or reorganization, and all requisite
corporate action has been taken by the Company to make this Agreement and all
agreements contemplated hereby valid and binding upon the Company in accordance
with their terms;
iii. Neither the execution and delivery of this Agreement by the
Company, nor the origination of the Mortgage Loans by the Company, the sale of
the Residual Securities to the Purchaser, the consummation of the transactions
contemplated hereby, or the performance of or compliance with the terms and
conditions of this Agreement will conflict with any of the terms, conditions or
provisions of the Company's articles of incorporation or by-laws, or constitute
a default under or result in a breach or acceleration of, any material contract,
agreement or other instrument to which the Company is a party or which may be
applicable to the Company or its assets, or result in the material violation of
any law, rule, regulation, order, judgment or decree to which the Company or its
properties are subject, or impair the ability of the Purchaser to realize on the
Residual Securities;
iv. The Company is not in violation of, and the execution and
delivery of this Agreement by the Company and its performance and compliance
with the terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency having jurisdiction over the Company or
its assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of the
Company or its assets or might have consequences that would materially and
adversely affect the performance of its obligations and duties hereunder;
v. The Company does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant contained in this
Agreement. The Company is solvent and the sale of the Residual Securities will
not cause the Company to
become insolvent. The sale of the Residual Securities is not undertaken with the
intent to hinder, delay or defraud any of the Company's creditors;
vi. The Company is properly qualified to service the Mortgage Loans
and has been servicing the Mortgage Loans prior to the Cut-off Date;
vii. Immediately prior to the time ownership of the Residual
Securities is transferred to BSC, the Company was the owner of the Residual
Securities and not later than the payment of the Securities Purchase Price by
the Purchaser, the Purchaser shall own the Residual Securities free and clear of
all liens, claims and encumbrances suffered or incurred by the Company.
Immediately prior to the time ownership of the PSA Rights is transferred to EMC,
the Company was the owner of the PSA Rights and not later than the payment of
the PSA Purchase Price by the Purchaser, the Purchaser shall own the PSA Rights
free and clear of all liens, claims and encumbrances suffered or incurred by the
Company;
viii. There are no actions or proceedings against, or investigations
of, the Company before any court, administrative or other tribunal (A) that
might prohibit its entering into this Agreement, (B) seeking to prevent the sale
of the Residual Securities or PSA Rights or the consummation of the transactions
contemplated by this Agreement, (C) that might prohibit or materially and
adversely affect the performance by the Company of its obligations under, or the
validity or enforceability of, this Agreement or (D) that is reasonably likely
to have a material adverse effect on the financial condition of the Company;
ix. No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Company of, or compliance by the Company with, this Agreement
or the sale of the Residual Securities and PSA Rights and delivery of the
Mortgage Files (as defined in ANNEX D hereto) to the Purchaser or the
consummation of the transactions contemplated by this Agreement, except for such
consents, approvals, authorizations or orders, if any, that have been obtained
prior to the Closing Date, except with respect to the PSA Rights which shall be
obtained on or prior to January 31, 2000;
x. The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Company, and the
transfer, assignment and conveyance of the Residual Securities and PSA Rights by
the Company pursuant to this Agreement are not subject to the bulk transfer or
any similar statutory provisions in effect in any applicable jurisdiction;
xi. The origination and servicing practices used by the Company and
any prior originator or servicer with respect to each Mortgage Note and Mortgage
have been legal and in accordance with applicable laws and regulations, the
Mortgage Loan Documents, in accordance with Accepted Servicing Practices and in
all material respects proper and prudent in the mortgage origination and
servicing business. With respect to escrow deposits and payments (other than
with respect to second lien Mortgage Loans for which the mortgagee under the
prior lien is collecting Escrow Payments) that the Company is entitled to
collect, all such payments are in the possession of, or under the control of,
the Company, and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been
29
made. All Escrow Payments have been collected in full compliance with state and
federal law and the provisions of the related Mortgage Note and Mortgage. As to
any Mortgage Loan that is the subject of an escrow, escrow of funds is not
prohibited by applicable law and has been established in an amount sufficient to
pay for every escrowed item that remains unpaid and has been assessed but is not
yet due and payable. No escrow deposits or other charges or payments due under
the Mortgage Note have been capitalized under any Mortgage or the related
Mortgage Note;
xii. Company is an approved seller/servicer of residential mortgage
loans for (i) ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and (ii) HUD, with such facilities,
procedures and personnel necessary for the sound servicing of such mortgage
loans. The Company is duly qualified, licensed, registered and otherwise
authorized under all applicable federal state and local laws, and regulations,
if applicable, meets the minimum capital requirements set forth by its
regulator, and is in good standing to sell mortgage loans to and service
mortgage loans for ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and no event has occurred which
would make Company unable to comply with eligibility requirements or which would
require notification to both of ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac;
xiii. The Company's computer and other systems used in servicing the
Mortgage Loans have been modified and maintained to operate in a manner such
that all times, including on and after January 1, 2000, (i) the Company can
service the Mortgage Loans in accordance with the terms of this Agreement and
(ii) the Company can operate its business in the same manner as it is operating
on the date hereof. As of the Closing Date, Company's system has been certified
as passing all the requirements of the Federal Financial Institutions
Examination Council, which requirements are consistent with the Year 2000
requirements of ▇▇▇▇▇▇ Mae;
xiv. The Company will treat the sale of the Residual Securities and
PSA Rights to the Purchaser as a sale for reporting and accounting purposes and,
to the extent applicable, for federal income tax purposes;
xv. The Company acknowledges and agrees that the Servicing Fee and the
Sub-servicing Fee represents reasonable compensation for performing such
services and that the entire Servicing Fee and Sub-servicing Fee shall be
treated by the Company, for accounting and tax purposes, as compensation for the
servicing and administration of the Mortgage Loans pursuant to this Agreement.
In the opinion of Company, the consideration received by Company upon the sale
of the PSA Rights to Purchaser under this Agreement constitutes fair
consideration for such PSA Rights under current market conditions;
xvi. The Company has delivered to the Purchaser consolidated financial
statements for its last two complete fiscal years. All such financial
information fairly presents the pertinent results of operations and financial
position for the period identified and has been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as set forth in the notes thereto. The Company agrees
to provide to the Purchaser such other financial information as the Purchaser
may request. There has been no change in the business, operations, financial
condition, properties or assets of the Company since the date of the Company's
financial information that would have a material adverse effect on its ability
to perform its obligations under this Agreement;
30
xvii. The Company has not dealt with any broker, investment banker,
agent or other Person (other than the Purchaser) that may be entitled to any
commission or compensation in connection with the sale of the Residual
Securities or the PSA Rights;
xviii. The Company has the computer systems and the capability to
effect the servicing transfer via a "tape-to-tape" method or via a reasonably
acceptable electronic data processing method; and
xix. No statement, tape, diskette, form, report or document prepared
by, or on behalf of, or furnished by the Company to the Purchaser pursuant to
this Agreement, or in connection with the transactions contemplated hereby,
(including with respect to Purchaser's due diligence of the Mortgage Loans and
the Company) contains, or will contain, any statement that is, or will be,
inaccurate or misleading in any material respect.
xx. Each representation and warranty in each PSA was true, correct and
complete as of the date set forth in each PSA and as of each subsequent date set
forth in each PSA.
xxi. The Company is not in default under any PSA and no events or
circumstances have occurred which with the passage of time would result in a
default or an event of default under a PSA.
xxii. Neither the Company nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Residual Securities, any
interest in the Residual Securities or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other disposition of
the Residual Securities, any interest in the Residual Securities or any other
similar security from, or otherwise approached or negotiated with respect to the
Residual Securities, any interest in the Residual Securities or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action which would constitute a distribution of the Residual
Securities under the Securities Act of 1933 (the "33 Act") or which would render
the disposition of the Residual Securities a violation of Section 5 of the 33
Act or require registration pursuant thereto.
xxiii. The Company is an Insured Depository Institution and
accordingly, the Company makes the following additional representations and
warranties:
(a) The Agreement does not violate any statutory or regulatory
requirements applicable to the Company;
(b) The Agreement has been (1) executed contemporaneously with the
definitive agreement reached by the Purchaser and the Company, (2) approved by a
specific resolution by the Company's board of directors, which approval shall be
reflected in the minutes of said board, and (3) entered into the official
records of the Company, a copy of which approvals, certified by a vice president
or higher officer of the Company, has been provided to the Purchaser;
31
xxiv.The aggregate amount of the Securities Purchase Price between the
Purchaser and the Company does not exceed any restrictions or limitations
imposed by the board of directors of the Company.
II. REPRESENTATIONS AND WARRANTIES RESPECTING EMC
EMC hereby represents and warrants to the Company as of the Closing
Date that:
i. EMC is a corporation, validly existing and in good standing under the
laws of the State of Delaware and is qualified to transact business in, is in
good standing under the laws of, and possesses all licenses necessary for the
conduct of its business in, each state in which any Mortgaged Property is
located or is otherwise exempt or not required under applicable law to effect
such qualification or license;
ii. EMC has full power and authority to purchase and hold the PSA rights
pursuant to this Agreement and to execute, deliver and perform, and to enter
into and consummate all transactions contemplated by this Agreement and to
conduct its business as presently conducted, has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and delivered this
Agreement;
iii. None of the execution and delivery of this Agreement, the purchase of
the PSA rights, the consummation of the transactions contemplated hereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement
will conflict with any of the terms, conditions or provisions of EMC's charter
or by-laws or materially conflict with or result in a material breach of any of
the terms, conditions or provisions of any legal restriction or any agreement or
instrument to which EMC 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 material violation of any law, rule, regulation, order, judgment or decree
to which EMC or its property is subject;
iv. There is no litigation pending or to the best of EMC's knowledge,
threatened with respect to EMC which is reasonably likely to have a material
adverse effect on the purchase of the related PSA rights, the execution,
delivery or enforceability of this Agreement, or which is reasonably likely to
have a material adverse effect on the financial condition of EMC;
v. No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by EMC of or compliance by EMC with this Agreement, the purchase of
the PSA rights or the consummation of the transactions contemplated by this
Agreement except for consents, approvals, authorizations and orders which have
been obtained; and
vi. The consummation of the transactions contemplated by this Agreement is
in the ordinary course of business of EMC.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY REGARDING
INDIVIDUAL MORTGAGE LOANS.
32
i. The information set forth in the Annex E hereto with respect to the
Mortgage Loan is complete, true and correct in all material respects.
ii. Each Mortgage Loan was originated or acquired and otherwise
underwritten by the Company pursuant to the underwriting guidelines of the
Company (a copy of the Company's underwriting guidelines being attached hereto
as Schedule II);
iii. There is no valid offset, right of rescission, defense or
counterclaim of any obligor under any Mortgage Note, including the obligation of
the Mortgagor to pay the unpaid principal of or interest on such Mortgage Note,
and any applicable right of rescission has expired, nor will the operation of
any of the terms of such Mortgage Note or Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage unenforceable, in
whole or in part, or subject to any right of rescission, set-off, recoupment,
counterclaim or defense, including, without limitation, the defense of usury,
and no such right of rescission, set-off, recoupment, counterclaim or defense
has been asserted with respect thereto;
iv. [RESERVED];
v. As of the date of origination of the Mortgage Loan, there was and there
currently is no material damage to any Mortgaged Property or hazard insurance is
in effect which fully covers such damage. At origination of the Mortgage Loan
there was not, and since origination of the Mortgage Loan there has not been and
there currently is no, proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property. The Company has not received
notification that any such proceedings are scheduled to commence at a future
date;
vi. Each Mortgage is a valid, subsisting, enforceable and perfected (a)
first lien and first priority security interest with respect to each first lien
Mortgage Loans or (b) second lien and second priority security interest with
respect to each second lien Mortgage Loan, in either case, on the Mortgaged
Property securing the related Mortgage Note, subject to principles of equity,
bankruptcy, insolvency and other laws of general application affecting the
rights of creditors. The Mortgage and the Mortgage Note do not contain any
evidence of any security interest or other interest or right thereto. Each
Mortgaged Property is owned by the Mortgagor in fee simple and is free and clear
of all adverse claims, encumbrances and liens having priority over the first
lien of the Mortgage, subject only to (1) the lien of nondelinquent current real
property taxes and assessments not yet due and payable, (2) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions generally
and specifically reflected in the appraisal made in connection with the
origination of the related Mortgage Loan or referred to in the lender's title
insurance policy delivered to the originator of the related Mortgage Loan, (3)
other matters to which like properties are commonly subject which do not
individually or in the aggregate materially interfere with the benefits of the
security intended to be provided by such Mortgage or the use, enjoyment, value
or marketability of the related Mortgaged Property and (4) with respect to each
second lien Mortgage Loan, a first lien on the Mortgaged Property. Any security
33
agreement, chattel mortgage or equivalent document related to and delivered in
connection with the Mortgage Loan establishes and creates a valid, subsisting
and enforceable (a) first lien and first priority security interest with respect
to each first lien Mortgage Loan or (b) second lien and second priority security
interest with respect to each second lien Mortgage Loan, on the property
described therein, and immediately prior to the sale of such Mortgage Loan to
the Purchaser pursuant to this Agreement, the Company had full right to sell and
assign the same to the Purchaser;
vii. Each Mortgage Loan is being serviced in accordance with
applicable state and federal laws, including, without limitation, the Federal
Truth-In-Lending Act and other consumer protection laws, real estate settlement
procedures, usury, equal credit opportunity and disclosure laws. Company shall
maintain in its possession during the Interim Servicing Period, available for
the Purchaser's inspection, as appropriate, and shall deliver to the Purchaser
or its designee upon demand, evidence of compliance with all such requirements;
viii. Neither the Company nor any prior holder of any Mortgage Loan
has impaired, waived, altered or modified the Mortgage or Mortgage Note (except
that a Mortgage Loan may have been modified by a written instrument (a copy of
which is in the Mortgage File and the terms of which are reflected on the
Mortgage Loan Schedule (as defined in the PSA) which has been recorded, if
necessary to protect the interests of the owner of such Mortgage Loan; the
substance of any such waiver, alteration or modification has been approved by
the issuer of any related Primary Mortgage Insurance Policy and title insurance
policy, to the extent required by the related policies); satisfied, canceled,
rescinded or subordinated such Mortgage in whole or in part (other than the
subordination of a second lien Mortgage Loan to the prior mortgage); released
the applicable Mortgaged Property in whole or in part from the lien of such
Mortgage; or executed any instrument of cancellation, rescission or satisfaction
with respect thereto. No instrument of release or waiver has been executed in
connection with any Mortgage Loan, and no Mortgagor has been released, in whole
or in part from its obligations in connection with a Mortgage Loan;
ix. Each Mortgage Loan is covered by an ALTA lender's title insurance
policy or equivalent form of policy or insurance acceptable to ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac in a form acceptable to, and issued by a title insurer acceptable
to, ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, together with all applicable ALTA endorsements,
including without limitation and where applicable, a condominium endorsement, a
planned unit development endorsement, an extended coverage endorsement, and an
8.1 ALTA or equivalent environmental endorsement, insuring the Company, its
successors and assigns, as to (a) the first lien priority of the Mortgage with
respect to first lien Mortgage Loans (subject to the exceptions contained in (v)
(1), (2), and (3) above) and (b) the second lien priority of the Mortgage with
respect to second lien Mortgage Loans, in an amount at least equal to the
original principal amount of each such Mortgage Loan. Each title insurance
policy affirmatively insures ingress and egress and insures against
encroachments by or upon the Mortgaged Property, and each such policy was issued
on the date of the origination of each related Mortgage Loan by a title insurer
qualified to do business in the jurisdiction where the Mortgaged Property is
located. The Company, its successors and assigns, are the sole insured of such
lender's title insurance policy, such title insurance policy has been duly and
validly endorsed to the Purchaser or the assignment to the Purchaser of the
Company's
34
interest therein does not require the consent of or notification to the insurer
and such lender's title insurance policy is in full force and effect and will be
in full force and effect upon the consummation of the transactions contemplated
by this Agreement. Where required by law or regulation, the Mortgagor has been
given the opportunity to choose the carrier of the required mortgage title
insurance. No claims have been made under such lender's title insurance policy,
and no prior holder of the related Mortgage, including the Company, has done, by
act or omission, anything which would impair the coverage of such lender's title
insurance policy;
x. As of the date of origination, all of the improvements which were
included for the purpose of determining the Appraised Value of the Mortgaged
Property lie wholly within the boundaries and building restriction lines of such
property (and wholly within the project with respect to a condominium unit), and
no improvements on adjoining properties encroach upon the Mortgaged Property;
xi. [Reserved];
xii. The originator was and the Servicer is (A) in compliance with any
and all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located, and (B) (1) organized under the laws of such
state, or (2) qualified to do business in such state, or (3) federal savings and
loan associations or national banks having principal offices in such state, or
(4) not doing business in such state;
xiii. There are no defaults by Company in complying with the terms of
the Mortgage, and (except for the Mortgage Loans hereto which shall not be more
than 2% of the Mortgage Loans, other than the Credit Derivative Loans) all
taxes, governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents or other outstanding charges
affecting the Mortgaged Property which previously became due and owing have been
paid, or escrow funds have been established in an amount sufficient to pay for
every such escrowed item which remains unpaid and which has been assessed but is
not yet due and payable. Except for the Mortgage Loans hereto which shall not be
more than 2% of the Mortgage Loans, there exist no deficiencies with respect to
escrow deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made, and no escrow deficits or
payments of other charges or payments due the Company have been capitalized
under the Mortgage or the applicable Mortgage Note. With respect to each
Mortgage Loan which is a second lien Mortgage Loan, (i) the senior mortgage is
in full force and effect, (ii) there is no default, breach, violation or event
of acceleration existing under such senior mortgage or the related mortgage
note, (iii) no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration thereunder, and either (A) the senior
mortgage contains a provision which allows or (B) applicable law requires, the
mortgagee under the second lien Mortgage Loan to receive notice of, and affords
such mortgagee an opportunity to cure any default by payment in full or
otherwise under the senior mortgage;
xiv. The buildings and improvements upon each Mortgaged Property as of
the date of origination of the related Mortgage Loans are insured by a Qualified
Insurer pursuant to a standard, valid and existing hazard insurance policy
acceptable to ▇▇▇▇▇▇ ▇▇▇ which policy
35
insures against loss by fire, hazards of extended coverage and such other
hazards as are provided for in the ▇▇▇▇▇▇ Mae Guides representing coverage in an
amount not less than the lesser of (A) the maximum insurable value of the
improvements securing such Mortgage Loan and (B) the outstanding principal
balance of the related Mortgage Loan, but in no event an amount less than an
amount that is required to prevent the Mortgagor from being deemed to be a
co-insurer thereunder. All individual insurance policies contain a standard
mortgagee clause naming the Company or the original holder of the Mortgage, and
its successors in interest, as loss payee, and all of the premiums due and
payable thereon have been paid; the Mortgage obligates the Mortgagor thereunder
to maintain all such insurance at the Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to obtain
and maintain such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor. Neither the Company (nor any prior
originator or servicer of any of the Mortgage Loans) nor any Mortgagor has
engaged in any act or omission which has impaired or would impair the coverage
of any such policy, the benefits of the endorsement provided for herein, or the
validity and binding effect of either;
xv. If the Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy in a form meeting the requirements of the
current guidelines of the Flood Insurance Administration (which policy conforms
to ▇▇▇▇▇▇ ▇▇▇ requirements) is in effect with respect to such Mortgaged Property
with a Qualified Insurer in an amount representing coverage not less than the
least of (A) the outstanding Stated Principal Balance of the Mortgage Loan, (B)
the maximum insurable value of the improvements securing such Mortgage Loan or
(C) the maximum amount of insurance that is available under federal law. The
Mortgage obligates the Mortgagor thereunder to maintain all such insurance at
the Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
xvi. There is no obligation on the part of the Company or any other
party to make any payments with respect to the related Mortgage Loan in addition
to the Monthly Payments required to be made by the applicable Mortgagor and the
Mortgage Note with respect to any Mortgage Loan does not permit or obligate the
Company to make future advances to the Mortgagor at the option of the Mortgagor;
xvii. The Company has caused or will cause to be performed any and all
acts required to preserve the rights and remedies of the Purchaser in any
insurance policies applicable to the Mortgage Loans including, without
limitation, any necessary notifications of insurers, assignments of policies or
interests therein, and establishments of coinsured, joint loss payee and
mortgagee rights in favor of the Purchaser;
xviii. The Company has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the Mortgagor,
directly or indirectly, for the payment of any amount required by the Mortgage
Loan;
36
xix. The Mortgage File contains an appraisal of the Mortgaged Property
signed prior to the final approval of the mortgage loan application by a
Qualified Appraiser, approved by the Company, who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the security thereof,
and whose compensation is not affected by the approval or disapproval of the
Mortgage Loan, and the appraisal and appraiser both satisfy the requirements of
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and Title XI of the Federal Institutions Reform,
Recovery, and Enforcement Act of 1989 and the regulations promulgated
thereunder, all as in effect on the date the Mortgage Loan was originated and
conforms to the underwriting requirements of the Company. The appraisal is in a
form acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and was made by a Qualified
Appraiser;
xx. None of the Mortgage Loans are simple interest Mortgage Loans;
xxi. The trustee under each PSA is the sole owner of record and is the
holder of the Mortgage Loan and the indebtedness evidenced by the Mortgage Note
and the related servicing thereto and all assignments to the trustee under the
PSAs have been validly recorded. Upon the sale of the Mortgage Loan to the
Purchaser, and prior to the transfer of servicing to the Purchaser, the Company
will retain the Mortgage File or any part thereof with respect thereto not
delivered to the Purchaser or the Purchaser's designee in trust only for the
purpose of servicing and supervising the servicing of the Mortgage Loan.
Immediately prior to the transfer and assignment to BSC, the Residual Securities
were not subject to an assignment sale or pledge to any Person other than
Purchaser. Upon payment of the Securities Purchase Price for the Residual
Securities by the Purchaser pursuant to this Agreement, the Company shall
transfer to the Purchaser good and marketable title to the Residual Securities
free and clear of any and all liens and claims (except for those not yet due and
payable), encumbrances, participation interests, equities, pledges, charges or
security interests of any nature and has or had full right and authority,
subject to no participation of or agreement with any other Person, to sell and
assign the same. The Company acquired any right, title and interest in and to
the Residual Securities and the PSA Rights in good faith and without notice of
any adverse claim;
xxii. Except for not more than 2% of the Mortgage Loans, the Mortgagor
has not notified the Company, and the Company has no knowledge of any relief
requested or allowed to the Mortgagor under the Soldiers' and Sailors' Civil
Relief Act of 1940;
xxiii. The Company has no knowledge of any pending action or
proceeding directly involving the related Mortgaged Property in which compliance
with any environmental law, rule or regulation is an issue; and nothing further
remains to be done to satisfy in full all requirements of each such law, rule or
regulation constituting a prerequisite to the use and enjoyment of such
Mortgaged Property;
xxiv. For each Mortgage Loan, the related Mortgage File is complete
and contains a true, accurate and correct copy of each of the documents and
instruments specified to be included therein;
37
xxv. The Servicing Files shall be delivered to EMC in accordance with
the terms of this Agreement;
xxvi. No statement, tape, diskette, form, report or other document
furnished or to be furnished by Company pursuant to this Agreement or in
connection with the transactions contemplated hereby contains or will contain
any statement that is or will be inaccurate or misleading in any material
respect or omits to state a material fact required to be stated therein or
necessary to make the information and statements therein not misleading;
xxvii. No fraud, negligence, or material error or omission of fact
with respect to a Mortgage Loan has taken place on the part of the Company or
the Mortgagor or any other party involved in the origination or servicing of the
Mortgage Loan;
xxviii. The Company or an approved LIFE Bank Correspondent (as defined
in the LIFE Bank Seller's Guide) is either, and each Mortgage Loan was
originated by a savings and loan association, savings bank, commercial bank,
credit union, insurance company or similar institution which is supervised and
examined by a federal or State authority, or by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to Section 203 and 211 of
the National Housing Act;
xxix. [Reserved];
xxx. Except to the extent to which inconsistent with the PSAs, with
respect to each Mortgage Loan that has a prepayment penalty feature, each such
prepayment penalty is enforceable and will be enforced by the Company during the
Interim Servicing Period, and each prepayment penalty is permitted pursuant to
federal, state and local law. Each such prepayment penalty is in an amount equal
to the maximum amount permitted under applicable law;
xxxi. The Company has obtained a life of loan, transferable real
estate tax service contract with a tax service company reasonably acceptable to
Purchaser for each of the Mortgage Loans and the Company shall assign all such
contracts to the Purchaser by the Servicing Transfer Date;
xxxii. For any Mortgage Loan secured by manufactured housing, the
title insurance policy for such Mortgage Loan identifies and insures the unit as
part of the real property; and
xxxiii. The Company has obtained a life of loan, transferable flood
certification contract with a flood certification company reasonably acceptable
to Purchaser for each of the Mortgage Loans and the Company shall assign all
such contracts to the Purchaser by the Servicing Transfer Date.
38
ANNEX D
SERVICING
COMPANY TO ACT AS SUB-SERVICER.
The Company, as independent contract sub-servicer, shall service and
administer the Mortgage Loans in accordance with the provisions of the
applicable PSAs.
REMITTANCES AND REPORTING.
(a) PRIOR TO THE SERVICING TRANSFER DATE
Prior to the Servicing Transfer Date, (i) the Company shall
remit to the Trustee all amounts required to be remitted on account of the
Mortgage Loans by the Servicer under the applicable PSAs as required under the
PSA, (ii) the Company shall remit the Servicing Fee to EMC on the Remittance
Date, (iii) EMC shall remit the Sub-servicing Fee to the Company on the next
succeeding Business Day after the Remittance Date and (iv) the Company shall
deliver all reports required to be provided by the Servicer pursuant to the
applicable PSA as required under the PSA to the Trustee, with a copy to EMC.
(b) AFTER THE SERVICING TRANSFER DATE.
(i) Mortgage Loans which are not Credit Derivative Loans.
(A) With respect to the Life Financial Home Loan Certificates,
Series 1997-2 Residual Interest (the "1997-2 CERTIFICATE") and Life
Financial Home Loan Asset-Backed Certificates Series 1997-3 Residual
Interest Certificate (the "1997-3 CERTIFICATE"):
On the first Remittance Date after the Servicing Transfer
Date: (a) the Company shall remit to EMC all amounts received with respect
to the 1997-2 Certificate and the 1997-3 Certificate which have not
previously been remitted to the Trust, (b) the Company shall remit the
Servicing Fee to EMC on the Remittance Date and, on the next succeeding
Business Day, EMC shall remit the Sub-servicing Fee to the Company and (c)
the Company shall deliver all reports required to be provided by the
Servicer pursuant to the applicable PSA to the Trustee, with a copy to
EMC.
(B) With respect to LIFE Bank Asset-Backed Certificates,
Series 1998-1 Residual Interest Certificate:
On the first Remittance Date after the Servicing Transfer
Date (a) the Company shall remit to EMC an amount equal to the aggregate
amount of all collections of unscheduled principal, prepayments or
liquidations in excess of Servicing Advances previously remitted to the
Trustee, (b) the Company shall remit the Servicing Fee to EMC on the
Remittance Date and, on the next succeeding Business Day, EMC shall remit
the Sub-servicing Fee to the Company and (c) the Company shall deliver all
reports
39
required to be provided by the Servicer pursuant to the applicable PSA to
the Trustee, with a copy to EMC.
(ii) Mortgage Loans which are Credit Derivative Loans.
On each Remittance Date after the Servicing Transfer Date, (a)
the Company shall remit all amounts required to be remitted with respect
to the Credit Derivative Loans to EMC, (b) the Company shall remit the
Servicing Fee to EMC on the Remittance Date and EMC shall remit the
Sub-servicing Fee to the Company on the next succeeding Business Day after
the Remittance Date and (c) the Company shall provide all reports required
to be provided by the Servicer pursuant to the applicable PSA to EMC
(provided, that with respect to the first Remittance Date after the
Servicing Transfer Date the Company shall deliver all reports required to
be provided by the Servicer pursuant to the applicable PSA to the Trustee,
with a copy to EMC). EMC shall be responsible for making all remittances
to the Trustee required under the applicable PSA in accordance with such
PSA.
The respective obligations and responsibilities of the Company, as
sub-servicer, with respect to the Mortgage Loans which are not Credit Derivative
Loans, shall terminate at the expiration of the Interim Servicing Period (except
as set forth herein) unless terminated on an earlier date at the option of EMC
or pursuant to Section 18. In no event shall any termination fee be due the
Company in connection with any termination. Upon request from EMC in connection
with any such termination, the Company shall prepare, execute and deliver, any
and all documents and other instruments, place in the EMC's possession all
Servicing Files, and do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete related documents, to prepare notices to the mortgagors and related
insurance companies, or otherwise, at the Company's sole expense. The Company
agrees to cooperate with EMC and such successor in effecting the termination of
the Company's responsibilities and rights hereunder as sub-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 Company to the
custodial accounts, or other accounts established in connection with servicing
the Mortgage Loans under the PSAs or thereafter received with respect to the
Mortgage Loans. The Company shall not be entitled to any termination or transfer
fee.
40
SERVICING TRANSFER INSTRUCTIONS
EMC MORTGAGE CORPORATION
PRELIMINARY DATA
The following preliminary data includes information which EMC requests be
provided prior to the Servicing Transfer Date:
1. List of transaction codes, stop codes and any other codes necessary to
read your reports, loan histories, etc.
2. Loan number cross-reference of your loan number to prior servicer's loan
number.
3. An insurance report with a primary sort by payee and a secondary sort by
premium due date. Include the following information: loan number, name,
type, payee, premium due date, disbursement amount, type pay
(escrowed/non-escrowed) and policy number.
4. A tax report with primary sort by payee and a secondary sort by
disbursement due date. Include the following information: loan number,
name, type, payee, term, disbursement due date, disbursement amount, type
pay (escrowed/non-escrowed) and tax service.
5. A PMI insurance report with a primary sort by payee and a secondary by
premium due date. Include the following information: loan number, name,
payee, term, disbursement due date, disbursement amount and type pay
(escrowed/non-escrowed).
6. An ARM report with a primary sort by basis code or index and a secondary
sort by next P&I change date. Include the following: loan number, due
date, loan balance, basis code, base rate, original rate, current interest
rate, interest rate period, next interest rate change date, new rate,
original ▇&▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇&▇ ▇▇▇▇▇▇, ▇&▇ period, next P&I change date
and new P&I amount.
41
7. A list of all tax and hazard insurance payees, sorted by your payee code,
for all loans included in the transfer. This list must include the
insurance company or taxing authority, along with their respective mailing
addresses and telephone numbers. (Service Release Workstation report #
2EH)
8. A test tape (Master Records and ARM Deconversion Tapes - THE ARM
DECONVERSION TAPE MUST BE REQUESTED FROM ▇▇▇▇▇▇ ▇▇▇▇ AT ALLTEL - (904)
854-5299) and file layout. The date of the tape will be decided after the
settlement. Also, a trial balance as of the tape date including the
following information: loan number, name, property address, due date, loan
balance, escrow balance, escrow advance balance, suspense balance, P&I,
and total payment. Please total all monetary fields and provide loan
count.
9. A report as of the same date of the test tape that lists loans with
optional insurance and the monthly payment amount for optional insurance.
Please provide a total. EMC doesn't offer optional insurance.
10. Fifteen days prior to the Servicing Transfer Date, provide EMC with a copy
of the notification letter sent to the mortgagor advising them of the
transfer. Attached is an example of the letter which EMC recommends be
used. The good-bye letter used must be approved by EMC. Copies of each
letter must be filed in the Servicing Files or shipped at the time of the
transfer.
11. If you are unable to produce the reports requested and you are a CPI
client, please produce the following system generated reports:
P14S ARM Loans by Investor and Basis Code
P157 Hazard Insurance Status by Investor
P46Q PMI Loan Report by Investor
CPI Tax Report Writer by Investor and sorted by payee
42
FINAL TRANSFER DATA
The final transfer data must be received within five (5) business days after the
Servicing Transfer Date.
1. EACH LOAN IS TO BE RELEASED WITH THE ACTUAL PRINCIPAL BALANCE AND DUE DATE
AT THE TIME OF THE SERVICING TRANSFER DATE.
2. The final tape(s) (MASTER RECORDS AND ARM DECONVERSION TAPES - THE ARM
DECONVERSION TAPE MUST BE REQUESTED FROM ▇▇▇▇▇▇ ▇▇▇▇ AT ALLTEL - (904)
854-5299) as of the Servicing Transfer Date must be sent via overnight
within 3 business days of the Servicing Transfer Date.
3. A list of all tax and hazard insurance payees, sorted by your payee code,
for all loans included in the transfer.
4. A portfolio trial balance on diskette as of the Servicing Transfer Date,
must be sent via overnight delivery to the attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to
facilitate verification of the Cut-Off date balances. The trial balance
should include the following information: Loan number, name, due date,
unpaid principal balance, escrow balance, escrow advance balance, suspense
balance, P & I, corporate advances, and total payment. Please total all
monetary fields and provide loan count. THE REQUESTED REPORTS IN HARD COPY
FORMAT AND ON DISKETTE IN EXCEL OR LOTUS FORMAT (OR SOMETHING ▇▇▇▇▇▇▇▇▇▇▇)
▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇, AND P4CJ. ALL OTHER SERVICE RELEASE WORKSTATION
REPORTS AVAILABLE ON HARD COPY.
5. Send all investor cutoff reports as identified in the `Remittance of
Funds' section below.
6 Mortgagors must be instructed to make their future mortgage payments to
the following address until they receive their payment coupon:
EMC Mortgage Corporation
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Under separate cover, the mortgagors will be provided with a monthly
billing statement with a payment coupon and return envelope.
43
Any payment received by the previous servicer after the Servicing Transfer Date
must be endorsed to EMC Mortgage Corporation and sent via overnight delivery to
the attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. Please date stamp all correspondence.
NOTE: AT YOUR OPTION, YOU MAY PROVIDE EMC WITH A LIMITED POWER OF ATTORNEY,
ALLOWING EMC TO ENDORSE CHECK(S) SENT TO THEM IN ERROR.
44
SPECIAL LOANS
1. Provide an ARM report with a primary sort by basis code or index and a
secondary sort by next P&I change date. Include the following: loan
number, due date, loan balance, basis code, base rate, original rate,
current interest rate, interest rate period, next interest rate change
date, new rate, original ▇&▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇&▇ ▇▇▇▇▇▇, ▇&▇ period, next
P&I change date and new P&I amount.
2. Copies of all ARM change notification letters to the homeowner will be
made available upon request from Purchaser.
3. Provide a Balloon report including the following information: loan number,
loan balance, first payment date, balloon date and current due date.
4. Include and maintain in the Servicing File, with respect to each loan with
Ground Rents, copies of any bills or correspondence with respect to Ground
Rents.
5. Provide a report of any Texas Home Equity Loans.
6. Provide a report of any loans originated in Wisconsin.
7. Provide a report of all loans that contain a prepayment penalty provision,
to include the prepayment penalty code and a legend detailing the
calculation required for each code.
8. Provide a list of loans for which flood insurance is required. The report
reflecting the flood certificate numbers for each loan and type of service
(i.e., life of loan).
9. Provide a file (electronic format) from the Flood Determination companies
which includes loan number, flood determination date, flood zone, contract
number, map number, community number and panel number.
45
PMI INSURANCE
You will be responsible for paying all monthly and annual premiums due within 30
days after the Servicing Transfer Date otherwise you must provide EMC with the
renewal ▇▇▇▇▇▇▇▇ for such premium payments. In addition, please provide EMC with
the following:
1. A listing of loans with PMI coverage, indicating the names of the
insurance carrier, and attaching thereto a copy of primary mortgage
insurance certificate.
2. Evidence of the mortgage insurer's approval of the transfer of the loan
and its' commitment to continue insuring the transferred loan or a copy of
the Master Policy evidencing that loan transfers are permitted without
prior approval of the mortgage insurer.
3. A copy of each notification letter sent to each PMI carrier advising it of
the change in the servicer. In addition to indicating the change in the
servicer, the notification must also instruct the PMI carrier to forward
all future renewal ▇▇▇▇▇▇▇▇ to:
EMC Mortgage Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
4. A detailed listing of any unpaid premiums or special problems as of the
Servicing Transfer Date.
5. With respect to each loan from the LIFE Bank Asset-Backed Certificates,
Series 1998-1 transaction, a listing of each loan which does not have PMI
coverage and which has a loan to value ratio of 80% or greater.
46
HAZARD INSURANCE
1. Provide EMC with a listing of expired policies or unpaid premiums as of
the Servicing Transfer Date. You must pay all bills received in your
office prior to the final Servicing Transfer Date.
2. A listing of all loans which have temporary binder coverage as of the
Servicing Transfer Date.
3. A listing of all loans which have been placed on forced placed policies as
of the Servicing Transfer Date.
4. Information regarding who your forced placed carrier is along with the
address, telephone number and a contact person.
5. Provide EMC with a copy of each notification letter sent to each insurance
carrier and insurance agent requesting a change in the mortgagee clause
for each loan. The mortgagee clause should be changed to read as follows:
EMC Mortgage Corporation
Its Successors and/or Assigns
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
6. Any pending loss draft funds should be identified and shipped to the
attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. Any such files must be identified with your
loan number and shipped in loan number order.
47
TAX INFORMATION
1. Provide EMC with a copy of each notification letter sent to each tax
service agency advising it of the transfer of servicing. If First American
is the tax service company, the tax contract should be transferred. If the
contract is with any other tax service, it should be canceled.
2. As of the Servicing Transfer Date, provide EMC with a detailed report
sorted by state including loan number, payee code and tax parcel number
for: (a) all delinquent taxes and (b) all taxes unpaid and due within
thirty (30) days of the Servicing Transfer Date.
3. Provide a detailed report of any outstanding tax problems including the
appropriate correspondence and explanation of the situation as of the
Servicing Transfer Date.
4. Provide listing of all open tax items in your loan number order as of the
Servicing Transfer Date.
5. Provide EMC with a tax data file from tax servicer in electronic format
which includes the contract #, tax payee, disbursement date, disbursement
amount & type of service. (if from Transamerica, provide AB48 file -Lien
Level Audit File, if from Fidelity, corresponding file as the Transamerica
tape).
48
PAYOFF INFORMATION
Provide a copy of all payoff statements issued within the past 60 days on any
loans included in the sale will be provided upon request by Purchaser. The
statement must reflect your account number and be in account number order.
49
ESCROW ANALYSIS
1. To comply with RESPA, copies of the last escrow analysis for each loan
MUST be sent to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. They must be identified with your loan
number and be in account number order.
2. Provide EMC with a schedule of when you analyze, each state's escrow
requirement and an explanation of those states not analyzed as indicated
on the schedule.
3. Provide EMC with a copy of the Closing Escrow Account Statement - short
year for each loan.
50
CUSTOMER SERVICE ISSUES
Any unresolved or pending customer service issues should be documented and sent
overnight to the attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. The documentation must include
your account number and be shipped in loan number order.
51
COLLECTIONS
1. As of the cutoff date, please prepare a delinquency report for all loans
specifying those loans which are delinquent 30+, 60+, 90+ , 120+, in
foreclosure and bankruptcy. The report must include the loan number,
mortgagor name, next payment due date, principal balance, escrow balance
and payment amount.
2. The complete foreclosure, bankruptcy or REO file must be sent overnight to
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ on the Servicing Transfer Date. The files must provide all
information necessary to service the loan through completion of the
related proceeding.
52
INVESTOR ACCOUNTING
Provide any information regarding reconciliation differences in your custodial
account(s) that could affect the loans being transferred to EMC.
53
REMITTING OF FUNDS
1. You must remit all funds due EMC for escrow, insurance claims, suspense
amount, etc. The funds must be wired to:
Chase Bank of Texas
For Credit to: EMC Mortgage Corporation
ABA # ▇▇▇▇▇▇▇▇▇
For Credit to Account # 07001227347
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & "what funds are for"
2. The foregoing funds must be remitted to EMC within five (5) business days
of the Servicing Transfer Date.
3. Please call ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇ upon sending the wire.
4. A listing of how the funds should be posted is due to EMC within five (5)
business days of the Servicing Transfer Date.
5. Funds (from Section II, Custodial Account Analysis) must be wired to the
following account within ten (10) business days of the Servicing Transfer
Date.
Chase Bank of Texas
For Credit to : EMC Mortgage Corporation
ABA # ▇▇▇▇▇▇▇▇▇
For credit to Account # 07001224500
Attention: ▇▇▇▇ ▇▇▇▇▇▇
6. Investor reports must be as of month end. Reports (as listed below) must
be in EMC's office by the fifth business day after the Servicing Transfer
Date.
THE FOLLOWING SYSTEM GENERATED REPORTS SHOULD BE SENT IN HARD COPY AND
DISKETTE FORMS (EXCEL OR LOTUS IF POSSIBLE, OR SOMETHING CONVERTIBLE TO
EXCEL OR LOTUS):
Monthly Summary Report and Certification (with attachments)
Memo detailing Cut-off Adjustments
Monthly Remittance Report
Loan Level Detail Advance Report
Verification of Investor Interest
Norwest Investor Report (with adjusted totals)
Securitization Weighted Average Remaining Term
Trial Balance
Investor Collection Report
Investor Loan Exception Report
54
Investor Loan Rate Change Report
Last Investor Bank Account Reconciliations
55
GENERAL INFORMATION
1. The Servicing Files must be boxed in loan number order with an inventory
sheet and boxes must be numerically labeled (Box 1 of 100, box 2 of 100,
etc.). ALL SERVICING FILES MUST BE RECEIVED BY EMC NO LATER THAN 5 DAYS
PRIOR TO SERVICING TRANSFER DATE. All documentation must be received by
EMC within five (5) business days of the SERVICING TRANSFER DATE. Please
have the documentation shipped via courier to the following street
address:
EMC Mortgage Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
2. Please provide EMC with a copy of the Master Records Status report (T-309)
with histories (PHST screen - Customer Account Activity Statement) for
each loan for the past two (2) years. If possible, paper copies of the
histories can be provided instead of microfiche copies. The histories must
provide EMC with loan number, due date, transaction date, type of
transaction (payment, disbursement, etc.).
3. You will be responsible for mailing the mortgagor's year-end statements
reflecting loan activity during the time you serviced each loan. Provide a
copy of the year-end statement sent to those mortgagors whose loans were
included in this transfer upon request from the Purchaser. The year-end
statements must be identified with your account number and be shipped in
loan number order.
4. You will be responsible for depositing to the mortgagors' escrow account
and reporting to the IRS any interest paid on the escrow accounts.
5. Daily "hot boxes" must be shipped to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ via overnight
delivery service. The "hot box" must include documentation outlined in
these servicing transfer instructions or required by the Servicing
Transfer and Interim Servicing Agreement. In addition, the "hot box" must
contain items you receive after the SERVICING TRANSFER DATE, such as tax
bills, payments, renewal notice, etc. Please have all items categorized
and placed in separate manila envelopes, labeled so as to identify their
contents and place them inside the "hot box". These procedures will ensure
timely processing of the items by the various departments. All items,
including the "hot box", must be accompanied by a detailed transmittal of
their contents. The daily "hot boxes" must be shipped to the address
stated above.
ALL ITEMS, INCLUDING THE "HOT BOXES", MUST BE ACCOMPANIED BY A DETAILED
TRANSMITTAL OF THEIR CONTENTS.
56
EMC
MORTGAGE
CORPORATION
CONTACTS
ACQUISITIONS
▇▇▇▇▇▇ ▇▇▇▇▇▇, SVP ACQUISITIONS (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, VP ACQUISITION MANAGER (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ACQUISITION ASST MANAGER (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ACQUISITION SUPERVISOR (▇▇▇) ▇▇▇-▇▇▇▇
COLLATERAL DOCUMENTS
▇▇▇▇▇ ▇▇▇▇▇, VP LOAN DELIVERY MANAGER (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, AVP ASSISTANT MANAGER (▇▇▇) ▇▇▇-▇▇▇▇
SERVICING
▇▇▇ ▇▇▇▇▇▇▇▇, SVP SERVICING MANAGER (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, VP ASST. SERVICING MANAGER (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, SVP DEFAULT CONTROL MANAGER (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, VP MANAGER/PROJECT MANAGEMENT (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, AVP REO ASST. MANAGER (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, VP DEFAULT MANAGER (▇▇▇) ▇▇▇-▇▇▇▇
57
SAMPLE GOODBYE LETTER
[TODAY'S DATE]
[BORROWER]
[CO-BORROWER]
[MAILING ADDRESS]
[MAILING ADDRESS] [ZIP]
RE: LOAN NUMBER:[LOAN NUMBER]
DEAR MORTGAGOR(S) :
THIS LETTER IS TO NOTIFY YOU THAT THE SERVICING OF YOUR REAL ESTATE LOAN,
MEANING THE RIGHT TO COLLECT PAYMENTS FROM YOU, WHICH IS CURRENTLY HELD BY
[SERVICER] IS BEING TRANSFERRED AS OF [SERVICING TRANSFER DATE] TO EMC MORTGAGE
CORPORATION ["EMC"]. OUR RECORDS AS OF [TODAY'S DATE] INDICATE THAT YOUR NEXT
PAYMENT IS DUE [DUE DATE]. EFFECTIVE [SERVICING TRANSFER DATE], PLEASE DIRECT
YOUR PAYMENT TO YOUR NEW SERVICER.
[SERVICER] WILL CEASE TO ACCEPT PAYMENTS RECEIVED AFTER [SERVICING TRANSFER
DATE] AND WILL FORWARD THEM TO YOUR NEW SERVICER. IF YOU ARE MAKING PAYMENTS
THROUGH OUR MONTHLY AUTOMATIC PAYMENT SYSTEM, THIS SERVICE WILL BE DISCONTINUED
ON [SERVICING TRANSFER DATE]. PLEASE SEND A PERSONAL CHECK OR MONEY ORDER TO EMC
FOR FUTURE PAYMENTS. EMC DOES OFFER AN AUTOMATIC PAYMENT DRAFTING SERVICE. IF
YOU WISH TO USE THIS SERVICE, PLEASE CONTACT EMC TO OBTAIN THE NECESSARY
INFORMATION. IF YOUR ACCOUNT IS DELINQUENT, YOUR NEW SERVICER WILL CONTACT YOU.
AFTER THE SERVICING TRANSFER DATE OF [SERVICING TRANSFER DATE], IF YOU HAVE ANY
QUESTIONS PLEASE CONTACT:
EMC MORTGAGE CORPORATION EMC MORTGAGE CORPORATION
P. O. BOX 225749 ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
CUSTOMER SERVICE HOURS; 7:30 - 6:00 CST
TOLL FREE NUMBER ▇▇▇-▇▇▇-▇▇▇▇
YOUR NEW SERVICER WILL BE SUPPLYING YOU WITH A MONTHLY BILLING STATEMENT AND
INSTRUCTIONS FOR MAKING PAYMENTS TO THEM. IF YOU HAVE NOT RECEIVED YOUR BILLING
STATEMENT PRIOR TO THE SERVICING TRANSFER DATE, MAKE YOUR CHECK PAYABLE TO EMC
MORTGAGE CORPORATION, INCLUDE YOUR [SERVICER] LOAN NUMBER AND FORWARD TO THE
ADDRESS LISTED ABOVE.
58
IF YOU CURRENTLY HAVE LIFE, ACCIDENTAL DEATH, AND/OR DISABILITY INSURANCE,
PLEASE CONTACT YOUR AGENT TO CONTINUE COVERAGE. EMC DOES NOT OFFER OPTIONAL
INSURANCE. EMC WILL LOWER YOUR MONTHLY PAYMENT AMOUNT BY YOUR INSURANCE PREMIUM.
IN JANUARY 2000, [SERVICER] WILL SEND YOU A FINAL STATEMENT FOR INCOME TAX
PURPOSES, WHICH WILL SHOW YOUR 1999 ACCOUNT INFORMATION WHILE YOUR LOAN WAS
SERVICED BY [SERVICER]. EMC WILL SEND YOU A STATEMENT IN JANUARY 2000, WHICH
WILL SHOW YOUR 1999 ACCOUNT INFORMATION.
THE TRANSFER OF SERVICING IS COMMON IN THE LOAN INDUSTRY. EXCEPT IN LIMITED
CIRCUMSTANCES, THE LAW REQUIRES THAT [SERVICER] SEND YOU THIS NOTICE AT LEAST 15
DAYS BEFORE THE EFFECTIVE DATE OF TRANSFER. EMC MUST ALSO SEND YOU THIS NOTICE
NO LATER THAN 15 DAYS AFTER THE EFFECTIVE DATE. THIS TRANSFER DOES NOT AFFECT
ANY TERM OR CONDITION OF THE MORTGAGE LOAN DOCUMENTS, OTHER THAN THE TERMS
DIRECTLY RELATED TO THE SERVICING OF YOUR LOAN.
THE FIRE AND OR HOMEOWNERS INSURANCE POLICIES CURRENTLY CARRIED ON YOUR PROPERTY
WILL BE TRANSFERRED TO YOUR NEW SERVICER AND WILL REMAIN IN FULL FORCE. THIS
TRANSFER WILL NOT AFFECT THE PAYMENT OF YOUR INSURANCE RENEWAL PREMIUMS AND
TAXES. IF YOU HAVE ANY QUESTIONS WHILE YOUR LOAN IS IN TRANSITION, PLEASE WRITE
TO OUR CUSTOMER SERVICE DEPARTMENT OR CALL OUR TOLL FREE NUMBER [SERVICER'S TOLL
FREE NUMBER].
YOU SHOULD ALSO BE AWARE OF THE FOLLOWING INFORMATION, WHICH IS SET OUT IN MORE
DETAIL IN SECTION 6 OF THE REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) (12
U.S.C. 2605):
DURING THE 60-DAY PERIOD FOLLOWING THE EFFECTIVE DATE OF THE TRANSFER OF THE
LOAN SERVICING, A LOAN PAYMENT RECEIVED BY [SERVICER] BEFORE ITS DUE DATE MAY
NOT BE TREATED BY EMC AS LATE, AND A LATE FEE MAY NOT BE IMPOSED ON YOU.
SECTION 6 OF RESPA (12 U.S.C. 2605) GIVES YOU CERTAIN CONSUMER RIGHTS. IF YOU
SEND A "QUALIFIED WRITTEN REQUEST" TO YOUR LOAN SERVICER THEY MUST PROVIDE YOU
WITH A WRITTEN ACKNOWLEDGMENT WITHIN 20 BUSINESS DAYS OF RECEIPT OF YOUR
REQUEST. A "QUALIFIED WRITTEN REQUEST" IS A WRITTEN CORRESPONDENCE, OTHER THAN
NOTICE ON A PAYMENT COUPON OR OTHER PAYMENT MEDIUM SUPPLIED BY THE SERVICER,
WHICH INCLUDES YOUR NAME AND ACCOUNT NUMBER, AND YOUR REASONS FOR THE REQUEST.
IF YOU WANT TO SEND A "QUALIFIED WRITTEN REQUEST" REGARDING THE SERVICING OF
YOUR LOAN, IT MUST BE SENT TO THIS ADDRESS:
EMC MORTGAGE CORPORATION
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
NO LATER THAN 60 BUSINESS DAYS AFTER RECEIVING YOUR REQUEST, YOUR SERVICER MUST
MAKE ANY APPROPRIATE CORRECTIONS TO YOUR ACCOUNT AND MUST PROVIDE YOU WITH A
WRITTEN CLARIFICATION REGARDING ANY DISPUTE. DURING THIS 60-BUSINESS DAY PERIOD,
YOUR SERVICER MAY NOT PROVIDE INFORMATION TO A CONSUMER REPORTING AGENCY
CONCERNING ANY OVERDUE PAYMENT RELATED TO
59
SUCH PERIOD OR QUALIFIED WRITTEN REQUEST. HOWEVER THIS DOES NOT PREVENT THE
SERVICER FROM INITIATING FORECLOSURE IF PROPER GROUNDS EXIST UNDER THE MORTGAGE
DOCUMENTS.
A BUSINESS DAY IS A DAY ON WHICH THE OFFICES OF THE BUSINESS ENTITY ARE OPEN TO
THE PUBLIC FOR CARRYING ON SUBSTANTIALLY ALL OF ITS BUSINESS FUNCTIONS.
SECTION 6 OF RESPA ALSO PROVIDES FOR DAMAGES AND COST FOR INDIVIDUALS IN
CIRCUMSTANCES WHERE SERVICERS ARE SHOWN TO HAVE VIOLATED THE REQUIREMENTS OF
THAT SECTION. YOU SHOULD SEEK LEGAL ADVICE IF YOU BELIEVE YOUR RIGHTS HAVE BEEN
VIOLATED.
THANK YOU FOR YOUR PAST BUSINESS.
SINCERELY,
[SERVICER]
[TITLE]
CC: EMC MORTGAGE CORPORATION
60
SAMPLE
ATTORNEY NOTIFICATION
LETTER
[DATE]
▇▇▇▇▇▇ & ▇▇▇▇▇▇ ATTORNEY ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: ABC MORTGAGE LN #: 123456
MORTGAGOR(S): ▇▇▇▇ ▇▇▇▇▇▇▇▇
PROPERTY ADDRESS: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTORNEY FILE
NO/REFERENCE: F1342-43321-99
YOUR FIRM IS CURRENTLY HANDLING A (FORECLOSURE AND/OR BANKRUPTCY) CASE FOR US ON
THIS LOAN. PLEASE BE ADVISED THAT THE SERVICING OF THIS LOAN WILL TRANSFER ON
(SERVICING TRANSFER DATE) TO:
EMC MORTGAGE CORPORATION
P. O. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
PLEASE SEND ALL CORRESPONDENCE TO THE NEW SERVICER FOLLOWING THE SERVICING
SERVICING TRANSFER DATE.
ABC MORTGAGE IS RESPONSIBLE FOR PAYING ALL FEES AND COSTS INCURRED PRIOR TO
(CUTOFF DATE). SUBMIT YOUR INVOICE TO ABC MORTGAGE COVERING THIS TIME FRAME
IMMEDIATELY. ANY AMOUNTS INCURRED AFTER (CUTOFF DATE) SHOULD BE BILLED TO THE
NEW SERVICER.
SINCERELY,
ABC MORTGAGE
61
EXHIBIT 1 TO ANNEX D
For purposes of this ANNEX D, "Mortgage File" shall mean the items pertaining to
a particular Mortgage Loan referred to below, and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
CONTENTS OF EACH MORTGAGE FILE:
With respect to each Mortgage Loan, the Mortgage File shall include each of the
following items, which shall be available for inspection by the Purchaser and
which shall be delivered to the Purchaser or its designee:
1. Mortgage Loan Documents.
2. Residential loan application.
3. Mortgage Loan closing statement.
4. Verification of employment and income, if applicable.
5. Verification of acceptable evidence of source and amount of down
payment, if applicable.
6. Credit report on Mortgagor.
7. Residential appraisal report.
8. Photograph of the Mortgaged Property.
9. Survey of the Mortgaged Property, only where required by the
Company.
10. Copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy,
i.e., map or plat, restrictions, easements, sewer agreements, home
association declarations, etc.
11. All required disclosure statements and statement of Mortgagor
confirming receipt thereof.
12. If available, termite report, structural engineer's report, water
potability and septic certification.
13. Sales Contract, if applicable.
14. Hazard insurance policy.
62
15. Insurance claim files, correspondence, and all other processing,
underwriting and closing papers and records which are customarily
contained in a mortgage loan file and which are required to document
the Mortgage Loan or to service the Mortgage Loan.
16. Amortization schedule, if available.
17. Payment history for each Mortgage Loan from its origination date
through the Closing Date.
63
ANNEX E
MORTGAGE LOAN DATA
64
LIFE BANK,
as Assignor,
and
EMC MORTGAGE CORPORATION,
as Assignee,
ASSIGNMENT AND ASSUMPTION AGREEMENT
Dated as of January 27, 2000
65
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (this "Agreement") is
executed as of January 27, 2000, by and between LIFE BANK, ("Assignor") and EMC
Mortgage Corporation, a Delaware corporation ("Assignee").
WHEREAS, Assignor is a party to those agreements indicated on Exhibit
A attached hereto (the "Servicer Agreements"), pursuant to which the Assignor,
in its capacity as servicer (in such capacity, the "Servicer") under such
Servicer Agreements, has agreed to service certain mortgage loans as specified
therein.
WHEREAS, the Assignor, the Assignee and Bear, ▇▇▇▇▇▇▇ & Co. Inc. are
parties to that certain Letter Agreement dated as of December 31, 1999 (the
"Letter Agreement").
WHEREAS, in connection with the transactions contemplated by the
Letter Agreement, Assignor seeks to assign and transfer all of its rights and
obligations as Servicer under the Servicer Agreements to Assignee and Assignee
seeks to succeed to all of such rights and assume all of such obligations on the
terms and conditions hereinafter set forth.
WHEREAS, in order to effectuate the assignment and assumption
contemplated hereunder, the consent of the parties listed on Schedule I attached
hereto (the "Consenting Parties") is required, and the Consenting Parties are
willing to consent on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Assignor hereby assigns and transfers to Assignee, and Assignee
hereby accepts and assumes, all of Assignor's rights, duties, commitments and
obligations as Servicer under the Servicer Agreements (the "Servicer
Obligations"), including, but not limited to, any of Assignor's rights, duties,
commitments and obligations with respect to administration and compliance of the
trust fund or funds created thereunder in accordance with the "real estate
mortgage investment conduit" rules and regulations of the Internal Revenue Code
of 1986, as amended and any indemnification obligations of the Servicer relating
to acts, omissions or liabilities of the Servicer arising from and after the
Effective Date. It is expressly agreed that Assignor is not assigning, but
instead reserving, the obligations of the Servicer on and before the Effective
Date as more particularly described in paragraph 3 below.
2. The Consenting Parties hereby approve of, and consent to, the
assignment and assumption set forth in paragraph 1 hereof. The Consenting
Parties hereby release Assignor from any and all obligations and liabilities in
its capacity as Servicer that arise after the Effective Date of this Agreement
under or in connection with the Servicer Agreements.
3. All claims against and liabilities (or actions or omissions giving
rise to claims against and liabilities) of the Servicer under the Servicer
Agreements arising on or before the Effective Date shall be the responsibility
of Assignor and all claims against and liabilities (or
66
actions or omissions giving rise to claims against and liabilities) of the
Servicer under the Servicer Agreements arising after the Effective Date shall be
the responsibility of Assignee.
4. This Agreement shall be effective on the date (the "Effective
Date") that is the later of (i) the date upon which all of the Consenting
Parties have consented to this Agreement or (ii) February 29, 2000, or such
other date determined by the Assignor and Assignee under the Letter Agreement
which in no event shall be later than March 31, 2000 (the "Servicing Transfer
Date").
5. The Assignee agrees that all fees and reimbursements due and owing
to the Servicer under the Servicer Agreements (including, but not limited to,
reimbursement of any advances made by the Servicer pursuant to the terms of the
Servicer Agreements and the right to any servicing fee) prior to the Effective
Date but remaining outstanding after the Effective Date shall be paid or
reimbursed to the Assignor in accordance with the terms of the Servicer
Agreements.
6. Each of Assignor and Assignee agrees to indemnify the other for any
responsibilities under paragraph 3 above and for any other breach of the terms
of this Agreement.
7. This Agreement shall be governed by New York law. This Agreement
constitutes the complete agreement of the parties relating to the subject matter
hereof and supersedes any prior agreements or understandings. This Agreement may
not be amended unless agreed upon in writing by the parties and the Consenting
Parties. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute but
one and the same instrument. The provisions of this Agreement shall be binding
upon and inure to the benefit of both parties and their respective successors
and assigns.
8. In connection with the transfer of servicing from Assignor to
Assignee, Assignor agrees to cooperate with Assignee and Consenting Parties in
effecting the transfer of the servicing obligations under the Servicer
Agreements, of all records (electronic and otherwise) with respect to the
mortgage loans relating to the Servicer Agreements and of all amounts (cash or
otherwise) that shall at the time be held by Assignor for deposit, or have been
deposited by Assignor, in any account, or thereafter received with respect to
any of the mortgage loans relating to the Servicer Agreements, and prior to
transfer thereof, any such amounts shall be held in trust by Assignor on behalf
of the related trustee.
9. Assignor agrees to pay all reasonable costs and expenses of the
Consenting Parties (including without limitation, attorneys' fees and expenses)
associated with this Agreement and the transfer of servicing to the Assignee.
10. The Consenting Parties shall be express third party beneficiaries
to this Agreement and shall be entitled to rely upon and directly enforce the
provisions hereof (other than with respect to paragraph 6).
11. The Assignee hereby represents and warrants, as of the date hereof
and as of the Effective Date, as follows:
67
(a) DUE ORGANIZATION AND QUALIFICATION. The Assignee is a
corporation, duly organized, validly existing and in good standing
under the laws of Delaware. The Assignee is duly qualified to do
business, is in good standing and has obtained all licenses,
permits, charters, registrations and approvals (together,
"approvals") necessary for the conduct of its business as currently
conducted and the performance of its obligations hereunder and under
the Servicer Agreements, in each jurisdiction in which the failure
to be so qualified or to obtain such approvals would render this
Agreement or any Servicer Agreement unenforceable in any respect or
would have a material adverse effect upon the transactions
contemplated by this Agreement and the Servicer Agreements.
(b) POWER AND AUTHORITY. The Assignee has all necessary
corporate power and authority to conduct its business as currently
conducted and to execute and deliver this Agreement and to perform
its obligations hereunder and under the Servicer Agreements and to
consummate the transactions contemplated by this Agreement and the
Servicer Agreements.
(c) DUE AUTHORIZATION. The execution, delivery and performance
of this Agreement and the performance of the Servicer's obligations
under the Servicer Agreements by Assignee have been duly authorized
by all necessary corporate action and do not require any additional
approvals or consents, or other action by or any notice to or filing
with any person, including, without limitation, any governmental
entity or the Assignee's stockholders, which have not previously
been obtained or given by the Assignee.
(d) NONCONTRAVENTION. None of the execution and delivery of
this Agreement by the Assignee, the consummation of the transactions
contemplated hereby and by the Servicer Agreements or the
satisfaction of the terms and conditions hereof and of the Servicer
Agreements (i) conflicts with or results in any breach or violation
of any provision of the certificate of incorporation or bylaws of
the Assignee or any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award currently in effect
having applicability to the Assignee or any of its material
properties or (ii) constitutes a default by the Assignee under or a
breach of any provision of any loan agreement, mortgage, indenture
or other agreement or instrument to which the Assignee is a party or
by which any of its properties, which are individually or in the
aggregate material to the Assignee, is or may be bound or affected.
(e) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Assignee or any of its
subsidiaries, or any properties or rights of the Assignee or any of
its subsidiaries, pending or, to the Assignee's knowledge after
reasonable inquiry, threatened, which, in any case, could reasonably
be expected to result in a material adverse change in the business,
financial condition or results of operation or properties of
Assignee or the ability of Assignee to perform its obligations
hereunder or under the Servicer Agreements (a "Material Adverse
Change").
68
(f) VALID AND BINDING OBLIGATIONS. This Agreement and the Servicer
Obligations set forth in the Servicer Agreements constitute the
legal, valid and binding obligations of the Assignee, enforceable in
accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equitable principles and
public policy considerations as to rights of indemnification for
violations of federal securities laws.
(g) FINANCIAL STATEMENTS. The financial statements of the Assignee,
copies of which have been furnished to MBIA Insurance Corporation
(the "Insurer"), (i) are, as of the dates and for the periods
referred to therein, complete and correct in all material respects,
(ii) present fairly the financial condition and results of
operations of the Assignee as of the dates and for the periods
indicated and (iii) have been prepared in accordance with generally
accepted accounting principles consistently applied, except as noted
therein (subject as to interim statements to normal year-end
adjustments). Since the date of the most recent financial
statements, there has been no Material Adverse Change in respect of
the Assignee. Except as disclosed in the financial statements, the
Assignee is not subject to any contingent liabilities or commitments
that, individually or in the aggregate, have a possibility of
causing a Material Adverse Change in respect of the Assignee.
(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Assignee in the conduct
of its business violates any law, regulation, judgment, agreement,
order or decree applicable to any of them that, if enforced, could
reasonably be expected to result in a Material Adverse Change with
respect to the Assignee. The Assignee is not in breach of or in
default under any applicable law or administrative regulation of its
respective jurisdiction of incorporation, or any department,
division, agency or instrumentality thereof or of the United States
or any applicable judgment or decree or any loan agreement, note,
resolution, certificate, agreement or other instrument to which the
Assignee is a party or is otherwise subject which, if enforced,
would have a material adverse effect on the ability of the Assignee
to perform its respective obligations under this Agreement and the
Servicer Agreements.
(i) ACCURACY OF INFORMATION. None of the written information
relating to the operations of the Assignee (including servicing of
loans) or the financial condition of the Assignee (collectively, the
"Documents"), as amended, supplemented or superseded, furnished to
the Insurer by the Assignee contain any statement of a material fact
by the Assignee which was untrue or misleading in any material
adverse respect when made. The Assignee has no knowledge of
circumstances that could reasonably be expected to cause a Material
Adverse Change with respect to the Assignee. Since the furnishing of
the Documents, there has been no change, development or event
involving a prospective change known to the Assignee that would
render any of the Documents untrue or misleading in a material
respect.
(j) SOLVENCY. The Assignee is solvent and will not be rendered
insolvent by the transactions contemplated by this Agreement and the
Servicer Agreements and, after
69
giving effect to such transactions, the Assignee will not be left
with an unreasonably small amount of capital with which to engage in
its business, and the Assignee does not intend to incur, or believe
that it has incurred, debts beyond its ability to pay as they
mature. The Assignee does not contemplate the commencement of
insolvency, bankruptcy, liquidation or consolidation proceedings or
the appointment of a receiver, liquidator, conservator, trustee or
similar official in respect of the Assignee or any of its assets.
The parties hereto and the Consenting Parties agree that, as of the Effective
Date, the representations and warranties of the Assignee contained herein shall
be considered the representations and warranties of the Servicer for all
purposes of the Servicer Agreements.
70
IN WITNESS WHEREOF, the Assignor and the Assignee have executed this
Agreement as of the date first written above.
LIFE BANK, as Assignor
By:
---------------------------------
Its:
--------------------------------
EMC MORTGAGE CORPORATION, as Assignee
By:
---------------------------------
Its:
--------------------------------
71
EXHIBIT A
Servicer Agreements
1. Pooling and Servicing Agreement, dated as of August 31, 1998, among ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ABS Capital I Inc., Life Bank, Life Investment Holdings, Inc. and
Norwest Bank Minnesota, National Association
2. Custodial Agreement, dated as of August 31, 1998, among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS
Capital I Inc., Life Bank, Life Bank, Life Investment Holdings, Inc. and Norwest
Bank Minnesota, National Association
3. Sale and Servicing Agreement, dated as of December 1, 1997, among Life
Financial Home Loan Owner Trust 1997-3, PaineWebber Mortgage Acceptance
Corporation IV, Life Bank, Life Investment Holdings, Inc. and Norwest Bank
Minnesota, National Association
4. Sale and Servicing Agreement, dated as of September 1, 1997, among Life
Financial Home Loan Owner Trust 1997-2, Bear ▇▇▇▇▇▇▇ Asset Backed Securities,
Inc., Life Savings Bank, Federal Savings Bank, Life Investment Holdings, Inc.
and Norwest Bank Minnesota, National Association
5. Insurance Agreement dated as of August 31, 1998 among Life Bank, Life
Investments Holding, Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc., MBIA Insurance
Corporation and Norwest Bank Minnesota, National Association.
72
Schedule I
Consenting Parties
Consented and agreed to as of the date first written above:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as the Trustee and Custodian
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Consented and agreed to as of the date first written above:
MBIA Insurance Corporation,
as the Certificate Insurer
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Consented and agreed to as of the date first written above:
WILMINGTON TRUST COMPANY,
as the Owner Trustee
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
73