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EXHIBIT 4.4
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EXECUTION
SALE AND SERVICING AGREEMENT
Among
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-A,
Trust,
ADVANTA HOLDING TRUST 1999-A,
Holding Trust,
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor,
ADVANTA MORTGAGE CORP. USA,
as Master Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
Dated as of May 1, 1999
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TABLE OF CONTENTS
(Not a Part of this Agreement)
Page
Parties....................................................................... 1
Recitals...................................................................... 1
ARTICLE I. DEFINITIONS; RULES OF CONSTRUCTION............................. 1
Section 1.1 Definitions.............................................. 1
Section 1.2 Use of Words and Phrases................................. 15
Section 1.3 Captions; Table of Contents.............................. 15
Section 1.4 Opinions................................................. 15
ARTICLE II. CONVEYANCE OF MORTGAGE LOANS.................................. 15
Section 2.1 Conveyance of the Mortgage Loans......................... 15
Section 2.2 Acceptance by Indenture Trustee; Certain
Substitutions of Mortgage Loans;Certification by
Indenture Trustee........................................ 21
Section 2.3 Qualified Replacement Mortgage Loans..................... 23
Section 2.4 Cooperation Procedures................................... 25
Section 2.5 Retransfers of Mortgage Loans at Election of
Sponsor or the Related Originator........................ 25
ARTICLE III. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND
THE MASTER SERVICER........................................... 26
Section 3.1 Representations and Warranties of the Sponsor............ 26
Section 3.2 Representations and Warranties of the Master Servicer.... 28
Section 3.3 Representations and Warranties of the Sponsor
with Respect to the Mortgage Loans; Retransfer of
Certain Mortgage Loans................................... 31
Section 3.4 Covenants of Sponsor to Take Certain Actions with
Respect to the Mortgage Loans In Certain Situations...... 38
ARTICLE IV. SERVICING AND ADMINISTRATION OF MORTGAGE LOANS................ 40
Section 4.1 Master Servicer and Sub-Servicers........................ 40
Section 4.2 Modifications............................................ 41
Section 4.3 Servicer Report.......................................... 44
Section 4.4 Liability of Master Servicer............................. 44
Section 4.5 Sub-Servicing Agreements Between Master
Servicer and Sub-Servicers............................... 45
Section 4.6 Successor Sub-Servicers.................................. 45
Section 4.7 No Contractual Relationship Between Sub-Servicer
and Indenture Trustee or the Noteholders................. 45
Section 4.8 Assumption or Termination of Sub-Servicing
Agreement by Indenture Trustee........................... 45
Section 4.9 Principal and Interest Account........................... 46
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Section 4.10 Servicing Advances....................................... 48
Section 4.11 Maintenance of Insurance................................. 48
Section 4.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements............................................... 49
Section 4.13 Realization Upon Defaulted Mortgage Loans................ 50
Section 4.14 Indenture Trustee to Cooperate; Release of Mortgage
Files.................................................... 51
Section 4.15 Servicing Compensation................................... 53
Section 4.16 Annual Statement as to Compliance........................ 53
Section 4.17 Annual Independent Certified Public Accountants'
Reports.................................................. 53
Section 4.18 Access to Certain Documentation and Information
Regarding the Mortgage Loans............................. 53
Section 4.19 Assignment of Agreement.................................. 54
Section 4.20 Resignation of the Master Servicer....................... 54
ARTICLE V. SERVICING TERMINATION........................................... 54
Section 5.1 Events of Servicing Termination.......................... 54
Section 5.2 Inspections by Insurer; Errors and Omissions
Insurance................................................ 58
Section 5.3 Merger, Conversion, Consolidation or Succession
to Business of Master Servicer........................... 58
Section 5.4 Notification to Noteholders.............................. 59
Section 5.5 Notices of Material Events............................... 59
ARTICLE VI. ADMINISTRATIVE DUTIES OF THE MASTER SERVICER................... 60
Section 6.1 Administrative Duties with Respect to the Indenture...... 60
Section 6.2 Records.................................................. 62
Section 6.3 Additional Information to be Furnished to the Trust...... 62
ARTICLE VII. MISCELLANEOUS................................................. 62
Section 7.1 Compliance Certificates and Opinions..................... 62
Section 7.2 Form of Documents Delivered to the Indenture
Trustee.................................................. 63
Section 7.3 Acts of Noteholders...................................... 63
Section 7.4 Notices, etc. to Indenture Trustee....................... 64
Section 7.5 Notices and Reports to Noteholders; Waiver of Notices.... 64
Section 7.6 Successors and Assigns................................... 65
Section 7.7 Severability............................................. 65
Section 7.8 Benefits of Agreement.................................... 65
Section 7.9 Legal Holidays........................................... 65
Section 7.10 Governing Law............................................ 65
Section 7.11 Counterparts............................................. 66
Section 7.12 Usury.................................................... 66
Section 7.13 Amendment................................................ 66
Section 7.14 The Insurer.............................................. 67
Section 7.15 Notices.................................................. 67
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Section 7.16 Limitation of Liability.................................. 69
SCHEDULE I.. -- Schedule of Mortgage Loans
EXHIBIT A -- [Reserved]
EXHIBIT B -- Form of Credit Line Agreements
EXHIBIT C -- [Reserved]
EXHIBIT D -- Form of Trustee's Acknowledgement of Receipt
EXHIBIT E -- Form of Certification
EXHIBIT F -- Form of Master Servicer's Trust Receipt
EXHIBIT G Form of Power of Attorney
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SALE AND SERVICING AGREEMENT, dated as of May 1, 1999, by and among
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-A, a Delaware business trust (the
"Trust"), ADVANTA HOLDING TRUST 1999-A, a Delaware business trust ("Holding"),
ADVANTA MORTGAGE CONDUIT SERVICES, INC., a Delaware corporation, in its capacity
as Sponsor of the Trust (the "Sponsor"), ADVANTA MORTGAGE CORP. USA, a Delaware
corporation, in its capacity as master servicer (the "Master Servicer"), and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a national banking association, in
its capacity as Indenture Trustee (the "Indenture Trustee").
WHEREAS, Holding desires to purchase a portfolio of Mortgage Loans (as
defined herein) originated by the Originators (as defined herein);
WHEREAS, the Sponsor is willing to sell or cause or direct to be sold
such Mortgage Loans to Holding;
WHEREAS, Holding desires to transfer such Mortgage Loans to the Trust and
the Trust desires to acquire such Mortgage Loans from Holding;
WHEREAS, the Master Servicer has agreed to service such Mortgage Loans,
which constitute the principal assets of the Trust Estate;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Sponsor, the Master Servicer, the Trust, Holding and the
Indenture Trustee hereby agree as follows:
ARTICLE I.
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.1 Definitions.For all purposes of this Agreement, the following
terms shall have the meanings set forth below, unless the context clearly
indicates otherwise. In addition, capitalized terms used herein and not defined
herein shall have their respective meanings as set forth in the Indenture.
"Accepted Servicing Practices": The Master Servicer's normal servicing
practices in servicing and administering mortgage loans for its own account,
which in general will conform to the mortgage servicing practices of prudent
mortgage lending institutions which service for their own account mortgage loans
of the same type as the Mortgage Loans in the jurisdictions in which the related
Mortgaged Properties are located.
"Account": The Note Account and the Principal and Interest Account.
"Additional Balance": As to any Mortgage Loan and any day, the
aggregate amount of all Draws conveyed to the Trust pursuant to Section 2.1,
it being understood that the Trust shall not be required to fund any
Additional Balances.
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"Agreement": This Sale and Servicing Agreement, as it may be amended
from time to time in accordance with the terms hereof, and including the
Exhibits hereto.
"AMHC": Advanta Mortgage Holding Company, a Delaware corporation and
the corporate parent of Advanta Mortgage Corp. USA, and the indirect
corporate parent of Advanta Mortgage Conduit Services, Inc.
"Appraised Value": As to any Mortgaged Property, the value established
by a drive-by inspection, a full appraisal of such Mortgaged Property or a
statistical property valuation.
"Assignee": With respect to any Person, any direct or indirect
assignee, pledgee or other transferee of such Person.
"Assignment of Mortgage": With respect to each Mortgage Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the recordation of the pledge
of the Mortgage Loan to the Indenture Trustee for the benefit of the Noteholders
and the Insurer.
"Assignor": With respect to any Person, any immediate or mediate
assignor, pledgor or other transferor to such Person of any right, title or
interest in or to any property of any kind whatsoever.
"Authorized Officer": With respect to any Person, any person who is
authorized to act for such Person in matters relating to this Agreement, and
whose action is binding upon such Person and, with respect to the Indenture
Trustee, the Master Servicer and the Sponsor, initially including those
individuals whose names appear on the lists of Authorized Officers delivered on
the Closing Date.
"▇▇▇▇ of Sale and Assignment": The ▇▇▇▇ of sale and assignment between the
Warehouse Trust, as seller, and Holding, as buyer, dated as of May 1, 1999,
pursuant to which Holder acquired a portion of the Mortgage Loans.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which the Insurer, the Master Servicer or the Sponsor is closed or commercial
banking institutions in the State of New York, State of Delaware or in the city
in which the principal Corporate Trust Office of the Indenture Trustee is
located, are authorized or obligated by law or executive order to be closed.
"Certificates": The trust certificates evidencing the beneficial
ownership interests in Holding or the Trust, as applicable.
"Charged-Off Mortgage Loan": Any Mortgage Loan that has been Delinquent
for a period of 180 consecutive days (irrespective of any grace periods). The
Trust will be entitled to recoveries from all Charged-Off Mortgage Loans and
such recoveries shall be treated as interest.
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"Civil Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Closing Date": May 27, 1999.
"Code": The Internal Revenue Code of 1986, as amended, and any
successor statute.
"Combined Loan-to-Value Ratio": With respect to any Mortgage Loan as of
any date, the percentage equivalent of a fraction, the numerator of which is the
sum of (A) the Credit Limit and (B) as of the date of execution of the related
Credit Line Agreement (or as of any subsequent date, in connection with an
increase in the Credit Limit for such Mortgage Loan) the sum of the outstanding
principal balance of any mortgage loan or mortgage loans that are senior in
priority to the Mortgage Loan and which are secured by the same Mortgaged
Property and the denominator of which is the lesser of (C) the Appraised Value
of the related Mortgaged Property as set forth in the Mortgage File on such date
of execution or on such subsequent date, if any, or (D) in the case of a
Mortgaged Property purchased within one year of the date of execution of the
Credit Line Agreement, the purchase price thereof.
"Coupon Rate": With respect to any Mortgage Loan and as of any date,
the per annum rate of interest specified under the related Credit Line
Agreement to the calculation of interest on the Principal Balance of such
Mortgage Loan.
"Coupon Rate Cap": With respect to each Mortgage Loan, the lesser of
(i) the Lifetime Rate Cap specified in the Credit Line Agreement, if any, or
(ii) the Highest Lawful Rate.
"Credit Limit": As to any Mortgage Loan, the maximum principal balance
stated under the terms of the related Credit Line Agreement.
"Credit Limit Utilization Rate": As to any Mortgage Loan, at any time,
the percentage equivalent of a fraction, the numerator of which is the
outstanding Principal Balance and the denominator of which is the related
Credit Limit.
"Credit Line Agreement": With respect to any Mortgage Loan, the related
home equity line of credit agreement executed by the related Mortgagor and any
amendment or modification thereof a form of which is set forth as Exhibit B
attached hereto.
"Cut-Off Date": With respect to each Mortgage Loan, including Mortgage
Loans originated after May 1, 1999 but prior to the Closing Date, the opening of
business on May 1, 1999. With respect to each Qualified Replacement Mortgage
Loan, the Replacement Cut-off Date related to such Qualified Replacement
Mortgage Loan.
"Cut-Off Date Pool Balance": As defined in the Indenture.
"Cut-Off Date Principal Balance": As defined in the Indenture.
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"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Minimum Monthly Payment
due on such Mortgage Loan.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation of
the related Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding Principal Balance of the Mortgage Loan, which
valuation results from a proceeding initiated under the United States Bankruptcy
Code.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due thereon
is not made by the close of business on the day such payment is scheduled to be
due. A Mortgage Loan is "30 days Delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month), then on the last day
of such immediately succeeding month. Similarly for "60 days Delinquent," "90
days Delinquent" and so on.
"Depository": The Depository Trust Company, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and any successor Depository hereafter named.
"Designated Depository Institution": As defined in the Indenture.
"Determination Date": As to each Payment Date, the third Business Day
next preceding such Payment Date or such earlier day as shall be agreed to by
the Insurer and Indenture Trustee.
"Document Delivery Requirements": The Sponsor's obligations to deliver
certain legal documents, to prepare and record certain Assignments of Mortgage
or to deliver certain opinions relating to Assignments of Mortgage, in each case
with respect to the Mortgage Loans and upon certain conditions as set forth in
Section 2.1 hereof.
"Draw": With respect to any Mortgage Loan, an additional borrowing by
the Mortgagor subsequent to the related Cut-Off Date in accordance with the
related Credit Line Agreement.
"Draw Period": With respect to any Mortgage Loan, the period of time
specified in the related Credit Line Agreement whereby a Mortgagor may make a
Draw under such Credit Line Agreement; unless extended at the option of the
Master Servicer pursuant to the terms hereof and the Credit Line Agreement
(provided that any such extension shall be in accordance with the provisions set
forth herein with respect to Mortgage Loan modifications).
"Event of Servicing Termination": As defined in Section 5.1 hereof.
"FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.
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"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"First Mortgage Loan": A Mortgage Loan which constitutes a first
priority mortgage lien with respect to any Mortgaged Property.
"Foreclosure Profit": With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (x) the aggregate of its Net Liquidation Proceeds
exceeds (y) the sum of (i) the related Principal Balance and (ii) accrued and
unpaid interest thereon at the applicable Coupon Rate from the date interest was
last paid through the date of receipt of the final Liquidation Proceeds of such
Liquidated Mortgage Loan immediately prior to the final recovery of its
Liquidation Proceeds.
"FNMA": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the
Federal National Mortgage Association Charter Act, as amended, or any
successor thereof.
"Highest Lawful Rate": As defined in Section 7.12.
"Holding": Advanta Holding Trust 1999-A, a Delaware business trust.
"Holding Trust Agreement": The trust agreement dated as of May 1, 1999
between the Sponsor and Wilmington Trust Company, as Owner Trustee, relating
to the formation of Holding.
"Indemnification Agreement": As defined in the Indenture.
"Indenture": The Indenture dated as of May 1, 1999 between the Trust
and the Indenture Trustee, as the same may be amended and supplemented from
time to time in accordance with the terms thereof.
"Indenture Trustee": Bankers Trust Company of California, N.A., located on
the date of execution of this Agreement at ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, not in its individual capacity but solely as Indenture Trustee
under this Agreement, and any successor hereunder.
"Indenture Trustee Fee": As defined in the Indenture.
"Insurance Agreement": As defined in the Indenture.
"Insurer": Ambac Assurance Corporation, or any successor thereto, as
issuer of the Policy.
"Interest Collections": With respect to any Remittance Date, the sum of
all payments by or on behalf of Mortgagors and any other amounts constituting
interest collected by the Master Servicer under the Mortgage Loans during the
related Remittance Period, including the portion of Net Liquidation Proceeds
allocated to interest and all
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recoveries with respect to Charged-Off Mortgage Loans. The terms of the related
Credit Line Agreement shall determine the portion of each payment in respect of
a Mortgage Loan that constitutes interest.
"Interest Remittance Amount": With respect to any Remittance Date, the
sum, without duplication, of (i) Interest Collections for such Remittance Period
less the Servicing Fee for the related Remittance Period, except that with
respect to Prepaid Installments, interest shall be remitted in the related
Remittance Period, (ii) without duplication, the portion of the Loan
Reacquisition Price and the Substitution Amount relating to interest on the
Mortgage Loans reacquired during the related Remittance Period, and (iii) the
proceeds of any liquidation of the Trust Estate (to the extent such proceeds
relate to interest).
"Junior Mortgage Loan": A Mortgage Loan which constitutes a junior
priority mortgage lien with respect to the related Mortgaged Property.
"Late Payment Rate": As defined in the Insurance Agreement.
"Lifetime Rate Cap": With respect to each Mortgage Loan for which the
related Credit Line Agreement provides for a lifetime rate cap, the maximum
Coupon Rate permitted at any time under the terms of the related Credit Line
Agreement, a form of which is set forth in Exhibit B hereto.
"Liquidated Mortgage Loan": A defaulted Mortgage Loan (i) which the Master
Servicer has determined that it has recovered all amounts it expects to recover
from or on account of such defaulted Mortgage Loan or (ii) becomes a Charged-Off
Mortgage Loan, whichever is the first to occur. A Mortgage Loan which is
reacquired from the Trust pursuant to Section 2.2(b), 3.3(c) or 3.4 hereof is
not a "Liquidated Mortgage Loan."
"Liquidation Expenses": Expenses which are incurred by the Master Servicer
or any Sub-Servicer in connection with the liquidation of any defaulted Mortgage
Loan, such expenses, including, without limitation, legal fees and expenses, and
any unreimbursed Servicing Advances expended by the Master Servicer or any
Sub-Servicer pursuant to Section 4.10 with respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Mortgage Loan, any
amounts (including the proceeds of any Mortgage Insurance Policy but excluding
any amounts drawn on the Policy) recovered by the Master Servicer in connection
with such Liquidated Mortgage Loan, whether through trustee's sale, foreclosure
sale or otherwise.
"Liquidation Report": As defined in Section 4.13(b).
"Loan Reacquisition Price": With respect to any Mortgage Loan reacquired
from the Trust on a Remittance Date pursuant to Section 2.2(b), 3.3(c) or 3.4
hereof, an amount, without duplication, equal to (i) the outstanding Principal
Balance of such Mortgage Loan as of the date of reacquisition, (ii) one month's
interest on (if not already deposited in the Principal and Interest Account) the
outstanding Principal Balance thereof as of the beginning of the preceding
Remittance Period computed at the Coupon Rate,
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(iii) all Servicing Advances theretofore made with respect to such Mortgage Loan
and not subsequently recovered from the related Mortgage Loan, including
Nonrecoverable Advances and (iv) any Reimbursement Amount relating to such
Mortgage Loan.
"Margin": With respect to each Mortgage Loan, the fixed percentage amount
set forth in the related Credit Line Agreement which amount is added to the
index specified in the related Credit Line Agreement to determine the Coupon
Rate for such Mortgage Loan, subject to any maximum.
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware corporation,
and its permitted successors and assigns.
"Master Servicer Affiliate": A Person (i) controlling, controlled by or
under common control with the Master Servicer, (ii) which is qualified to
service residential mortgage loans, and (iii) is subservicing the Mortgage
Loans.
"Master Servicer's Trust Receipt": The Master Servicer's trust receipt
in the form set forth as Exhibit F hereto.
"Minimum Monthly Payment": With respect to any Mortgage Loan and any
month, the minimum amount required to be paid by the related Mortgagor in
that month.
"Monthly Remittance Amount": With respect to each Remittance Date, the
sum of the Principal Remittance Amount and the Interest Remittance Amount.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or junior lien in real property securing each Credit Line Agreement.
"Mortgage Files": For each Mortgage Loan:
(a) The original Credit Line Agreement, or a certified copy thereof,
bearing all intervening endorsements, endorsed either (i) "Pay to the order of
Bankers Trust Company of California, N.A., as custodian or trustee under the
applicable custody or trust agreement, without recourse" or (ii) "Pay to the
order of Bankers Trust Company of California, N.A., as custodian or trustee
under the applicable custody or trust agreement, without recourse, Advanta as
Master Servicer," or (iii) "Pay to the order of Bankers Trust Company of
California, N.A., as custodian or trustee" by [Seller, signature, name, title]
and signed in the name of the previous owner by an authorized officer (in the
event that the Mortgage Loan was acquired by the previous owner in a merger the
signature must be in the following form: "[the previous owner], successor by
merger to [name of predecessor]," in the event that the Mortgage Loan was
acquired or originated while doing business under another name, the signature
must be in the following form: "[the previous owner], formerly known as
[previous name]", (iv) "Pay to the order of Bankers Trust Company of California,
N.A., without recourse" or (v)"Pay to the order of _________, without recourse".
The original Credit Line Agreement should be
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accompanied by any rider made in connection with the origination of the related
Mortgage Loan.
(b) The original of any guaranty executed in connection with the Credit
Line Agreement (if any).
(c) The original Mortgage with evidence of recording thereon or copies
certified by the related recording office or if the original Mortgage has not
yet been returned from the recording office, a certified copy of the Mortgage.
(d) The originals of any assumption, modification, consolidation or
extension agreements.
(e) The original Assignment of Mortgage of each Mortgage Loan to (1)
"Bankers Trust Company of California, N.A., as custodian or trustee," (2)
"Bankers Trust Company of California, N.A. as trustee or custodian on behalf of
the Advanta Conduit", (3) "Bankers Trust Company of California, N.A., as
trustee" or (4) in blank. In the event that the Mortgage Loan was acquired by
the previous owner in a merger, the Assignment of Mortgage must be the
"(previous owner), successor by merger to (names of predecessor)"; and in the
event that the Mortgage Loan was acquired or originated by the previous owner
while doing business under another name, the Assignment of Mortgage must be by
the "(previous owner), formerly known as (previous name)."
(f) The originals of all intervening Assignments of Mortgage, if
applicable, showing a complete chain of assignment from origination to the
related Seller, including warehousing assignments, with evidence of recording
thereon (or, if an original intervening assignment has not been returned from
the recording office, a certified copy thereof).
"Mortgage Insurance Policy": Any hazard, title or primary mortgage
insurance policy relating to a Mortgage Loan, but excluding any non-mortgage
related or credit life insurance policy. The term "Mortgage Insurance
Policy" shall not include the Policy.
"Mortgage Insurance Proceeds": Proceeds paid by any insurer (other than
the Insurer) pursuant to any Mortgage Insurance Policy covering a Mortgage Loan,
or amounts required to be paid by the Master Servicer pursuant to the last
sentence of the first paragraph of Section 4.11(b), or the penultimate sentence
of Section 4.11(c), net of any component thereof (i) covering any expenses
incurred by or on behalf of the Master Servicer in connection with obtaining
such proceeds, (ii) that is applied to the restoration or repair of the related
Mortgaged Property, (iii) released to the Mortgagor in accordance with the
Master Servicer's normal servicing procedures, or (iv) required to be paid to
any holder of a mortgage in a senior lien position to such Mortgage Loan.
"Mortgage Loan": Each mortgage loan transferred and assigned to the Trust
pursuant to Section 2.1 hereof, together with any Qualified Replacement Mortgage
Loans substituted therefor in accordance with this Agreement, as from time to
time are held as a part of the Trust Estate, the Mortgage Loans originally so
held being identified in the Schedule of Mortgage Loans. The term "Mortgage
Loan" includes the terms "First
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Mortgage Loan" and "Junior Mortgage Loan." The term "Mortgage Loan" includes any
Mortgage Loan which is Delinquent, which relates to a foreclosure or which
relates to a Mortgaged Property that is REO Property prior to such Mortgaged
Property's disposition by the Trust and any Mortgage Loan the related Mortgagor
of which is in bankruptcy. Any mortgage loan which, although intended by the
parties hereto to have been, and which purportedly was, transferred and assigned
to the Trust by the Sponsor, in fact was not transferred and assigned to the
Trust for any reason whatsoever shall nevertheless be considered a "Mortgage
Loan" for all purposes of this Agreement.
"Mortgaged Property": The underlying property securing a Mortgage Loan.
"Mortgagor": The obligor under a Credit Line Agreement.
"Net Liquidation Proceeds": As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of, without duplication, (i) Liquidation Expenses other
than any such expenses reflected in the calculation of Mortgage Insurance
Proceeds for such Liquidated Mortgage Loan, (ii) unreimbursed Servicing Advances
incurred in connection with such Liquidated Mortgage Loan and (iii) accrued and
unpaid Servicing Fees with respect to such Mortgage Loan through the date of
liquidation. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Mortgage Loan be less than zero.
"Nonrecoverable Advance": With respect to any Mortgage Loan, any Servicing
Advance previously made and not reimbursed pursuant to Section 4.10 or any
Servicing Advance proposed to be made in respect of a Mortgage Loan, either of
which, in the good faith business judgment of the Master Servicer would not be
ultimately recoverable.
"Note": Any Note designated as a "Note" on the face thereof, in
substantially the form of Exhibit A to the Indenture.
"Note Account": The Note Account established in accordance with
Section 8.3 of the Indenture and maintained by the Indenture Trustee.
"Note Balance": As of any date of determination, the Original Note
Balance, less any amounts actually distributed as principal to the
Noteholders on all prior Payment Dates.
"Noteholder": The Person in whose name a Note is registered on the
Note Register.
"Note Register": The register maintained by the Indenture Trustee in
accordance with Section 2.3 of the Indenture, in which the names of the
Noteholders are set forth.
"Note Registrar": The Indenture Trustee, acting in its capacity as
Note Registrar appointed pursuant to Section 2.3 of the Indenture, or any
duly appointed and eligible successor thereto.
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"Officer's Certificate": A certificate signed by any Authorized
Officer of any Person delivering such certificate and delivered in accordance
with the terms of this Agreement.
"Operative Documents": As defined in the Indenture.
"Original Note Balance": $247,500,000.
"Original Principal Amount": With respect to any particular Note, an
amount equal to the product of (i) the Percentage Interest of such Note and
(ii) the Original Note Balance.
"Originators": Advanta National Bank, a national banking association,
and Advanta Finance Corp., a Nevada corporation.
"Outstanding": As defined in the Indenture.
"Owner Trustee": Wilmington Trust Company, not in its individual capacity
but solely as Owner Trustee under the Trust Agreement or the Holding Trust
Agreement (as applicable), its successors in interest or any successor Owner
Trustee under the Trust Agreement or the Holding Trust Agreement (as
applicable).
"Payment Date": Any date on which the Indenture Trustee is required to
make distributions to the Noteholders, which shall be the 25th day of each
month, commencing in the month following the Closing Date or, if such day is not
a Business Day, then on the next succeeding Business Day.
"Percentage Interest": As defined in the Indenture.
"Person": Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust,
unincorporated organization or government
"Policy": As defined in the Indenture.
"Pool Certification": As defined in Exhibit E attached hereto.
"Pool Factor": A seven-digit decimal which the Indenture Trustee shall
compute monthly expressing the Note Balance as of each Payment Date (after
giving effect to any distribution of principal on such Payment Date) as a
proportion of the Original Note Balance. On the Closing Date, the Pool Factor
will be 1.0000000. Thereafter, the Pool Factor shall decline to reflect
reductions in the Note Balance resulting from distributions of principal to the
Noteholders.
"Pool Principal Balance": With respect to any date of determination,
the aggregate of the Principal Balances of the Mortgage Loans as of such date.
"Preference Amount": As defined in the Policy.
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"Prepaid Installment": With respect to any Mortgage Loan, any installment
of principal thereof and interest thereon received prior to the scheduled due
date for such installment, intended by the Mortgagor as an early payment thereof
and not as a Prepayment with respect to such Mortgage Loan.
"Prepayment": Any payment of principal of a Mortgage Loan which is
received by the Master Servicer in advance of the scheduled due date for the
payment of such principal (other than the principal portion of any Prepaid
Installment), and the proceeds of any Mortgage Insurance Policy which are to be
applied as a payment of principal on the related Mortgage Loan in advance of the
scheduled payment shall be deemed to be Prepayments for all purposes of this
Agreement.
"Preservation Expenses": Expenditures made by the Master Servicer or any
Sub-Servicer in connection with a foreclosed Mortgage Loan prior to the
liquidation thereof, including, without limitation, expenditures for real estate
property taxes, hazard insurance premiums, property restoration or preservation.
"Prime": The "prime" rate of interest charged from time to time as set
forth in the related Credit Line Agreement.
"Principal and Interest Account": Collectively, each principal and
interest account created by the Master Servicer or any Sub-Servicer pursuant
to Section 4.9(a) hereof, or pursuant to any Sub-Servicing Agreement.
"Principal Balance": As to any Mortgage Loan, other than a Liquidated
Mortgage Loan, and as of any date, the related Cut-Off Date Principal Balance,
plus (i) any Additional Balance, minus (ii) all collections credited as
principal against the Mortgage Loan in accordance with the related Credit Line
Agreement prior to such day. For purposes of this definition, a Liquidated
Mortgage Loan shall be deemed to have a Principal Balance of zero as of the
first day of the Remittance Period following the Remittance Period in which such
Mortgage Loan becomes a Liquidated Mortgage Loan and at all times thereafter.
"Principal Collections": With respect to any Payment Date, the sum of all
payments by or on behalf of Mortgagors and any other amounts constituting
principal (including, but not limited to, any portion of Mortgage Insurance
Proceeds or Net Liquidation Proceeds allocable to principal of the applicable
Mortgage Loan, but excluding Foreclosure Profits and any recoveries in respect
of Charged-Off Mortgage Loans) collected by the Master Servicer under the
Mortgage Loans during the related Remittance Period. The terms of the related
Credit Line Agreement shall determine the portion of each payment in respect of
a Mortgage Loan that constitutes principal.
"Principal Remittance Amount": With respect to any Remittance Date, the
sum, without duplication, of (i) Principal Collections for such Remittance
Period, except that with respect to Prepaid Installments, principal shall be
remitted in the related Remittance Period, (ii) without duplication, the portion
of the Loan Reacquisition Price and the Substitution Amount relating to
principal on the Mortgage Loans reacquired during the
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related Remittance Period and (iii) the proceeds of any liquidation of the Trust
Estate (to the extent such proceeds relate thereon).
"Prospectus": That certain Prospectus dated May 6, 1999, naming
Advanta Mortgage Conduit Services, Inc. as registrant and describing certain
mortgage loan asset-backed securities to be issued from time to time as
described in related Prospectus Supplements.
"Prospectus Supplement": That certain Prospectus Supplement dated May
18, 1999, describing the Notes issued by the Trust.
"Purchase Agreement": The purchase agreement, dated as of May 1, 1999,
among the Sponsor, Advanta National Bank and Advanta Finance Corp.
"Qualified Replacement Mortgage Loan": As defined in Section 2.3.
"Realized Loss": As to any Liquidated Mortgage Loan, the amount, if any,
by which the Principal Balance thereof as of the date of liquidation is in
excess of Net Liquidation Proceeds allocable to the Principal Balance thereof
realized thereon.
"Record Date": As defined in the Indenture.
"Registration Statement": The Registration Statement (No. 333-77927)
filed by the Sponsor with the Securities and Exchange Commission, including
all amendments thereto and including the Prospectus and the Prospectus
Supplement relating to the Notes constituting a part thereof.
"Reimbursement Amount": As of any Payment Date and with respect to the
Policy, the sum of (x)(i) all payments made pursuant to the Policy previously
received by the Indenture Trustee and all Preference Amounts previously paid to
the Indenture Trustee by the Insurer and in each case not previously repaid to
the Insurer pursuant to Section 8.6(b)(vi) of the Indenture plus (ii) interest
accrued on each such payment made pursuant to the Policy not previously repaid
calculated at the Late Payment Rate from the date the Indenture Trustee received
the related payment made pursuant to the Policy and (y)(i) any other amounts
then due and owing to the Insurer under the Insurance Agreement plus (ii)
interest on such amounts at the Late Payment Rate. The Insurer shall notify the
Indenture Trustee and the Sponsor of the amount of any Reimbursement Amount.
"Remittance Date": With respect to any Payment Date, the date on which the
Master Servicer is required to remit monies on deposit in the Principal and
Interest Account to the Indenture Trustee for deposit in the Note Account, which
shall be the 18th day or, if such day is not a Business Day, the next succeeding
Business Day, of each month, commencing in the month following the month in
which the Closing Date occurs.
"Remittance Period": As to any Payment Date, the calendar month
preceding the month of such Payment Date.
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"REO Property": A Mortgaged Property acquired by the Master Servicer or
any Sub-Servicer on behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage Loan, the first day of the calendar month in which such Qualified
Replacement Mortgage Loan is conveyed to the Trust.
"Representation Letter": Collectively, the letters to, or the
agreements with, the Depository to effectuate a book entry system with
respect to the Notes registered in the Register under the nominee name of the
Depository.
"SAS 70": Means the Statement on Auditing Standards No. 70, Reports on
the Processing of Transactions by Service Organizations as in effect as of
the date hereof, which may be amended from time to time.
"Schedule of Mortgage Loans": The Schedule of Mortgage Loans attached
hereto as Schedule I, as the same may be supplemented or amended from time to
time in connection with substitutions of Qualified Replacement Mortgage Loans.
The information contained on the Schedule of Mortgage Loans shall be delivered
to the Indenture Trustee in an electronic medium.
"Securities Act": The Securities Act of 1933, as amended.
"Senior Lien": With respect to any Junior Mortgage Loan, the mortgage
loan relating to the corresponding Mortgaged Property having a senior
priority lien.
"Servicing Advance": As defined in Section 4.10 and Section 4.13 hereof.
"Servicing Fee": With respect to any Remittance Period, the product of (i)
Servicing Fee Rate and (ii) the Pool Principal Balance of as of the opening of
business on the first day of the related Remittance Period (or the Cut-Off Date
Pool Balance with respect to the first Payment Date).
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any officer of the Master Servicer or of an agent or
independent contractor through which all or part of the Master Servicer's
servicing responsibilities are carried out, involved in, or responsible for, the
administration and servicing of the Mortgage Loans.
"Sponsor": Advanta Mortgage Conduit Services, Inc., a Delaware
corporation.
"S&P": Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"Substitution Amount": In connection with the delivery of any Qualified
Replacement Mortgage Loan, if the outstanding principal amount of such Qualified
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Replacement Mortgage Loan as of the applicable Replacement Cut-Off Date is less
than the Principal Balance of the Mortgage Loan being replaced, an amount equal
to such difference together with accrued and unpaid interest on such amount
calculated at the Coupon Rate, net of the Servicing Fee, of the Mortgage Loan
being replaced.
"Sub-Servicer": Any Person with whom the Master Servicer has entered
into a Sub-Servicing Agreement and who satisfies any requirements set forth
in Section 4.5 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract reasonably acceptable to
the Insurer between the Master Servicer and any Sub-Servicer (other than an
affiliated Sub-Servicer) relating to the servicing and/or administration of
certain Mortgage Loans as permitted by Section 4.5.
"Telerate Screen Page 3750": The display designated as page 3750 on the
Telerate Service (or such other page as may replace page 3750 on that service
for the purpose of displaying London interbank offered rates of major banks).
"Termination Fees": With respect to Mortgage Loans which prepay in
full or in part and are secured by Mortgaged Properties in certain
jurisdictions, termination fee as specified in the related Credit Line
Agreement.
"Transfer Date": With respect to a Qualified Replacement Mortgage Loan,
the date that such Mortgage Loan is delivered to the Indenture Trustee on behalf
of the Trust, and with respect to a Mortgage Loan that is reassigned to the
Sponsor pursuant to Section 2.5, the date that is specified therein.
"Transfer Notice Date": As defined in Section 2.5 herein.
"Trust": Advanta Revolving Home Equity Loan Trust 1999-A created by
the Trust Agreement until a successor acceptable to the Insurer replaces it,
and thereafter, such successor.
"Trust Agreement": The Trust Agreement dated as of May 1, 1999 among
the Owner Trustee, the Sponsor and Holding relating to the formation of the
Trust.
"Trust Estate": As defined in the Indenture.
"UCC": Unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
"Underwriters": Bear, ▇▇▇▇▇▇▇ & Co. Inc. and ▇▇▇▇▇▇ Brothers Inc.
"Unqualified Mortgage Loan": A Mortgage Loan which is subject to
repurchase or substitution pursuant to Section 2.1(b) or Section 3.4(b).
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"Warehouse Trust": Any trust established by the Sponsor or any
affiliate to finance the origination of mortgage loans, including Advanta
Mortgage Funding Trust, a Delaware business trust.
Section 1.2 Use of Words and Phrases.
"Herein," "hereby," "hereunder," "hereof," "hereinbefore", "hereinafter"
and other equivalent words refer to this Agreement as a whole and not solely to
the particular section of this Agreement in which any such word is used. The
definitions set forth in Section 1.1 hereof include both the singular and the
plural. Whenever used in this Agreement, any pronoun shall be deemed to include
both singular and plural and to cover all genders. As used herein, any form of
the word "include" shall be deemed to be followed by the words "without
limitation.".
Section 1.3 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents are
for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.4 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Notes may be qualified to the extent that the
same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.
ARTICLE II.
CONVEYANCE OF MORTGAGE LOANS
Section 2.1 Conveyance of the Mortgage Loans
(a) The Sponsor, concurrently with the execution and delivery hereof,
hereby sells, assigns, transfers, sets over and otherwise conveys or shall
request or cause to be transferred, sold, assigned, set over and otherwise
conveyed to Holding, and Holding hereby purchases and acquires, without recourse
(subject to the Sponsor's obligations herein), all right, title and interest of
the Sponsor in and to: (i) all Mortgage Loans acquired by the Sponsor pursuant
to the Purchase Agreement listed on the Schedule of Mortgage Loans, and their
respective Principal Balances (including all Additional Balances) and all
principal and interest collections in respect thereof on or after the
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respective Cut-Off Date; (ii) all Mortgaged Properties to the extent that they
are acquired by foreclosure or deed in lieu of foreclosure; (iii) all of the
Sponsor's rights under any Mortgage Insurance Policies covering the Mortgaged
Properties; (iv) all of the Sponsor's rights and benefits, but none of its
obligations or burdens, under Sections 2.03, 2.05, 4.01, 4.02 and 4.04 (other
than the fourth paragraph thereof) of the Purchase Agreement, including all of
the Sponsor's rights and remedies in the event of certain breaches by the
Originators of their respective representations and warranties under Sections
4.01 and 4.02 of the Purchase Agreement; (v) all Mortgage Files and other
documents relating to the foregoing; (vi) all amounts held in the Principal and
Interest Account and the Note Account; (vii) all proceeds with respect to the
foregoing; and (viii) all other assets included or to be included in the Trust
Estate created under the Indenture for the benefit of Noteholders and the
Insurer; provided, however, that neither Holding nor any of its Assignees
(including the Trust and the Indenture Trustee) shall assume any obligation
under any Credit Line Agreement that provides for the funding of future advances
to the Mortgagor thereunder, it being understood that neither Holding nor any of
its Assignees (including the Trust and the Indenture Trustee) shall be required
or permitted to fund any such future advances.
On or before the Closing Date, the Sponsor will cause the Insurer to
deliver the Policy to the Indenture Trustee for the benefit of the Noteholders
of the Notes.
As full consideration for the Sponsor's sale, assignment, transfer,
set-over and conveyance to Holding of all of its right, title and interest in
and to the Mortgage Loans and the other rights and properties specified above,
Holding shall (A) pay to or upon the order of the Sponsor that amount in
immediately available funds equal to the proceeds of the sale of the Notes, net
of any underwriting discounts and other transaction costs (including the cost of
obtaining the Policy as described above and the expenses referred to in Section
2.01 of the Purchase Agreement), and (B) direct the issuance of one or more
Certificates evidencing in the aggregate 100% of the beneficial ownership
interest in Holding to or upon the order of the Sponsor or its designees, all in
such amounts as the Sponsor shall determine on or before the Closing Date.
(b) It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans (including the related Mortgage Files and the other rights
and properties described in Section 2.1(a) above) by the Sponsor to Holding as
contemplated by Section 2.1(a) be construed as a sale of the Mortgage Loans by
the Sponsor to Holding. It is not the intent of the parties that such conveyance
be deemed a pledge of the Mortgage Loans by the Sponsor to Holding or any of
Holding's Assignees (including the Indenture Trustee) to secure a debt or other
obligation of the Sponsor or any Assignor of the Sponsor. However, in the event
and to the extent that, notwithstanding the intent of the parties hereto, any or
all of the Mortgage Loans (including the related Mortgage Files and the other
rights and properties described in Section 2.1(a) above) are held to be property
of the Sponsor or any Warehouse Trust or any of their respective Assignors,
then:
(i) this Agreement shall also be deemed to be a security agreement
within the meaning of Article 9 of the New York UCC;
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(ii) the conveyance provided for herein shall be deemed to be a
grant by the Sponsor and the Warehouse Trusts to Holding of a
first priority security interest in all of the Sponsor's and
the Warehouse Trusts' right, title and interest in and to the
Mortgage Loans (including the related Mortgage Files and the
other rights and properties described in Section 2.1(a) above)
and all amounts payable to the holder of the Mortgage Loans
and/or such rights or properties in accordance with the terms
thereof and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments,
securities or other property, including all amounts from time
to time held or invested in the Note Account, or the Principal
and Interest Account, whether in the form of cash,
instruments, securities or other property;
(iii) the possession by Holding or any of its Assignees or their
respective bailees or agents of items of property that
constitute instruments, money, negotiable documents or chattel
paper shall be deemed to be "possession by the secured party"
for purposes of perfecting the security interest pursuant to
Section 9-305 of the New York UCC;
(iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons
holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of Holding
for the purpose of perfecting such security interest under
applicable law; and
(v) the obligations secured by the first priority security
interest described in clause (iii) above shall be deemed to
include any and all obligations of Holding or any of its
Assignees (including the Trust) to pay the principal of and
interest on the Notes to the Noteholders and to pay the fees,
expenses and other amounts required to be paid to the Master
Servicer, the Indenture Trustee, the Owner Trustee, the
Insurer and the Certificateholders, all in accordance with and
otherwise subject to the Operative Documents (including the
Indenture).
Any assignment or other transfer of the interest of Holding under any
provision hereof shall also be deemed to be an assignment of any security
interest created hereby. Each of the Sponsor, the Warehouse Trusts and Holding
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and would be
maintained as such throughout the terms of this Agreement and the Indenture. The
Sponsor also covenants not to pledge, assign or grant any security interest to
any third party in any Mortgage Loan conveyed to Holding hereunder.
(c) Upon Holding's request, the Sponsor shall perform (or cause to be
performed) such further acts and execute, acknowledge and deliver (or cause to
be executed,
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acknowledged and delivered) to Holding such further documents as Holding shall
deem necessary or advisable in order to evidence, establish, maintain, protect,
enforce or defend its rights in and to the Mortgage Loans and other rights and
properties transferred hereunder or otherwise to carry out the intent and
accomplish the purposes of this Agreement (including UCC-1 financing statements
naming the Sponsor as debtor and Holding as secured party and any continuation
statements relating thereto).
(d) Holding, immediately after the purchase and sale described in Section
2.1(a) above but otherwise concurrently with the execution and delivery hereof,
hereby transfers, sets over and otherwise conveys, to the Trust, and the Trust
hereby acquires without recourse (subject to Holding's obligations herein), all
right, title and interest of Holding in and to: (i) all Mortgage Loans listed on
the Schedule of Mortgage Loans (which includes the Mortgage Loans acquired by
Holding from the Warehouse Trust pursuant to the ▇▇▇▇ of Sale and Assignment),
including their respective Principal Balances (including all Additional
Balances) and all principal and interest collections in respect thereof on or
after the Cut-Off Date; (ii) all Mortgaged Properties to the extent that they
are acquired by foreclosure or deed in lieu of foreclosure; (iii) all of the
Sponsor's rights under any Mortgage Insurance Policies covering the Mortgaged
Properties; (iv) all of the Sponsor's rights and benefits, but none of its
obligations or burdens, under Sections 2.03, 2.05, 4.01, 4.02 and 4.04 (other
that the fourth paragraph thereof) of the Purchase Agreement, including all of
the Sponsor's rights and remedies in the event of certain breaches by the
Originators of their respective representations and warranties under Sections
4.01 and 4.02 of the Purchase Agreement (all of which rights and benefits were
assigned to Holding pursuant to Section 2.1(a) above); (v) all Mortgage Files
and other documents relating to the foregoing; (vi) all amounts held in the
Principal and Interest Account and the Note Account; (vii) all proceeds with
respect to the foregoing; and (viii) all other assets included or to be included
in the Trust Estate created under the Indenture for the benefit of Noteholders
and the Insurer; provided, however, that neither the Trust nor any of its
Assignees (including the Indenture Trustee) shall assume any obligation under
any Credit Line Agreement that provides for the funding of future advances to
the Mortgagor thereunder, it being understood that neither the Trust nor any of
its Assignees (including the Indenture Trustee) shall be required or permitted
to fund any such future advances. In addition, on or before the Closing Date,
Holding will cause the Policy to be delivered to the Indenture Trustee for the
benefit of the Noteholders of the Notes. As full consideration for Holding's
transfer, set-over and conveyance to the Trust of all of its right, title and
interest in and to the Mortgage Loans and the other rights and properties
specified above, the Trust shall (x) pay to or upon the order of Holding that
amount in immediately available funds equal to the proceeds of the sale of the
Notes, net of any underwriting discounts and other transaction costs (including
the cost of obtaining the Policy as described above and the expenses referred to
in Section 2.01 of the Purchase Agreement), and (y) issue to Holding one or more
Certificates evidencing in the aggregate 100% of the beneficial ownership
interest in the Trust.
(e) It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans (including the related Mortgage Files and the other rights
and properties described in Section 2.1(d) above) by Holding to the Trust as
contemplated by Section
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2.1(d) be construed as a sale of the Mortgage Loans by Holding to the Trust. It
is, further, not the intent of the parties that such conveyance be deemed a
pledge of the Mortgage Loans by Holding to the Trust or any of the Trust's
Assignees (including the Indenture Trustee) to secure a debt or other obligation
of Holding or any Assignor of Holding. However, in the event and to the extent
that, notwithstanding the intent of the parties hereto, any or all of the
Mortgage Loans (including the related Mortgage Files and the other rights and
properties described in Section 2.1(d) above) are held to be property of Holding
or any of its Assignors, then (i) this Agreement shall also be deemed to be a
security agreement within the meaning of Article 9 of the New York UCC; (ii) the
conveyance provided for herein shall be deemed to be a grant by Holding to the
Trust of a first priority security interest in all of Holding' right, title and
interest in and to the Mortgage Loans (including the related Mortgage Files and
the other rights and properties described in Section 2.1(a) above) and all
amounts payable to the holder of the Mortgage Loans and/or such rights or
properties in accordance with the terms thereof and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property, including all amounts from time to time held or
invested in the Note Account or the Principal and Interest Account, whether in
the form of cash, instruments, securities or other property; (iii) the
possession by the Trust or any of its Assignees or their respective agents of
items of property that constitute instruments, money, negotiable documents or
chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to Section 9-305 of the
California UCC; (iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trust
for the purpose of perfecting such security interest under applicable law; and
(v) the obligations secured by the first priority security interest described in
clause (iii) above shall be deemed to include any and all obligations of the
Trust or any of its Assignees to pay the principal of and interest on the Notes
to the Noteholders and to pay the fees, expenses and other amounts required to
be paid to the Master Servicer, the Indenture Trustee, the Owner Trustee, the
Insurer and the Certificateholders, all in accordance with and otherwise subject
to the Operative Documents (including the Indenture). Any assignment or other
transfer of the interest of the Trust under any provision hereof shall also be
deemed to be an assignment of any security interest created hereby. Each of
Holding and the Trust shall, to the extent consistent with this Agreement, take
such actions as may be necessary to ensure that, if this Agreement were deemed
to create a security interest in the Mortgage Loans, such security interest
would be deemed to be a perfected security interest of first priority under
applicable law and would be maintained as such throughout the terms of this
Agreement and the Indenture. Holding also covenants not to pledge, assign or
grant any security interest to any third party in any Mortgage Loan conveyed to
the Trust hereunder.
(f) Upon the Trust's request, Holding shall perform (or cause to be
performed), such further acts and execute, acknowledge and deliver (or cause to
be executed, acknowledged and delivered) to the Trust such further documents as
the Trust shall deem necessary or advisable in order to evidence, establish,
maintain, protect, enforce or defend its rights in and to the Mortgage Loans and
other rights and properties transferred hereunder or otherwise to carry out the
intent and accomplish the purposes of this
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Agreement (including filing UCC-1 financing statements naming Holding as debtor
and the Trust as secured party and any continuation statements relating
thereto).
(g) In connection with the transfer and assignment of the Mortgage Loans,
the Sponsor and Holding agree to:
(i) cause to be delivered without recourse to the Indenture
Trustee, on the Closing Date with respect to the Mortgage Loans or on the
Transfer Date with respect to any Qualified Replacement Mortgage Loan, the
items listed in the definition of "Mortgage File";
(ii) cause, within 75 Business Days following the Closing Date
or Transfer Date (as applicable), Assignments of Mortgage to be (x)
prepared and copies delivered to the Indenture Trustee and (y) originals
submitted for recording in the appropriate jurisdictions wherein such
recordation is necessary to perfect the lien thereof as against creditors
of or purchasers from the Sponsor to the Indenture Trustee; provided,
however, that Assignments of Mortgage shall not be required to be
submitted for recording with respect to any Mortgage Loan as to which the
recordholder is an Originator unless (A) the related Mortgaged Property is
not located in a jurisdiction in which, as evidenced by an Opinion of
Counsel acceptable to the Rating Agencies and the Insurer and delivered to
the Indenture Trustee and the Insurer within 30 Business Days following
the Closing Date, recordation of such Assignment of Mortgage is not
necessary to perfect the lien of the Indenture Trustee in the related
Mortgage Loan or (B) provided that an Event of Servicing Termination or a
Rapid Amortization Event shall have occurred or the long-term unsecured
debt of Advanta Corp. shall have been assigned a rating of less than BBB
by S&P or less than Baa2 by ▇▇▇▇▇'▇, the existence of circumstances
discussed in Section 2.1(j) below, or the Insurer otherwise directs the
Sponsor in writing; and
(iii) cause, within one year after the Closing Date or the
Transfer Date (as applicable), to be delivered to the Indenture Trustee
and the Insurer evidence of the recording of such Assignments of Mortgage
(provided that such recording is otherwise required pursuant to clause
(ii) above).
All recording, if required pursuant to this Section 2.1, shall be
accomplished at the expense of the Sponsor. Notwithstanding anything to the
contrary contained in this Section 2.1, in those instances where the public
recording office retains the original Mortgage, the assignment of a Mortgage or
the intervening assignments of the Mortgage after it has been recorded, the
Sponsor shall be deemed to have satisfied its obligations hereunder upon
delivery to the Indenture Trustee of a copy of such Mortgage, such assignment or
assignments of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
Copies of all Mortgage assignments and any Assignment of Mortgage in
recordable form received by the Indenture Trustee shall be kept in the related
Mortgage File.
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Within 30 days after the Closing Day, the Master Servicer shall deliver to
the Indenture Trustee for signature powers of attorney for execution,
substantially in the form of Exhibit G, authorizing the Master Servicer on
behalf of the Indenture Trustee to record the Assignments of Mortgage as
provided in clause (ii) above. The Indenture Trustee also may execute new
assignment of mortgage for any Mortgage Loan if the original assignment of
mortgage delivered by the Sponsor to the Indenture Trustee is not in recordable
form at such time as the assignment of mortgage is to be recorded by the
Indenture Trustee.
(h) If an Assignment of Mortgage is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
the Sponsor shall prepare or cause to be prepared a substitute assignment or
cure such defect, as the case may be, and thereafter cause each such assignment
to be duly recorded.
(i) The Sponsor shall reflect on its records that the Mortgage Loans have
been sold to Holding.
(j) If the ultimate consolidating parent of the Master Servicer's
shareholders' equity calculated pursuant to generally accepted accounting
principles, as evidenced by the Financial Statements (as defined in the
Insurance Agreement, and which the Master Servicer hereby agrees to provide to
the Insurer on a quarterly basis as requested by the Insurer), falls below
$5,000,000, then the Sponsor shall promptly prepare and deliver to the Indenture
Trustee Assignments of Mortgage. Upon the direction of the Insurer, the
Indenture Trustee shall submit such Assignments of Mortgage for recording in the
appropriate jurisdictions. The Master Servicer shall pay the anticipated
recording costs to the Indenture Trustee on the date of delivery of such
Assignments of Mortgage to the Indenture Trustee, and if the Master Servicer
fails to do so or the actual recording costs exceed the anticipated recording
costs then the Indenture Trustee shall pay such costs and shall be entitled to
reimbursement therefor from amounts otherwise distributable to the
Certificateholders.
(k) To the extent that the ratings, if any, then assigned to the unsecured
debt of the Advanta National Bank or of its ultimate corporate parent are
satisfactory to the Insurer, ▇▇▇▇▇'▇ and S&P, then any of the Document Delivery
Requirements described above may be waived by an instrument signed by the
Insurer, S&P and ▇▇▇▇▇'▇ (or any documents theretofore delivered to the
Indenture Trustee returned to Advanta National Bank) on such terms and subject
to such conditions as the Insurer, ▇▇▇▇▇'▇ and S&P may permit.
Section 2.2 Acceptance by Indenture Trustee; Certain Substitutions of
Mortgage Loans; Certification by Indenture Trustee.
(a) The Indenture Trustee hereby acknowledges its receipt of the Policy
and agrees to execute and deliver on the Closing Date and each Transfer Date an
acknowledgment of receipt of the Credit Line Agreements delivered by the Sponsor
and declares that it will hold such documents and any amendments, replacement or
supplements thereto, as well as any other assets of the Trust Estate and
delivered to the
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Indenture Trustee, as Indenture Trustee in trust upon and subject to the
conditions set forth herein, for the benefit of the Noteholders and the Insurer.
The Indenture Trustee further agrees to review any other documents delivered by
the Sponsor within 90 days after the Closing Date (or within 90 days with
respect to any Qualified Replacement Mortgage Loan after the Transfer Date) and
to deliver to the Sponsor, the Master Servicer and the Insurer a Pool
Certification to the effect that, as to each Mortgage Loan listed in the
Schedule of Mortgage Loans (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in such Pool Certification as not covered
by such Pool Certification), (i) all documents described in the definition of
"Mortgage Files" and required to be delivered to it pursuant to this Agreement
are in its possession and (ii) such documents have been reviewed by it and have
not been damaged, torn or physically altered and on their face appear to relate
to such Mortgage Loan; provided, however, that such Pool Certification shall not
be required to be delivered prior to 90 days after the Closing Date. The
Indenture Trustee shall be under no duty or obligation to inspect, review or
examine any such documents, instruments, certificates or other papers to verify
the validity, legality, enforceability, sufficiency, due authorization,
recordability or genuineness of same or to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face, nor shall the Indenture Trustee be
under any duty to determine independently whether there are any intervening
assignments or assumption or modification agreements with respect to any
Mortgage Loan.
(b) If the Indenture Trustee during such 90-day period from the Closing
Date or Transfer Date, respectively, finds any document constituting a part of a
Mortgage File which is not properly executed, has not been received within the
specified period, or is unrelated to the Mortgage Loans identified in the
Schedule of Mortgage Loans, or that any Mortgage Loan does not conform in a
material respect to the description thereof as set forth in the Schedule of
Mortgage Loans, the Indenture Trustee shall promptly so notify the Sponsor and
the Insurer. In performing any such review, the Indenture Trustee may
conclusively rely on the Sponsor as to the purported genuineness of any such
document and any signature thereon. It is understood that the scope of the
Indenture Trustee's review of the items delivered by the Sponsor pursuant to
Section 2.1(g)(i) is limited solely to confirming that the documents listed in
Section 2.1(g)(i) have been executed and received, on their face, appear to
relate to the Mortgage Files identified in the Schedule of Mortgage Loans and
conform materially to the description thereof in the Schedule of Mortgage Loans
with regard to Mortgagor name and original Credit Limit.
The Sponsor agrees to use reasonable efforts to remedy a material defect
in a document constituting part of a Mortgage File of which it is so notified by
the Indenture Trustee. If, however, within 60 days after the Indenture Trustee's
notice to it respecting such defect the Sponsor has not remedied or caused to be
remedied the defect and the defect materially and adversely affects the interest
in the related Mortgage Loan of the Indenture Trustee, Noteholders or of the
Insurer, the Sponsor will then on the next succeeding Business Day (i)
substitute in lieu of such Mortgage Loan a Qualified Replacement Mortgage Loan
pursuant to Section 2.3 and, deliver the Substitution Amount applicable thereto
to the Master Servicer for deposit in the Principal and Interest Account or (ii)
reacquire such Mortgage Loan at a purchase price equal to the Loan
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Reacquisition Price thereof, which reacquisition price shall be delivered to the
Master Servicer for deposit in the Principal and Interest Account.
Upon receipt of any Qualified Replacement Mortgage Loan and written
notification of the Substitution Amount, if any, or of written notification
signed by a Servicing Officer to the effect that the Loan Reacquisition Price in
respect of a Unqualified Mortgage Loan has been deposited into the Principal and
Interest Account, then within 10 Business Days, the Indenture Trustee shall, at
the direction of the Master Servicer, execute such documents and instruments of
transfer including preparing an endorsement and assignment of documents, in each
case without recourse, representation or warranty, and take such other actions
as shall reasonably be requested by the Sponsor to effect such transfer by the
Trust of such Unqualified Mortgage Loan to the Sponsor or its designee.
It is understood and agreed that the obligation of the Sponsor to accept a
transfer of a Unqualified Mortgage Loan and to either convey a Qualified
Replacement Mortgage Loan or to make a deposit of any related Loan Reacquisition
Price into the Principal and Interest Account shall constitute the sole remedy
available to Noteholders, the Insurer and the Indenture Trustee against the
Sponsor.
The Sponsor, promptly following the transfer of an Unqualified Mortgage
Loan from the Trust pursuant to this Section, shall deliver an amended Schedule
of Mortgage Loans to the Indenture Trustee and the Insurer and shall make
appropriate entries in its general account records to reflect such transfer. The
Master Servicer shall, following such reacquisition, appropriately ▇▇▇▇ its
records to indicate that it is no longer servicing such Mortgage Loan on behalf
of the Trust. The Sponsor, promptly following such transfer, shall appropriately
▇▇▇▇ its electronic ledger and make appropriate entries in its general account
records to reflect such reacquisition.
Section 2.3 Qualified Replacement Mortgage Loans
(a) A "Qualified Replacement Mortgage Loan" is a Mortgage Loan that
substitutes for another pursuant to Section 2.2(b), 3.3 or 3.4 hereof, which
with respect to the Mortgage Loan being replaced and as of the Replacement
Cut-Off Date (i) has the same interest rate index, a margin over such index and
a maximum interest rate at least equal to those applicable to the Mortgage Loan
being replaced), (ii) is of the same or better property type and the same or
better occupancy status as the replaced Mortgage Loan, (iii) is of the same or
better credit quality classification (determined in accordance with the relevant
Originator's credit underwriting guidelines), (iv) shall mature no later than
the Payment Date occurring in February 2024, (v) has a Combined Loan-to-Value
Ratio no higher than that of the replaced Mortgage Loan, (vi) has a Principal
Balance equal to or less than that of the replaced Mortgage Loan, (vii) is in
the same lien position or better, (viii) is not Delinquent, and (ix) complies
with the representations and warranties set forth in Section 3.3(a). Except with
respect to clause (vii) above, in the event that one or more mortgage loans are
proposed to be substituted for one or more Mortgage Loans, the Insurer may allow
the foregoing tests to be met on a weighted
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average basis or other aggregate basis acceptable to the Insurer, as evidenced
by a written approval delivered to the Indenture Trustee and the Sponsor by the
Insurer.
(b) Each Unqualified Mortgage Loan that is required to be repurchased or
substituted pursuant to the provisions of this Agreement or the Purchase
Agreement shall, upon such reacquisition or substitution in accordance with the
provisions hereof, be released from the Trust and from the lien created by the
Indenture. As to each Mortgage Loan released from the Trust in connection with
the reacquisition thereof or the conveyance of a Qualified Replacement Mortgage
Loan therefor, the Indenture Trustee will transfer, assign, set over and
otherwise convey without recourse, to or upon the order of the Sponsor, all of
its right, title and interest in and to such released Mortgage Loan and all the
Trust's right, title and interest to principal and interest collected on such
released Mortgage Loan on and after the first day of the calendar month in which
such Mortgage Loan is released; as applicable; provided, however, that the Trust
shall reserve and retain all right, title and interest in and to payments of
principal and interest collected on such released Mortgage Loan prior to such
date.
(c) As to each Mortgage Loan released from the Trust in connection with
the conveyance of a Qualified Replacement Mortgage Loan the Indenture Trustee
shall deliver on the date of conveyance of such Qualified Replacement Mortgage
Loan, to the Sponsor, the Mortgage File, properly endorsed without recourse to
the Sponsor.
(d) The Sponsor shall, in connection with the delivery of each Qualified
Replacement Mortgage Loan to the Indenture Trustee, provide the Indenture
Trustee with the information set forth in the Schedule of Mortgage Loans with
respect to such Qualified Replacement Mortgage Loan.
(e) As to any Qualified Replacement Mortgage Loan, the Sponsor shall, if
required to deliver any such Qualified Replacement Mortgage Loan, deliver to the
Indenture Trustee with respect to such Qualified Replacement Mortgage Loan such
documents and agreements as are required to be held by the Indenture Trustee in
accordance with Section 2.2. For any Remittance Period during which the Sponsor
substitutes one or more Qualified Replacement Mortgage Loans, the Master
Servicer shall determine the Substitution Amount, which the Sponsor shall
deposit in the Principal and Interest Account at the time of substitution. All
amounts received in respect of the Qualified Replacement Mortgage Loan during
the Remittance Period in which the circumstances giving rise to such
substitution occur shall not be a part of the Trust Estate and shall not be
deposited by the Master Servicer in the Principal and Interest Account. All
amounts received by the Master Servicer during the Remittance Period in which
the circumstances giving rise to such substitution occur in respect of any
Unqualified Mortgage Loan so removed by the Trust Estate shall be deposited by
the Master Servicer in the Principal and Interest Account. Upon such
substitution, the Qualified Replacement Mortgage Loan shall be subject to the
terms of this Agreement in all respects, and the Sponsor shall be deemed (i) to
have made with respect to such Qualified Replacement Mortgage Loan or Loans, as
of the date of substitution, the covenants, representations and warranties set
forth in Section 3.3 and (ii) to have certified that such Mortgage Loan(s)
is/are Qualified Replacement Mortgage Loan(s). The procedures applied by the
Sponsor
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in selecting each Qualified Replacement Mortgage Loan shall not be materially
adverse to the interests of the Indenture Trustee, the Noteholders or the
Insurer.
Section 2.4 Cooperation Procedures.
The Sponsor, the Master Servicer and the Indenture Trustee covenant to
provide each other with all data and information required to be provided by them
hereunder at the times required hereunder, and additionally covenant reasonably
to cooperate with each other in providing any additional information required by
any of them in connection with their respective duties hereunder.
Section 2.5 Retransfers of Mortgage Loans at Election of Sponsor or the
Related Originator.
Subject to the conditions set forth below, the Sponsor or the related
Originator, may, but shall not be obligated to (except the Sponsor or the
related Originator shall be obligated upon a breach of a representation or
warranty), accept the reassignment of Mortgage Loans held by the Trust as of the
close of business on a Payment Date (the "Transfer Date"). On the fifth Business
Day (the "Transfer Notice Date") prior to the Transfer Date designated in such
notice, the Sponsor or the related Originator shall give the Indenture Trustee,
the Insurer and the Master Servicer a notice of the proposed reassignment that
contains a list of the Mortgage Loans to be reassigned. Such reassignment of
Mortgage Loans shall be permitted upon satisfaction of the following conditions:
(i) No Rapid Amortization Event has occurred or will occur as
a result of such removal;
(ii) On the Transfer Notice Date the Overcollateralization
Amount (after giving effect to the removal from the Trust of the Mortgage
Loans proposed to be retransferred) is at least equal to the Specified
Overcollateralization Amount;
(iii) On or before the Transfer Date, the Sponsor or the
related Originator shall have delivered to the Indenture Trustee, the
Insurer and the Rating Agencies a revised Schedule of Mortgage Loans,
reflecting the proposed retransfer (including any Qualified Replacement
Mortgage Loans proposed to be transferred) and the Transfer Date, and the
Master Servicer shall have marked its servicing records to show that the
Mortgage Loans reassigned to the Sponsor or the related Originator are no
longer owned by the Trust;
(iv) The Sponsor or the related Originator shall represent and
warrant that random selection procedures were used in selecting the
Mortgage Loans and no other selection procedures were used which are
adverse to the interests of the Noteholders or the Insurer were utilized
in selecting the Mortgage Loans to be removed from the Trust; and
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(v) The Sponsor or the related Originator shall have delivered
to the Indenture Trustee and the Insurer an Officer's Certificate
certifying that the items set forth in subparagraphs (i) through (v),
inclusive, have been performed or are true and correct, as the case may
be. The Indenture Trustee may conclusively rely on such Officer's
Certificate, shall have no duty to make inquiries with regard to the
matters set forth therein and shall incur no liability in so relying.
Upon receiving the requisite information from the Sponsor or the related
Originator, the Master Servicer shall perform in a timely manner those acts
required of it, as specified above. Upon satisfaction of the above conditions,
on the Transfer Date the Indenture Trustee shall deliver, or cause to be
delivered, to the Sponsor or the related Originator (or their designee) the
Mortgage File for each Mortgage Loan being so reassigned, and the Indenture
Trustee shall execute and deliver (at the Sponsor's or the related Originator's
direction) to the Sponsor or the related Originator such other documents as
shall be reasonably necessary to reassign such Mortgage Loans to the Sponsor or
the related Originator. Any such transfer of the Trust's right, title and
interest in and to Mortgage Loans shall be without recourse, representation or
warranty by or of the Indenture Trustee or the Trust to the Sponsor or the
related Originator.
ARTICLE III.
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER
Section 3.1 Representations and Warranties of the Sponsor.
The Sponsor hereby represents, warrants and covenants to the Indenture
Trustee, the Master Servicer, the Insurer and to the Noteholders as of the
Closing Date that:
(a) The Sponsor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada and is in good
standing as a foreign corporation in each jurisdiction in which the nature
of its respective business, or the properties owned or leased by it make
such qualification necessary. The Sponsor has all requisite corporate
power and authority to own and operate its respective properties, to carry
out its respective business as presently conducted and as proposed to be
conducted and to enter into and discharge its respective obligations under
this Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which the Sponsor is a party by the Sponsor and its
performance and compliance with the terms of this Agreement and of the
other Operative Documents to which it is a party have been duly authorized
by all necessary corporate action on the part of the Sponsor and will not
violate the Sponsor's Articles of Incorporation or Bylaws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to
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which the Sponsor is a party or by which the Sponsor is bound, or violate
any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the Sponsor or
any of its properties.
(c) This Agreement and the other Operative Documents to which the
Sponsor is a party, assuming due authorization, execution and delivery by
the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of the Sponsor enforceable against it in accordance
with the terms hereof and thereof, except as the enforcement hereof and
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and by general principles of equity (whether considered
in a proceeding or action in equity or at law).
(d) The Sponsor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which might have consequences
that would materially and adversely affect the condition (financial or
other) or operations of the Sponsor or its properties or might have
consequences that would materially and adversely affect its performance
hereunder and under the other Operative Documents to which it is a party.
(e) No litigation is pending or, to the best of the Sponsor's
knowledge, threatened against the Sponsor which litigation might have
consequences that would prohibit its entering into this Agreement or any
other Operative Document to which it is a party or might have consequences
that would materially and adversely affect its performance hereunder and
under the other Operative Documents to which it is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Sponsor contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Sponsor, or matters or activities for which the Sponsor is
responsible in accordance with the Operative Documents or which are
attributed to the Sponsor therein are true and correct in all material
respects, and such statements do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make such statements not misleading.
Other than with respect to the statements referred to in the preceding
sentence, to the best of the Sponsor's knowledge and belief, the
Registration Statement does not contain any untrue statement of a material
fact required to be stated therein or omit to state any material fact
required to be stated therein or necessary to make the statements
contained therein not misleading.
(h) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be
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taken, given or obtained, as the case may be, by or from any federal,
state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Sponsor makes no such
representation or warranty), that are necessary or advisable in connection
with the purchase and sale of the Notes and the execution and delivery by
the Sponsor of the Operative Documents to which it is a party, have been
duly taken, given or obtained, as the case may be, are in full force and
effect on the date hereof, are not subject to any pending proceedings or
appeals (administrative, judicial or otherwise) and either the time within
which any appeal therefrom may be taken or review thereof may be obtained
has expired or no review thereof may be obtained or appeal therefrom
taken, and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and the other Operative Documents on the
part of the Sponsor and the performance by the Sponsor of its respective
obligations under this Agreement and such of the other Operative Documents
to which it is a party.
It is understood and agreed that the representations and warranties set
forth in this Section 3.1 shall survive delivery of the Mortgage Loans to the
Indenture Trustee.
Section 3.2 Representations and Warranties of the Master Servicer.
The Master Servicer hereby represents, warrants and covenants to the
Indenture Trustee, the Sponsor, the Insurer and to the Noteholders as of the
Closing Date that:
(a) The Master Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, is,
in compliance with the laws of each state in which any Mortgaged Property
is located to the extent necessary to enable it to perform its obligations
hereunder and is in good standing as a foreign corporation in each
jurisdiction in which the nature of its business, or the properties owned
or leased by it make such qualification necessary. The Master Servicer has
all requisite corporate power and authority to own and operate its
properties, to carry out its business as presently conducted and as
proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a
party. The Master Servicer has, on a consolidated basis with its direct
parent, AMHC, equity of at least $5,000,000, as determined in accordance
with generally accepted accounting principles.
(b) The execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this
Agreement and the other Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of the
Master Servicer and will not violate the Master Servicer's Articles of
Incorporation or Bylaws or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material contract, agreement or other
instrument to which the Master Servicer is a party or by which the Master
Servicer is bound or violate any statute or any order, rule or regulation
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of any court, governmental agency or body or other tribunal having
jurisdiction over the Master Servicer or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Master Servicer is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a
valid, legal and binding obligation of the Master Servicer, enforceable
against it in accordance with the terms hereof, except as the enforcement
hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and by general principles of equity (whether considered
in a proceeding or action in equity or at law).
(d) The Master Servicer is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which might have consequences
that would materially and adversely affect the condition (financial or
other) or operations of the Master Servicer or its properties or might
have consequences that would materially and adversely affect its
performance hereunder and under the other Operative Documents to which the
Master Servicer is a party.
(e) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which
litigation might have consequences that would prohibit its entering into
this Agreement or any other Operative Document to which it is a party or
might have consequences that would materially and adversely affect its
performance hereunder and under the other Operative Documents to which the
Master Servicer is a party.
(f) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be, by
or from any federal, state or other governmental authority or agency
(other than any such actions, approvals, etc. under any state securities
laws, real estate syndication or "Blue Sky" statutes, as to which the
Master Servicer makes no such representation or warranty), that are
necessary or advisable in connection with the execution and delivery by
the Master Servicer of the Operative Documents to which it is a party,
have been duly taken, given or obtained, as the case may be, are in full
force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either
the time within which any appeal therefrom may be taken or review thereof
may be obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative
Documents on the part of the Master Servicer and the performance by the
Master Servicer of its obligations under this Agreement and such of the
other Operative Documents to which it is a party.
(g) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Master Servicer
contains any untrue
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statement of a material fact or omits to state any material fact necessary
to make the certificate, statement or report not misleading.
(h) The statements contained in the Registration Statement which
describe the Master Servicer or matters or activities for which the Master
Servicer is responsible in accordance with the Operative Documents or
which are attributed to the Master Servicer therein are true and correct
in all material respects, and the Registration Statement does not contain
any untrue statement of a material fact with respect to the Master
Servicer or omit to state a material fact required to be stated therein or
necessary to make the statement contained therein with respect to the
Master Servicer not misleading. Other than with respect to the statements
referred to in the preceding sentence, to the best of the Master
Servicer's knowledge and belief, the Registration Statement does not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements contained therein not misleading.
(i) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65
issued by the Financial Accounting Standards Board. Neither the Master
Servicer nor any affiliate thereof will report on any financial statements
any part of the Servicing Fee as an adjustment to the sales price of the
Mortgage Loans.
(j) The collection practices used by the Master Servicer with
respect to the Mortgage Loans directly serviced by it have been, in all
material respects, legal, proper, prudent and customary in the mortgage
loan servicing business.
(k) The transactions contemplated by this Agreement are in the
ordinary course of business of the Master Servicer.
(l) The terms of each existing Sub-Servicing Agreement and each
designated Sub-Servicer are acceptable to the Master Servicer and any new
Sub-Servicing Agreements or Sub-Servicers will comply with the provisions
of Section 4.1.
It is understood and agreed that the representations and warranties set
forth in this Section 3.2 shall survive delivery of the Mortgage Loans to the
Indenture Trustee.
Upon discovery by the Master Servicer, the Sponsor or the Indenture
Trustee of a breach of any of the representations and warranties set forth in
this Section 3.2 which materially and adversely affects the interests of the
Noteholders or of the Insurer, the party discovering such breach shall give
prompt written notice to the other parties. Within 60 days of its discovery or
its receipt of notice of breach, the Master Servicer shall cure such breach in
all material respects; provided, however, that if the Master Servicer can
demonstrate to the reasonable satisfaction of the Insurer that it is diligently
pursuing remedial action, then the cure period may be extended with the written
approval of the Insurer.
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Section 3.3 Representations and Warranties of the Sponsor with Respect to
the Mortgage Loans; Retransfer of Certain Mortgage Loans.
(a) The Sponsor makes the following representations and warranties, and
Holding makes the representations and warranties set forth in (vi)(b) and
(xv)(b) below, as to the Mortgage Loans on which the Trust relies in accepting
the Mortgage Loans and on which the Insurer relies in issuing the Policy. Such
representations and warranties speak as of the Closing Date, but shall survive
the transfer of the Mortgage Loans to the Trust and the pledge thereof to the
Indenture Trustee pursuant to the Indenture:
(i) All of the original or certified documentation set forth in
the definition of Mortgage File and in Section 2.1(g)(i) (including all
material documents related thereto) with respect to each Mortgage Loan has
been or will be delivered to the Indenture Trustee on the Closing Date.
All such documentation is true and accurate in all material respects. Each
of the documents and instruments specified to be included therein has been
duly executed and in due and proper form, and each such document or
instrument is in a form generally acceptable to prudent mortgage lenders
that regularly originate or purchase mortgage loans comparable to the
Mortgage Loans for sale to prudent investors in the secondary market that
invest in mortgage loans such as the Mortgage Loans.
(ii)Each Mortgage Loan is being serviced by the Master Servicer or
a Master Servicer Affiliate.
(iii) [reserved]
(iv)As of the Closing Date with respect to the Mortgage Loans and
as of the applicable Transfer Date with respect to any Qualified
Replacement Mortgage Loan, the information set forth in the Schedule of
Mortgage Loans for such Mortgage Loans is true and correct in all material
respects.
(v) As of the Closing Date, no more than 0.02% of the Cut-Off Date
Pool Balance of the Mortgage Loans is secured by Mortgaged Properties
located within any single zip code area.
(vi)(a) The Mortgages and the Credit Line Agreements conveyed to
Holding by the Sponsor pursuant to Section 2.1 hereof have not been
assigned or pledged by the Sponsor, and the Sponsor is the sole owner and
holder of such Mortgages and such Credit Line Agreements free and clear of
any and all liens, claims, encumbrances, participation interests,
equities, pledges, charges or security interests of any nature, and has
full right and authority, under all governmental and regulatory bodies
having jurisdiction over the holder of the related Mortgage Loans, to
sell, assign or transfer the same, and (b) the Mortgages and the Credit
Line Agreements conveyed by Holding to the Trust pursuant to Section 2.1
hereof have not been assigned or pledged by Holding, and Holding is the
sole owner and holder of such Mortgages and such Credit Line Agreements
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free and clear of any and all liens, claims, encumbrances, participation
interests, equities, pledges, charges or security interests of any nature,
and has full right and authority, under all governmental and regulatory
bodies having jurisdiction over the holder of the related Mortgage Loans,
to sell, assign or transfer the same.
(vii) As of the Closing Date with respect to the Mortgage Loans,
and as of the applicable Transfer Date with respect to any Qualified
Replacement Mortgage Loan, there is no valid offset, defense or
counterclaim of any obligor under any Credit Line Agreement or Mortgage.
Neither the operation of any of the terms of any such Credit Line
Agreement or any such Mortgage nor the exercise of any right thereunder
will render either such Credit Line Agreement or such Mortgage
unenforceable, in whole or in part, nor subject to any right of
rescission, set-off, claim, counterclaim or defense, including, without
limitation, the defense of usury and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto.
(viii) As of the Cut-Off Date with respect to the Mortgage Loans,
no Minimum Monthly Payment is more than 59 days Delinquent (measured on a
contractual basis) and no more than 0.52% (by the Cut-Off Date Pool
Balance) of the Mortgage Loans were 30-59 days Delinquent (measured on a
contractual basis).
(ix)As of the Cut-Off Date with respect to the Mortgage Loans and
as of the applicable Transfer Date with respect to any Qualified
Replacement Mortgage Loan, each Credit Line Agreement and each Mortgage
relating to such Mortgage Loans is an enforceable obligation of the
related Mortgagor, except as the enforceability thereof may be limited by
the bankruptcy, insolvency or similar laws affecting creditors' rights
generally.
(x) With respect to each Mortgage Loan, on each date that the
Coupon Rates have been adjusted, interest rate adjustments on such
Mortgage Loans were made in compliance with the related Mortgage and
Credit Line Agreement and applicable law.
(xi)With respect to the Mortgage Loans, as of the Cut-Off Date,
(i) the Coupon Rate over the term of each Mortgage Loan may not exceed the
related Lifetime Rate Cap, if any, (ii) the maximum Coupon Rates range
between 15.750% and 24.500%, (iii) the margins range between 0.0% and
8.750%, (iv) the weighted average margin is approximately 4.548%, (v) the
current Coupon Rates range between 7.750% and 16.500%, (vi) the weighted
average Coupon Rate is approximately 12.30%, (vii) the Credit Limits range
between $8,000 and $420,000, (viii) the average Credit Limit is
approximately $30,418, (ix) no Mortgage Loan had a Principal Balance in
excess of approximately $417,000 and (x) the average Principal Balance of
the Mortgage Loans is approximately $29,489.
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(xii) As of the Cut-Off Date, each Mortgaged Property is improved
by a single (one-to-four) family residential dwelling, which may include
manufactured homes, condominiums and townhouses but shall not include
cooperatives or property which constitutes other than real property under
applicable state law.
(xiii) As of the Cut-Off Date, no Mortgage Loan had a Combined
Loan-to-Value Ratio in excess of 125.00%.
(xiv) As of the Cut-Off Date with respect to the Mortgage Loans
and as of the applicable Transfer Date with respect to any Qualified
Replacement Mortgage Loan, each Mortgage is a valid and subsisting first
or junior lien of record on the Mortgaged Property (subject in the case of
any Junior Mortgage Loan only to one or more Senior Liens on such
Mortgaged Property) and subject in all cases to the exceptions to title
set forth in the title insurance policy or title search, with respect to
the related Mortgage Loan, which exceptions are generally acceptable to
banking institutions in connection with their regular mortgage lending
activities, and except for liens for (i) real estate taxes and special
assessments not yet delinquent, (ii) income taxes not yet due, (iii) any
covenants, conditions and restrictions, rights of way, easements, and
other matters of public record and such other exceptions to which similar
properties are commonly subject and which do not individually, or in the
aggregate, materially and adversely affect the benefits of the security
intended to be provided by such Mortgage.
(xv)(a) Immediately prior to the transfers and assignments herein
contemplated, the Sponsor held good and indefeasible title to, and was the
sole owner of, each Mortgage Loan (including its Cut-Off Date Principal
Balance) conveyed by the Sponsor to Holding pursuant to Section 2.1
hereof, all monies due or to become due with respect thereto, and all
proceeds of such Cut-Off Date Principal Balances with respect to such
Mortgage Loans subject to no liens, charges, mortgages, encumbrances or
rights of others except liens which will be released simultaneously with
such transfers and assignments; and immediately upon the transfers and
assignments herein contemplated, the Trust will hold good and indefeasible
title to, and be the sole owner of, each Mortgage Loan subject to no
liens, charges, mortgages, encumbrances or rights of others except liens
which will be released simultaneously with such transfers and assignments
and (b) immediately prior to the transfers and assignments herein
contemplated, Holding held good and indefeasible title to, and was the
sole owner of, each Mortgage Loan (including its Cut-Off Date Principal
Balance) conveyed by Holding to the Trust pursuant to Section 2.1 hereof,
all monies due or to become due with respect thereto, and all proceeds of
such Cut-Off Date Principal Balances with respect to such Mortgage Loans
subject to no liens, charges, mortgages, encumbrances or rights of others
except liens which will be released simultaneously with such transfers and
assignments; and immediately upon the transfers and assignments herein
contemplated, the Trust will hold good and indefeasible title to, and be
the sole owner of, each Mortgage Loan subject to no liens, charges,
mortgages,
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encumbrances or rights of others except liens which will be released
simultaneously with such transfers and assignments
(xvi) To the best of the Sponsor's knowledge, there is no
delinquent tax or assessment lien or mechanic's lien on any Mortgaged
Property relating to a Mortgage Loan, and each such Mortgaged Property is
free of substantial damage and is in good repair.
(xvii) Each Mortgage Loan at the time it was made complied in all
material respects with all applicable state and federal laws and
regulations, including, without limitation, the federal Truth-in-Lending
Act and other consumer protection laws, real estate settlement procedure,
usury, equal credit opportunity, disclosure and recording laws.
(xviii) With respect to each Mortgage Loan that is a First
Mortgage Loan, and, to the best of the Sponsor's knowledge, with respect
to each Mortgage Loan that is a Junior Mortgage Loan, (i) a lender's title
insurance policy, issued in standard California Land Title Association
form or American Land Title Association form, or other form acceptable in
a particular jurisdiction by a title insurance company authorized to
transact business in the state in which the related Mortgaged Property is
situated, was issued on the date of origination of such Mortgage Loan, and
as of the Closing Date with respect to the Mortgage Loans and each
applicable Transfer Date with respect to any Qualified Replacement
Mortgage Loan, each such policy is valid and remains in full force and
effect, or (ii) a title search or guaranty of title customary in the
relevant jurisdiction was obtained with respect to any Mortgage Loan as to
which no title insurance policy or binder was issued.
(xix) As of the Closing Date with respect to the Mortgage Loans
and as of the applicable Transfer Date with respect to any Qualified
Replacement Mortgage Loan, each Credit Line Agreement is the legal, valid,
binding and enforceable obligation of the maker thereof and is enforceable
in accordance with its terms, except only as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity (whether considered in a proceeding or
action in equity or at law).
(xx)The terms of each Credit Line Agreement and each related
Mortgage have not been impaired, cancelled, subordinated, rescinded,
altered or modified in any material respect, and the related Mortgaged
Property has not been released from the lien of the related Mortgage, in
whole or in part and no instrument has been executed that would effect
such release, cancellation, subordination or rescission, except by a
written instrument which (if such instrument is secured by real property)
has been recorded, if necessary, to protect the interest of the
Noteholders and which has been delivered to the Indenture Trustee. The
substance of any other alteration or modification of a Credit Line
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Agreement and related Mortgaged Property is reflected on the related
Schedule of Mortgage Loans.
(xxi) Except as otherwise required by law or the terms of the
Credit Line Agreement, pursuant to the statute under which the related
Mortgage Loan was made, the related Credit Line Agreement is not and has
not been secured by any collateral, pledged account or other security
except the lien of the corresponding Mortgage.
(xxii) Each Mortgaged Property relating to a Mortgage Loan is
located in the state identified in the Schedule of Mortgage Loans and
consists of one or more parcels of real property with a residential
dwelling erected thereon.
(xxiii) To the best of the Sponsor's knowledge, there is no
proceeding pending or threatened for the total or partial condemnation of
any Mortgaged Property relating to a Mortgage Loan, nor is such a
proceeding currently occurring, and each such Mortgaged Property is
undamaged by waste, fire, earthquake or earth movement, flood, tornado or
other casualty, so as to affect adversely the value of such Mortgaged
Property as security for the related Mortgage Loan or the use for which
the premises were intended.
(xxiv) To the best of the Sponsor's knowledge, with respect to
each Mortgage Loan that is a Junior Mortgage Loan, either (A) no consent
for such Mortgage Loan was required by the holder of the related Senior
Lien(s) prior to the making of such Mortgage Loan or (B) such consent has
been obtained and is contained in the related Mortgage File.
(xxv) Each Mortgage relating to a Mortgage Loan contains customary
and enforceable provisions which render the rights and remedies of the
holder thereof adequate for the realization against the related Mortgaged
Property of the benefits of the security, including (A) in the case of a
Mortgage designated as a deed of trust, by trustee's sale and (B)
otherwise by judicial foreclosure. There is no homestead or other
exemption available which materially interferes with the right to sell the
related Mortgaged Property at a trustee's sale or the right to foreclose
the related Mortgage.
(xxvi) As of the Closing Date with respect to the Mortgage Loans
and as of the applicable Transfer Date with respect to a Qualified
Replacement Mortgage Loan, there is no default, breach, violation or event
of acceleration existing under any Mortgage or Credit Line Agreement
relating thereto and no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration, and the Sponsor has
not waived any default, breach, violation or event of acceleration;
provided, however, that the foregoing shall not apply to the extent that
the relevant default, breach, violation or other event relates to one or
more of the Delinquent Mortgage Loans.
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(xxvii) To the best knowledge of the Sponsor, all parties to each
Credit Line Agreement and the related Mortgage had legal capacity to
execute such Credit Line Agreement and the related Mortgage and each such
Credit Line Agreement and the related Mortgage have been duly and properly
executed by such parties.
(xxviii) No selection procedures reasonably believed by the
Sponsor to be adverse to the interests of the Noteholders or the Insurer
was utilized in selecting the Mortgage Loans.
(xxix) As of the Closing Date with respect to the Mortgage Loans,
no Mortgagor has been released, in whole or in part, except in connection
with an assumption agreement which has been approved by the applicable
title insurer (to the extent required by such title insurer) and which is
part of the related Mortgage File delivered to the Indenture Trustee.
(xxx) To the best of the Sponsor's knowledge, at the time of
origination of each Mortgage Loan that is not a First Mortgage Loan, the
related senior lien was not more than 30 days delinquent.
(xxxi) To the best of the Sponsor's knowledge, all required
inspections, licenses and certificates with respect to the use and
occupancy of all occupied portions of all property securing the Mortgages
relating to the Mortgage Loans have been made, obtained or issued, as
applicable.
(xxxii) As of the Cut-Off Date, no more than 90.55% of the
Mortgage Loans are Junior Mortgage Loans.
(xxxiii) With respect to each Mortgage Loan that is not a First
Mortgage Loan, the related senior lien does not provide for negative
amortization.
(xxxiv) With respect to each Mortgage Loan that is not a First
Mortgage Loan, the maturity date of the Mortgage Loan is prior to the
maturity date of the related senior lien if such senior lien provides for
a balloon payment.
(xxxv) Each Mortgage Loan is secured by a property having an
appraised value of not more than $1,526,384.
(xxxvi) With respect to each Mortgage Loan, (1) the improvements
upon each related Mortgaged Property are covered by a valid and existing
hazard insurance policy with a carrier generally acceptable to the Master
Servicer that provides for fire and extended coverage representing
coverage not less than (a) the Credit Limit of such Mortgage Loan or (b)
the maximum insurable value of the related Mortgaged Property, or (2) the
Master Servicer has obtained and will maintain a blanket policy insuring
against fire, flood and hazards of extended coverage with respect to all
of the Mortgage Loans.
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(xxxvii) With respect to any Mortgage Loan which is a First
Mortgage Loan, the Sponsor has caused and will cause to be performed any
and all acts required to be performed to preserve the rights and remedies
of the Master Servicer and the Indenture Trustee in any Insurance Policies
applicable to such Mortgage Loan, including, without limitation, any
necessary notifications of insurers, assignments of policies or interests
therein, and establishments of co-insured, joint loss payee and mortgagee
rights in favor of the Trust and its assignees in care of the Indenture
Trustee.
(xxxviii) To the best of the Sponsor's knowledge, each Mortgage
Loan was underwritten in all material respects in accordance with the
credit underwriting guidelines of the related Originator as set forth in
the related Originator's underwriting guidelines, as in effect on the date
of origination or acquisition.
(xxxix) As of the Closing Date, the Sponsor has received no notice
of default of any First Mortgage Loan secured by any Mortgaged Property
that also secures a Mortgage Loan which has not been cured by a party
other than the Sponsor.
(xl)At the Cut-Off Date with respect to the Mortgage Loans, no
Mortgagor had been identified on the records of the Sponsor as being the
subject of a current bankruptcy proceeding.
(xli) [Reserved]
(xlii) To the best of the Sponsor's knowledge, each party which
had any interest in a Mortgage Loan, whether as mortgagee, assignee,
pledgee or otherwise (including the Sponsor), is (or, during the period in
which such party held and disposed of such interest, was) in substantial
compliance with any and all applicable licensing requirements of the law
of the state wherein the property securing the Mortgage Loan is located.
(xliii) To the best of the Sponsor's knowledge, with respect to
the Mortgage Loans, the documents, instruments and agreements submitted by
each Mortgagor for loan underwriting were not falsified and contain no
untrue statement of a material fact and do not omit to state a material
fact required to be stated therein or necessary to make the information
and the statements contained therein not misleading.
(xliv) Except as previously disclosed in writing to the Indenture
Trustee and the Insurer, with respect to each Mortgage Loan, there is only
one originally executed Mortgage and Credit Line Agreement not stamped as
a duplicate.
(xlv) As of the Cut-Off Date each Mortgage Loan conforms, and all
the Mortgage Loans, in the aggregate, conform, in all material respects to
the description thereof set forth in the Registration Statement.
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(xlvi) During the period from origination to the Cut-Off Date,
each Mortgage Loan has been serviced in accordance with applicable laws.
(b) [Reserved]
(c) Upon the discovery by the Master Servicer, any Sub-Servicer, the
Sponsor or the Indenture Trustee of a breach of any of the representations and
warranties made in respect of any Mortgage Loan which materially and adversely
affects the interests of the Noteholders or of the Insurer in such Mortgage
Loan, the party discovering such breach shall give prompt written notice to the
other parties. The Master Servicer shall promptly notify the Sponsor of such
breach and request that the Sponsor cure such breach or take the actions
described in Section 3.4(b) hereof within the time periods required thereby, and
the Sponsor shall cure such breach or take such actions; provided, however, that
the cure for any breach of a representation and warranty relating to the
characteristics of the Mortgage Loans in the aggregate shall be a reassignment
of, or substitution for, only those Mortgage Loans necessary to cause such
characteristics to be in compliance with the related representation and
warranty, unless the Insurer shall waive such breach. Upon accepting such
transfer and making any required deposit into the Principal and Interest Account
or substitution of a Qualified Replacement Mortgage Loan, as the case may be,
the Sponsor shall be entitled to receive an instrument of assignment or transfer
from the Indenture Trustee to the same extent as set forth in Section 2.2 with
respect to the transfer of Mortgage Loans under that Section.
It is understood and agreed that the obligation of the Sponsor to accept a
transfer of a Mortgage Loan as to which a breach has occurred and is continuing
and to deposit the Loan Reacquisition Price in the Principal and Interest
Account or to substitute an Qualified Replacement Mortgage Loan, and deposit the
Substitution Amount in the Principal and Interest Account, as the case may be,
shall constitute the sole remedy against the Sponsor respecting such breach
available to Noteholders, the Indenture Trustee on behalf of the Noteholders and
the Insurer.
Section 3.4 Covenants of Sponsor to Take Certain Actions with Respect to
the Mortgage Loans In Certain Situations.
(a) With respect to the representations and warranties set forth in
Section 3.3 that are made to the best of the Sponsor's knowledge or as to which
the Sponsor has no knowledge, if it is discovered by the Sponsor, the Master
Servicer, the Indenture Trustee or any Sub-Servicer that the substance of such
representation or warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan then, notwithstanding
the Sponsor's lack of knowledge with respect to the substance of such
representation and warranty being inaccurate at the time the representation or
warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty and the Sponsor shall cure such breach, repurchase
the related Mortgage Loan at the Loan Reacquisition Price or substitute a
Qualified Replacement Mortgage Loan therefor pursuant to Section 2.2(b), 3.3(c)
or 3.4 hereof.
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With the provisos and limitations as to remedies set forth in this Section
3.4, upon the discovery by Sponsor, the Master Servicer, the Insurer, any
Sub-Servicer or the Indenture Trustee that the representations and warranties
set forth in Section 3.3 of this Agreement were untrue in any material respect
as of the Closing Date and such breaches of the representations and warranties
materially and adversely affect the interests of the Noteholders or of the
Insurer, the party discovering such breach shall give prompt written notice to
the other parties.
The Sponsor acknowledges that a breach of any representation or warranty
(x) relating to marketability of title sufficient to transfer unencumbered title
to a Mortgage Loan or (y) relating to enforceability of the Mortgage Loan
against the related Mortgagor or Mortgaged Property constitutes a breach of a
representation or warranty which materially and adversely affects the interests
of the Noteholders or of the Insurer in such Mortgage Loan.
(b) Upon the earliest to occur of the Sponsor's discovery, its receipt of
notice of breach from any one of the other parties hereto or from the Insurer or
such time as a breach of any representation and warranty materially and
adversely affects the interests of the Noteholders or the Insurer as set forth
above, the Sponsor hereby covenants and warrants that it shall cure such breach
in all material respects within 30 days or it shall (or shall cause an affiliate
of the Sponsor to), subject to the further requirements of this paragraph,
regardless of whether or not it had knowledge of such breach, on the second
Remittance Date next succeeding such discovery, receipt of notice or such other
time (i) substitute in lieu of each Mortgage Loan which has given rise to the
requirement for action by the Sponsor a Qualified Replacement Mortgage Loan and
deliver the Substitution Amount applicable thereto to the Master Servicer for
deposit in the Principal and Interest Account or (ii) purchase such Mortgage
Loan from the Trust at the Loan Reacquisition Price thereof, which purchase
price shall be delivered to the Master Servicer for deposit in the Principal and
Interest Account. It is understood and agreed that the obligation of the Sponsor
to cure the defect, substitute for, or purchase any Mortgage Loan as to which a
representation or warranty is untrue in any material respect and has not been
remedied shall constitute the sole remedy available to the Noteholders, the
Indenture Trustee or the Insurer against the Sponsor, except as otherwise
provided in the Insurance Agreement.
(c) In the event that any Qualified Replacement Mortgage Loan is delivered
by the Sponsor to the Trust pursuant to Section 2.2(b), Section 3.3(c) or
Section 3.4 hereof, the Sponsor shall be obligated to take the actions described
in Section 3.4(b) with respect to such Qualified Replacement Mortgage Loan upon
the discovery by any of the Noteholders, the Master Servicer, the Sponsor, the
Insurer, or the Indenture Trustee that the representations and warranties set
forth in Section 3.3(a) above are untrue in any material respect on the date
such Qualified Replacement Mortgage Loan is conveyed to the Trust such that the
interests of the Noteholders or the Insurer in the related Qualified Replacement
Mortgage Loan are materially and adversely affected.
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(d) It is understood and agreed that the covenants set forth in this
Section 3.4 shall survive the pledge of the Mortgage Loans (including the
Qualified Replacement Mortgage Loans) to the Indenture Trustee on behalf of the
Trust.
ARTICLE IV.
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 4.1 Master Servicer and Sub-Servicers.
(a) Advanta Mortgage Corp. USA agrees to act as the Master Servicer and to
perform all servicing duties under this Agreement subject to the terms hereof.
(b) The Master Servicer shall service and administer the Mortgage Loans on
behalf of the Indenture Trustee and the Insurer and shall have full power and
authority, acting alone or through one or more Sub-Servicers, to do any and all
things in connection with such servicing and administration which it may deem
necessary or desirable. Without limiting the generality of the foregoing, the
Master Servicer, in its own name or the name of a Sub-Servicer, may, and is
hereby authorized and empowered by the Indenture Trustee to, execute and
deliver, on behalf of itself, the Noteholders, the Insurer and the Indenture
Trustee or any of them, any and all instruments of satisfaction or cancellation,
or of partial or full release or discharge and all other comparable instruments,
with respect to the Mortgage Loans and the related Mortgaged Properties, the
Mortgage Insurance Policies and Accounts related thereto and the properties
subject to the Mortgages in accordance with the terms of this Agreement. Upon
the execution and delivery of this Agreement, and from time to time as may be
required thereafter, the Indenture Trustee shall furnish the Master Servicer or
its Sub-Servicers with any powers of attorney and such other documents as may be
necessary or appropriate to enable the Master Servicer to carry out its
servicing and administrative duties hereunder.
In servicing and administering the Mortgage Loans, the Master Servicer
shall employ procedures consistent with Accepted Servicing Practices and in a
manner consistent with recovery under any Mortgage Insurance Policy required to
be maintained by the Master Servicer pursuant to this Agreement.
Costs incurred by the Master Servicer in effectuating the timely payment
of taxes and assessments on the property securing a Credit Line Agreement and
foreclosure costs may be added by the Master Servicer to the amount owing under
such Credit Line Agreement where the terms of such Credit Line Agreement so
permit; provided, however, that the addition of any such cost shall not be taken
into account for purposes of calculating the principal amount of the Credit Line
Agreement and the Mortgage Loan secured by the Credit Line Agreement or
distributions to be made to Noteholders. Such costs shall be recoverable by the
Master Servicer pursuant to Section 4.10 and 4.13.
(c) [reserved]
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(d) The relationship of the Master Servicer (and of any successor to the
Master Servicer as servicer under this Agreement) to the Indenture Trustee under
this Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent.
In the event that the rights, duties and obligations of the Master
Servicer are terminated hereunder, any successor to the Master Servicer may
(with the written consent of the Insurer), to the extent permitted by applicable
law, terminate the existing Sub-Servicer arrangements with any Sub-Servicer or
assume the terminated Master Servicer's rights under such Sub-Servicing
arrangements (with the written consent of the Insurer), which termination or
assumption will not violate the terms of such arrangements.
(e) Subject to Sections 4.13 and 4.14, the Master Servicer, in its own
name, or a Sub-Servicer, in its own name, may be authorized and empowered by the
Indenture Trustee, (i) to institute foreclosure proceedings or obtain a deed in
lieu of foreclosure so as to effect owner of any Mortgaged Property on behalf of
the Indenture Trustee and (ii) to hold title to any Mortgaged Property upon such
foreclosure or deed in lieu of foreclosure on behalf of the Indenture Trustee;
provided, however, that Section 4.14(a) shall constitute a power of attorney
from the Indenture Trustee to the Master Servicer to execute an instrument of
satisfaction (or assignment of mortgage without recourse) with respect to any
Mortgage Loan paid in full (or with respect to which payment in full has been
escrowed). Subject to Sections 4.13 and 4.14, the Indenture Trustee shall
furnish the Master Servicer and any Sub-Servicer with any powers of attorney and
other documents as the Master Servicer or such Sub-Servicer shall reasonably
request to enable the Master Servicer and such Sub-Servicer to carry out their
respective servicing and administrative duties hereunder.
(f) The Master Servicer shall give prompt notice to the Indenture Trustee
of any action, of which the Master Servicer has actual knowledge, to (i) assert
a claim against the Trust or (ii) assert jurisdiction over the Trust.
(g) Servicing Advances incurred by the Master Servicer or any Sub-Servicer
in connection with the servicing of the Mortgage Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Mortgaged Property shall be recoverable by the Master Servicer or such
Sub-Servicer to the extent described in Section 4.10 herein and in Section
8.6(b)(ix) of the Indenture.
Section 4.2 Modifications.
The Master Servicer may consent to any modification of the terms of any
Credit Line Agreement not expressly prohibited hereby if the effect of any such
modification will not be to affect materially and adversely the security
afforded by the related Mortgaged Property, the timing of receipt of any
payments required hereby or the interests of Noteholders or the Insurer, unless
the Insurer consents in writing, provided, however, that, if the Insurer has not
given its written consent within five (5) Business Days after notice from the
Master Servicer, the Insurer shall be deemed to have given its consent to such
modification; provided, however, that such notice and consent shall not
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be required in the event that the Master Servicer determines, in its reasonable
discretion that such modification is legally required to be made prior to such
five day period in which case the Master Servicer shall give the Insurer
immediate notice of such action.
In accordance with Accepted Servicing Practices and subject to the
limitations set forth in Section 4.1, the Master Servicer may in its discretion:
(a) waive any assumption fees, late payment charges, charges for checks
returned for insufficient funds, prepayment fees, if any, or the fees which may
be collected in the ordinary course of servicing the Mortgage Loans,
(b) if a Mortgagor is in default or about to be in default because of a
Mortgagor's financial condition, arrange with the Mortgagor a schedule for the
payment of delinquent payments due on the related Mortgage Loan; provided,
however, the Master Servicer shall not be permitted to reschedule the payment of
delinquent payments more than one time in any twelve consecutive months with
respect to any Mortgagor and such modifications shall not be made in excess of
10% of the aggregate of the Cut-Off Date Pool Balance without the prior written
consent of the Insurer; provided, however, that, if the Insurer has not given
its written consent within five (5) Business Days after notice from the Master
Servicer, the Insurer shall be deemed to have given its consent to such
modification or rescheduling for payments of delinquent payments; provided,
however, that such notice and consent shall not be required in the event that
the Master Servicer determines, in its reasonable discretion that such
modification is legally required to be made prior to such five day period, in
which case the Master Servicer shall give the Insurer immediate notice of such
action.
(c) modify payments of monthly principal and interest on any Mortgage Loan
becoming subject to the terms of the Civil Relief Act in accordance with the
Master Servicer's general policies of comparable mortgage loans subject to the
Civil Relief Act,
(d) extend the maturity date of any Mortgage Loan in connection with the
extension of the related Draw Period (provided, however, that in no event may
any such maturity date be extended to a date which is more than 12 months after
the original maturity date without the Insurer's written approval or to a date
which is later than the Payment Date occurring in February 2024).
(e) [reserved]
(f) The Master Servicer may, without prior approval from the Rating
Agencies or the Insurer (but subject to the 10% limitation described below),
increase the Credit Limits on Mortgage Loans provided that (i) new appraisals
are obtained and the Combined Loan-to-Value Ratios of the Mortgage Loans after
giving effect to such increase are less than or equal to the Combined
Loan-to-Value Ratios of the Mortgage Loans as of the related Cut-Off Date, (ii)
such increases are consistent with the applicable Originator's underwriting
policies, (iii) the related Mortgagor has made Draws on the Credit Line
Agreement in the past twelve months and has made timely payments and (iv) the
Master Servicer receives verbal verification of employment of the related
Mortgagor. In
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addition, the Master Servicer may increase the Credit Limits on Mortgage Loans
having aggregate balances of up to 5% of the Pool Principal Balance without
obtaining new appraisals provided that (i) the increase in the Credit Limit does
not cause the Combined Loan-to-Value Ratios of the Mortgage Loans to exceed
100%, (ii) the increase is consistent with the applicable Originator's
underwriting policies, (iii) the related Mortgagor has used the Credit Line
Agreement in the past twelve months and has made timely payments, (iv) the
Master Servicer receives verbal verification of employment of the related
Mortgagor and (v) the 10% limitation described below is satisfied.
(g) The Master Servicer or the related Originator acting on behalf of the
Master Servicer may, without prior approval from the Insurer, solicit Mortgagors
for a reduction in Coupon Rates of no more than 0.50%; provided that the Master
Servicer can only reduce such Coupon Rates in accordance with the 10%
limitations described below. Any such solicitations shall not result in a
reduction in the weighted average Coupon Rate of the Mortgage Loans by more than
2.5 basis points after taking into account any such prior reductions.
(h) Subject to the 10% limitations on modifications described below, the
Master Servicer shall have the right to approve applications of Mortgagors for
consent to partial releases of Mortgages (with the written consent of the
Insurer), alterations to Mortgaged Properties; and removal, demolition or
division of Mortgaged Properties. If the Insurer has not given its written
consent within five (5) Business Days after notice from the Master Servicer, the
Insurer shall be deemed to have given its consent to such modification;
provided, however, that such notice and consent shall not be required in the
event that the Master Servicer determines, in its reasonable discretion that
such modification is legally required to be made prior to such five day period,
in which case the Master Servicer shall give the Insurer immediate notice of
such action.
No application for approval shall be considered by the Master Servicer
unless: (x) the provisions of the related Credit Line Agreement and Mortgage
have been complied with; (y) the Combined Loan-to-Value Ratio (which may, for
this purpose, be determined at the time of any such action in a manner
reasonably acceptable to the Insurer) and the Mortgagor's debt-to-income ratio
after any release does not exceed the maximum Combined Loan-to-Value Ratio and
debt-to-income ratio specified as the then-current maximum levels under the
related Originator's underwriting guidelines for a similar credit grade borrower
and (z) the lien priority of the related Mortgage is not adversely affected.
(i) [reserved]
Except as otherwise permitted under this Agreement, the Master Servicer
may not, without the prior written consent of the Insurer (which consent shall
not be unreasonably delayed), forgive any Mortgage Loan payments, impair any
lien position on the Mortgage Loans or extend the maturity of any Mortgage Loan.
In addition, unless the Insurer consents in writing, the Master Servicer may not
modify Mortgage Loans having an aggregate Principal Balance in excess of 10% of
the Cut-Off Date Pool Balance.
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Section 4.3 Servicer Report
On the tenth day of each month, the Master Servicer shall send to the
Indenture Trustee a report (the "Servicer Report"), in the form of a computer
tape, detailing the aggregate payments on the Mortgage Loans during the prior
Remittance Period. Such tape shall be in the form and have the specifications as
may be agreed to between the Master Servicer and the Indenture Trustee from time
to time.
Section 4.4 Liability of Master Servicer.
(a) The Master Servicer shall not be relieved of its obligations under
this Agreement notwithstanding any Sub-Servicing Agreement or any of the
provisions of this Agreement relating to agreements or arrangements between the
Master Servicer and a Sub-Servicer or otherwise, and the Master Servicer shall
be obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans. The Master Servicer
shall be entitled to enter into any agreement with a Sub-Servicer for
indemnification of the Master Servicer by such Sub-Servicer and nothing
contained in such Sub-Servicing Agreement shall be deemed to limit or modify
this Agreement. The Trust shall not indemnify the Master Servicer for any losses
due to the Master Servicer's or any Sub-Servicer's negligence.
(b) The Master Servicer shall defend, indemnify and hold harmless the
Indenture Trustee (including its officers, directors, employees and agents), the
Owner Trustee (including its officers, directors, employees and agents), the
Noteholders, Holding and the Trust from and against any and all claims, damages,
liabilities, losses, costs and expenses (including the reasonable fees and
expenses of counsel) to the extent that such claims, damages, liabilities,
losses, costs or expenses arose out of, or were imposed upon the Indenture
Trustee, the Owner Trustee, the Noteholders, Holding or the Trust in connection
with or by reason of, (i) any failure by the Master Servicer to perform its
duties under this Agreement or any errors or omissions of the Master Servicer
related to such duties, including the making of any inaccurate representations
or warranties hereunder; or (ii) in the case of the Indenture Trustee or the
Owner Trustee, the performance of its duties hereunder or under the other
Operative Documents, except to the extent that such claim, damage, liability,
loss, cost or expense resulted from the Indenture Trustee's or the Owner
Trustee's gross negligence or willful misconduct. The provisions of this Section
4.4(b) shall run directly to and be enforceable by each injured party subject to
the limitations hereof, and the indemnification provided by the Master Servicer
to the Indenture Trustee, the Owner Trustee, the Noteholders, Holding and the
Trust pursuant to this Section 4.4(b) shall survive the payment in full of the
Notes, the termination of the Indenture and the resignation or removal of the
Indenture Trustee or the Owner Trustee. The Master Servicer shall pay any
amounts owing pursuant to this Section 4.4(b) directly to the indemnified
Person, and such amounts shall not be deposited in either the Principal and
Interest Account or the Note Account. Indemnification under this Section 4.4(b)
shall include reasonable fees and expenses of counsel and expenses of litigation
reasonably incurred. If the Master Servicer has made any indemnity payments to
the Indenture Trustee, the Owner Trustee, the Noteholders, Holding or the Trust
pursuant to this Section 4.4(b) and such party thereafter collects any
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of such amounts from others, such party will promptly repay such amounts
collected to the Master Servicer, without interest.
(c) The Master Servicer shall be the secondary obligor in respect of any
Expenses (as defined in the Trust Agreement and the Holding Trust Agreement)
owing to any Indemnified Party (as defined in the Trust Agreement and the
Holding Trust Agreement) under Section 8.2 of the Trust Agreement and the
Holding Trust Agreement.
Section 4.5 Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers.
The Master Servicer may enter into Sub-Servicing Agreements for any
servicing and administration of Mortgage Loans with any institution (including
affiliates) which is acceptable to the Insurer and is in compliance with the
laws of each state necessary to enable it to perform its obligations under such
Sub-Servicing Agreement. By delivery of the Policy, the Insurer is deemed to
have approved the respective Originators as Sub-Servicers hereunder. The Master
Servicer shall give notice to the Indenture Trustee, the Insurer and the Rating
Agencies of the appointment of any Sub-Servicer and shall furnish to the Insurer
and the Rating Agencies a copy of the Sub-Servicing Agreement (unless the
Sub-Servicer is an affiliate of the Master Servicer). For purposes of this
Agreement, the Master Servicer shall be deemed to have received payments on
Mortgage Loans when any Sub-Servicer has received such payments. Any such
Sub-Servicing Agreement shall be consistent with and not violate the provisions
of this Agreement.
Section 4.6 Successor Sub-Servicers.
The Master Servicer may terminate any Sub-Servicing Agreement in
accordance with the terms and conditions of such Sub-Servicing Agreement and to
either directly service the related Mortgage Loans itself or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer that qualifies under
Section 4.5.
Section 4.7 No Contractual Relationship Between Sub-Servicer and Indenture
Trustee or the Noteholders.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Master Servicer alone and the Insurer, the
Indenture Trustee and the Noteholders shall not be deemed parties thereto and
shall have no claims, rights, obligations, duties or liabilities with respect to
any Sub-Servicer except as set forth in Section 4.8.
Section 4.8 Assumption or Termination of Sub-Servicing Agreement by
Indenture Trustee.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Master Servicer
hereunder by the Indenture Trustee, it is understood and agreed that the Master
Servicer's rights and obligations
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under any Sub-Servicing Agreement then in force between the Master Servicer and
a Sub-Servicer may be assumed or terminated by the Indenture Trustee at its
option.
The Master Servicer shall, upon request of the Indenture Trustee, but at
the expense of the Master Servicer, deliver to the assuming party documents and
records relating to each Sub-Servicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts to effect
the orderly and efficient transfer of the Sub-Servicing Agreements to the
assuming party.
Section 4.9 Principal and Interest Account.
(a) The Master Servicer and/or each Sub-Servicer, as applicable, shall
establish in the name of the Trust for the benefit of the Noteholders and the
Insurer and maintain at one or more Designated Depository Institutions the
Principal and Interest Account, which may be separate accounts or a single
account with sub-accounts.
Subject to Subsections (c) and (e) below, the Master Servicer and any
Sub-Servicer shall deposit all receipts related to the Mortgage Loans to the
Principal and Interest Account on a daily basis (but no later than the second
Business Day after receipt). Such receipts shall include Net Liquidation
Proceeds, including net recoveries from the disposition or other turning to
account of Charged-Off Mortgage Loans.
On the Closing Date, the Sponsor shall cause the Master Servicer to
deposit within five Business Days after the Closing Date to the Principal and
Interest Account all principal and interest collected on and after the Cut-Off
Date.
The Master Servicer shall hold in escrow on behalf of the related
Mortgagor all Prepaid Installments received by it, and shall apply such Prepaid
Installments as directed by such Mortgagor and as set forth in the related
Credit Line Agreement.
(b) All funds in the Principal and Interest Account may only be held (i)
uninvested, up to the limits insured by the FDIC, or (ii) invested in Eligible
Investments (as defined in the Indenture). The Principal and Interest Account
shall be held in trust in the name of the Trust and for the benefit of the
Noteholders and the Insurer. Any investment earnings on funds held in the
Principal and Interest Account shall be for the account of the Master Servicer
and may only be withdrawn from the Principal and Interest Account by the Master
Servicer immediately following the remittance of the Monthly Remittance Amounts
by the Master Servicer. Any references herein to amounts on deposit in the
Principal and Interest Account shall refer to amounts net of such investment
earnings. The Master Servicer shall deposit the amount of any investment losses
immediately into the Principal and Interest Account as realized.
(c) Subject to Subsection (e) below, the Master Servicer shall deposit to
the Principal and Interest Account all principal and interest collected on the
Mortgage Loans received on or after the Cut-Off Date, including any Prepayments
and Net Liquidation Proceeds, all Loan Reacquisition Prices and Substitution
Amounts received or paid by the Master Servicer with respect to the Mortgage
Loans and other recoveries or amounts related to the Mortgage Loans received by
the Master Servicer, together with any
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amounts which are reimbursable from the Principal and Interest Account, but net
of (i) the Servicing Fee with respect to each Mortgage Loan and other servicing
compensation to the Master Servicer as permitted by Section 4.15 hereof, (ii)
principal (including Prepayments) collected on the Mortgage Loans prior to the
Cut-Off Date, (iii) interest collected on the Mortgage Loans prior to the
Cut-Off Date and (iv) Foreclosure Profits.
(d) (i) The Master Servicer may make withdrawals from the Principal and
Interest Account only for the following purposes:
(A) to effect the timely remittance to the Indenture Trustee of
the Monthly Remittance Amount due on the Remittance Date;
(B) to pay to itself from any funds in the Principal and Interest
Account with respect to the Mortgage Loans any accrued and
unpaid Servicing Fees with respect to Mortgage Loans and
reimburse itself pursuant to Section 4.10 hereof for
unreimbursed Servicing Advances and Servicing Advances which
have been deemed Nonrecoverable Advances;
(C) to withdraw investment earnings on amounts on deposit in the
Principal and Interest Account;
(D) to withdraw amounts that have been deposited to the Principal
and Interest Account in error;
(E) to clear and terminate the Principal and Interest Account
following the termination of the Trust Estate pursuant to
Article X or XII of the Indenture; and
(F) to invest in Eligible Investments.
(ii) On each Remittance Date the Master Servicer shall remit to the
Indenture Trustee by wire transfer, or otherwise make funds available in
immediately available funds, the Interest Remittance Amount and the Principal
Remittance Amount.
(e) To the extent that the ratings, if any, then assigned to the unsecured
debt of the Master Servicer or of the Master Servicer's ultimate corporate
parent are satisfactory to the Insurer, ▇▇▇▇▇'▇ and S&P, then the requirement to
maintain the Principal and Interest Account at a Designated Depository
Institution may be waived by an instrument signed by the Insurer, S&P and
▇▇▇▇▇'▇, and the Master Servicer may be allowed to co-mingle with its general
funds the amounts otherwise required to be deposited to the Principal and
Interest Account and make monthly deposits to the Note Account on such terms and
subject to such conditions as the Insurer, ▇▇▇▇▇'▇ and S&P may permit.
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Section 4.10 Servicing Advances.
The Master Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, the cost of (i) Preservation Expenses, (ii) the cost of any
enforcement or judicial proceedings, including (a) foreclosures, and (b) other
legal actions and costs associated herewith that potentially affect the
existence, validity, priority, enforceability or collectibility of the Mortgage
Loans, including collection agency fees and costs of pursuing or obtaining
personal judgments, garnishments, levies, attachment and similar actions, (iii)
the cost of the conservation, management, liquidation, sale or other disposition
or any Mortgaged Property acquired in satisfaction of the related Mortgage Loan
including reasonable fees paid to any independent contractors in connection
therewith, and (iv) advances to keep senior liens current, unless with respect
to any of the foregoing the Master Servicer has determined that such advance
would constitute a Nonrecoverable Advance. Each such amount so paid will
constitute a "Servicing Advance." The Master Servicer may recover Servicing
Advances (x) from the Mortgagors to the extent permitted by the Mortgage Loans,
from Liquidation Proceeds realized upon the liquidation of the related Mortgage
Loan and from Mortgage Insurance Proceeds, and (y) as provided in Section
8.6(c)(x) of the Indenture.
Section 4.11 Maintenance of Insurance.
(a) The Master Servicer shall cause to be maintained with respect to each
Mortgage Loan a hazard insurance policy with a generally acceptable carrier that
provides for fire and extended coverage which may be in the form of a blanket
policy as described in clause (c) below, and which provides for a recovery by
the Master Servicer on behalf of the Trust of insurance proceeds relating to
such Mortgage Loan in an amount not less than the least of (i) the Credit Limit
of the Mortgage Loan or (ii) the maximum insurable value of the Mortgaged
Property.
(b) If any Mortgage Loan at the time of origination relates to a Mortgaged
Property in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Master Servicer will
cause to be maintained with respect thereto a flood insurance policy in a form
meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable carrier (which may be in the form of
a blanket policy as described in clause (c) below) in an amount representing
coverage, and which provides for a recovery by the Master Servicer on behalf of
the Trust of Mortgage Insurance Proceeds relating to such Mortgage Loan of not
less than the least of (i) the Credit Limit of the Mortgage Loan or (ii) the
maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973. The Master Servicer shall indemnify the Trust and the
Insurer out of the Master Servicer's own funds for any loss to the Trust and the
Insurer resulting from the Master Servicer's failure to maintain the insurance
required by this Section; provided, however, that in no event shall the Master
Servicer be required to maintain a flood insurance policy in an amount greater
than 100% of the value of the related Mortgaged Property.
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It is understood and agreed that such insurance shall be with insurers
approved by the Master Servicer and that no earthquake or other additional
insurance is to be required of any Mortgagor or to be maintained on property
acquired in respect of a defaulted loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. Any cost incurred by the Master Servicer in maintaining
any such insurance shall be added to the amount owing under the Mortgage Loan
where the terms of the Credit Line Agreement so permit; provided, however, that
the addition of any such cost shall not be taken into account for purposes of
calculating the principal amount of the Credit Line Agreements or the
distributions to be made to the Noteholders. Such costs shall be considered a
Servicing Advance and shall be recoverable by the Master Servicer pursuant to
Section 4.10.
(c) In the event that the Master Servicer shall obtain and maintain a
blanket policy insuring against fire, flood and hazards of extended coverage on
all of the Mortgage Loans as set forth above, then, to the extent such policy
names the Master Servicer as loss payee and provides coverage in an amount equal
to the aggregate Credit Limit on the Mortgage Loans without co-insurance, and
otherwise complies with the requirements of this Section 4.11, the Master
Servicer shall be deemed conclusively to have satisfied its obligations with
respect to fire, hazard and flood insurance coverage under this Section 4.11, it
being understood and agreed that such blanket policy may contain a deductible
clause, in which case the Master Servicer shall, in the event that there shall
not have been maintained on the related Mortgaged Property a policy complying
with the preceding paragraphs of this Section 4.11, and there shall have been a
loss which would have been covered by such policy, deposit in the Principal and
Interest Account from the Master Servicer's own funds the difference, if any,
between the amount that would have been payable under a policy complying with
the preceding paragraphs of this Section 4.11 and the amount paid under such
blanket policy. Upon the request of the Indenture Trustee or the Insurer, the
Master Servicer shall cause to be delivered to the Indenture Trustee or the
Insurer, a certified true copy of such policy.
Section 4.12 Due-on-Sale Clauses; Assumption and Substitution Agreements.
Except as provided in Section 4.14(b), when a Mortgaged Property has been
or is about to be conveyed by the Mortgagor, the Master Servicer shall, to the
extent it has knowledge of such conveyance or prospective conveyance, exercise
its rights to accelerate the maturity of the related Mortgage Loan under any
"due-on-sale" clause contained in the related Mortgage or Credit Line Agreement;
provided, however, that the Master Servicer shall not exercise any such right if
(i) the "due-on-sale" clause, in the reasonable belief of the Master Servicer,
is not enforceable under applicable law or (ii) the Master Servicer reasonably
believes that to permit an assumption of the Mortgage Loan would materially and
adversely affect the interest of the Noteholders or of the Insurer. In such
event, the Master Servicer shall enter into an assumption and modification
agreement (the terms of which will be consistent with the 10% limitation on
modifications described in Section 4.2(h) above) with the person to whom such
property has been or is about to be conveyed, pursuant to which such person
becomes liable under the Credit Line Agreements and, unless prohibited by
applicable law or this Agreement or any of the agreements, guaranties or
assignments relating to the Mortgage Loans
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contained in the Mortgage Files, the Mortgagor remains liable thereon. If the
foregoing is not permitted under applicable law, the Master Servicer is
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as Mortgagor and becomes liable under the Credit Line
Agreement; provided, however, that to the extent any such substitution of
liability agreement would be delivered by the Master Servicer outside of its
usual procedures for mortgage loans held in its own portfolio the Master
Servicer shall, prior to executing and delivering such agreement, obtain the
prior written consent of the Insurer. The Mortgage Loan, as assumed, shall
conform in all respects to the requirements, representations and warranties of
this Agreement. The Master Servicer shall notify the Indenture Trustee that any
such assumption or substitution agreement has been completed by forwarding to
the Indenture Trustee the original copy of such assumption or substitution
agreement, which copy shall be added by the Indenture Trustee to the related
Mortgage File and which shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. The Master Servicer shall be responsible for
recording any such assumption or substitution agreements. In connection with any
such assumption or substitution agreement, the required monthly payment on the
related Mortgage Loan shall not be changed but shall remain as in effect
immediately prior to the assumption or substitution, the stated maturity or
outstanding principal amount of such Mortgage Loan shall not be changed nor
shall any required monthly payments of principal or interest be deferred or
forgiven. Any fee collected by the Master Servicer or the Sub-Servicer for
consenting to any such conveyance or entering into an assumption or substitution
agreement shall be retained by or paid to the Master Servicer as additional
servicing compensation.
Notwithstanding anything in this Section 4.12 or any other provision of
this Agreement, the Master Servicer shall not be deemed to be in default, breach
or any other violation of its obligations hereunder by reason of any assumption
of a Mortgage Loan by operation of law or any assumption which the Master
Servicer may be restricted by law from preventing, for any reason whatsoever.
Section 4.13 Realization Upon Defaulted Mortgage Loans.
(a) The Master Servicer shall foreclose upon or otherwise comparably
effect the ownership on behalf of the Trust of the Mortgaged Properties relating
to defaulted Mortgage Loans as to which no satisfactory arrangements can be made
for collection of Delinquent payments. If the Master Servicer determines not to
bring or to terminate foreclosure proceedings, it will determine in accordance
with the Accepted Servicing Practices whether or not to seek a judgment against
the Mortgagor. In connection with such foreclosure or other conversion, the
Master Servicer shall follow Accepted Servicing Practices. Any amounts advanced
pursuant to this Section 4.13 shall constitute "Servicing Advances" within the
meaning of Section 4.10 hereof.
Notwithstanding the generality of the foregoing provisions, the Master
Servicer shall manage, conserve, protect and operate each REO Property for the
Noteholders solely for the purpose of its prompt disposition and sale. Pursuant
to its efforts to sell
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such REO Property, the Master Servicer shall either itself or through an agent
selected by the Master Servicer protect and conserve such REO Property in the
same manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Noteholders, rent the same, or any part thereof, as the Master
Servicer deems to be in the best interest of the Noteholders for the period
prior to the sale of such REO Property. The Master Servicer shall take into
account the existence of any hazardous substances, hazardous wastes or solid
wastes, as such terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act of
1976, or other federal, state or local environmental legislation, on a Mortgaged
Property in determining whether to foreclose upon or otherwise comparably
convert the ownership of such Mortgaged Property.
(b) The Master Servicer shall determine, with respect to each defaulted
Mortgage Loan, when it has recovered, whether through trustee's sale,
foreclosure sale or otherwise, all amounts it expects to recover from or on
account of such defaulted Mortgage Loan, whereupon such Mortgage Loan shall
become a "Liquidated Mortgage Loan" and shall promptly deliver to the Insurer
the Master Servicer's customary liquidation report (each, a "Liquidation
Report") with respect to such Mortgage Loan. Any net recoveries from a
Liquidated Mortgage Loan shall constitute property of the Trust and shall be
deposited by the Master Servicer in the Principal and Interest Account, all in
accordance with the provisions of this Agreement.
Section 4.14 Indenture Trustee to Cooperate; Release of Mortgage Files.
(a) Upon the payment in full of the Principal Balance of any Mortgage Loan
(including the repurchase of any Mortgage Loan or any liquidation of such
Mortgage Loan through foreclosure or otherwise), or the receipt by the Master
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Master Servicer shall deliver to the Indenture
Trustee a Master Servicer's Trust Receipt. Upon receipt of such Master
Servicer's Trust Receipt, the Indenture Trustee shall promptly release the
related Mortgage File, in trust to (i) the Master Servicer, or (ii) an escrow
agent for the Master Servicer. Upon any such payment in full, or the receipt of
such notification that such funds have been placed in escrow, the Master
Servicer is authorized to give, as attorney-in-fact for the Indenture Trustee
and the mortgagee under the Mortgage which secured the Credit Line Agreement, an
instrument of satisfaction (or assignment of Mortgage without recourse)
regarding the Mortgaged Property relating to such Mortgage, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the Person
or Persons entitled thereto against receipt therefor of payment in full, it
being understood and agreed that no expense incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account. In lieu of executing any such
satisfaction or assignment, as the case may be, the Master Servicer may prepare
and submit to the Indenture Trustee, a satisfaction (or assignment without
recourse, if requested by the Person or Persons entitled thereto) in form for
execution by the Indenture Trustee with all requisite information completed by
the Master Servicer; in such event, the Indenture Trustee shall execute and
acknowledge such satisfaction or
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assignment, as the case may be, and deliver the same with the related Mortgage
File, as aforesaid.
(b) From time to time and as appropriate in the servicing of any Mortgage
Loan, including, without limitation, foreclosure or other comparable conversion
of a Mortgage Loan or collection under any applicable Mortgage Insurance Policy,
the Indenture Trustee shall, upon request of the Master Servicer and delivery to
the Indenture Trustee of a Master Servicer's Trust Receipt in the form of
Exhibit F hereto, release the related Mortgage File to the Master Servicer and
shall execute such documents as shall be necessary to the prosecution of any
such proceedings, including, without limitation, an assignment without recourse
of the related Mortgage to the Master Servicer; provided, that there shall not
be released and unreturned at any one time more than 25 Mortgage Files. The
Indenture Trustee shall complete in the name of the Indenture Trustee any
endorsement in blank on any Credit Line Agreement prior to releasing such Credit
Line Agreement to the Master Servicer. Such receipt shall obligate the Master
Servicer to return the Mortgage File to the Indenture Trustee when the need
therefor by the Master Servicer no longer exists unless the Mortgage Loan shall
be liquidated, in which case, upon receipt of the liquidation information, in
physical or electronic form, a copy of the Master Servicer's Trust Receipt shall
be released by the Indenture Trustee to the Master Servicer.
(c) No costs associated with the procedures described in this Section 4.14
shall be an expense of the Trust.
(d) The provisions set forth in Subsections (a) and (b) may be superseded
by any waiver of the Document Delivery Requirement as may be given by the
Insurer, ▇▇▇▇▇'▇ and S&P pursuant to Section 2.1(k) hereof.
(e) Each Master Servicer's Trust Receipt may be delivered to the Indenture
Trustee (i) via mail or courier, (ii) via facsimile or (iii) by such other
means, including, without limitation, electronic or computer readable medium, as
the Master Servicer and the Indenture Trustee shall mutually agree. The
Indenture Trustee shall promptly release the related Mortgage File(s) within
seven (7) Business Days of receipt of a properly completed Master Servicer's
Trust Receipt or such shorter period as may be agreed upon by the Master
Servicer and the Indenture Trustee. Receipt of a Master Servicer's Trust Receipt
above shall be authorization to the Indenture Trustee to release such Mortgage
Files, provided the Indenture Trustee has determined that such Master Servicer's
Trust Receipt has been executed, or approved, as applicable, by an Authorized
Officer of the Master Servicer or any Sub-servicer, and so long as the Indenture
Trustee complies with its duties and obligations under this Agreement. If the
Indenture Trustee is unable to release the Mortgage Files within the time frames
specified, the Indenture Trustee shall immediately notify the Master Servicer or
any Sub-servicer indicating the reason for such delay, but in no event shall
such notification be later than seven Business Days after receipt of a Master
Servicer's Trust Receipt. If the Master Servicer is required to pay penalties or
damages due solely to the Indenture Trustee's negligent failure to release the
related Mortgage File or the Indenture Trustee's negligent failure to execute
and release
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documents in a timely manner, the Indenture Trustee shall be liable for such
penalties or damages.
Section 4.15 Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Mortgage
Loan pursuant to the provisions of this Agreement. Additional servicing
compensation in the form of prepayment charges, Termination Fees, release fees,
bad check charges, assumption fees, late payment charges, or any other
servicing-related fees, Foreclosure Profits, Net Liquidation Proceeds not
required to be deposited in the Principal and Interest Account pursuant to
Section 4.9(c) and similar items may, to the extent collected from Mortgagors,
be retained by the Master Servicer.
Section 4.16 Annual Statement as to Compliance.
The Master Servicer, at its own expense, will deliver to the Indenture
Trustee, Insurer, S&P and ▇▇▇▇▇'▇, on or before the fifteenth of April of each
year, commencing in 2000, an Officer's Certificate stating, as to each signer
thereof, that (i) a review of the activities of the Master Servicer during such
preceding calendar year and of performance under this Agreement has been made
under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Master Servicer has fulfilled all its
obligations under this Agreement for such year, or, if there has been a default
in the fulfillment of all such obligations, specifying each such default known
to such officers and the nature and status thereof including the steps being
taken by the Master Servicer to remedy such defaults.
Section 4.17 Annual Independent Certified Public Accountants' Reports.
On or before the fifteenth of April of each year, commencing in 2000, the
Master Servicer, at its own expense, shall cause to be delivered to the
Indenture Trustee, the Insurer, S&P and ▇▇▇▇▇'▇ a letter or letters of a firm of
independent, nationally recognized certified public accountants reasonably
acceptable to the Insurer stating that such firm has, with respect to the Master
Servicer's overall servicing operations (i) performed applicable tests in
accordance substantially in compliance with the testing procedures as set forth
in Appendix 3 of the Audit Guide for Audits of HUD Approved Nonsupervised
Mortgagees, (ii) examined such operations substantially in compliance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers, and
in either case stating such firm's conclusions relating thereto or (iii)
examined such operations in accordance with the requirements of SAS 70.
Section 4.18 Access to Certain Documentation and Information Regarding the
Mortgage Loans.
The Master Servicer shall provide to the Indenture Trustee, the Insurer,
the FDIC and the supervisory agents and examiners of each of the foregoing
access to the documentation regarding the Mortgage Loans required by applicable
state and federal
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regulations, such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices of the Master Servicer.
Upon any change in the format of the computer tape maintained by the
Master Servicer in respect of the Mortgage Loans, the Master Servicer shall
deliver a copy of such computer tape to the Indenture Trustee and in addition
shall provide a copy of such computer tape to the Indenture Trustee and the
Insurer at such other times as the Indenture Trustee or the Insurer may
reasonably request.
Section 4.19 Assignment of Agreement.
The Master Servicer may not assign its obligations under this Agreement,
in whole or in part, unless it shall have first obtained the written consent of
the Indenture Trustee and Insurer, which such consent shall not be unreasonably
withheld; provided, however, that any assignee must meet the eligibility
requirements set forth in Section 5.1(f) hereof for a successor servicer; and
provided, further, that this Section 4.19 does not apply to the appointment of
Sub-Servicers or to the assignment to any affiliate. Notice of any such
assignment shall be given by the Master Servicer to the Indenture Trustee, the
Insurer, ▇▇▇▇▇'▇ and S&P.
Section 4.20 Resignation of the Master Servicer.
Subject to Section 5.1(c), the Master Servicer shall not resign from the
obligations and duties hereby imposed on it except by mutual written consent of
the Sponsor, the Master Servicer, the Insurer and the Indenture Trustee or upon
determination that its duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it, the other activities of the Master Servicer
so causing such a conflict being of a type and nature carried on by the Master
Servicer at the date of this Agreement. Any such determination permitting the
resignation of the Master Servicer shall be evidenced by an opinion of counsel
to such effect which shall be delivered to the Indenture Trustee and the
Insurer.
ARTICLE V.
SERVICING TERMINATION
Section 5.1 Events of Servicing Termination.
(a) If any one of the following events ("Event of Servicing Termination")
shall occur and be continuing:
(i) The Master Servicer shall fail to deliver to the Indenture
Trustee any proceeds or required payment, which failure continues
unremedied for three Business Days following written notice to an
Authorized Officer of the Master Servicer from the Indenture Trustee or
from the Insurer or Noteholders evidencing Percentage Interests
aggregating not less than 25%.
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(ii) The Master Servicer shall (I) apply for or consent to the
appointment of a receiver, Indenture Trustee, liquidator or custodian or
similar entity with respect to itself or its property, (II) admit in
writing its inability to pay its debts generally as they become due, (III)
make a general assignment for the benefit of creditors, (IV) be
adjudicated a bankrupt or insolvent, (V) commence a voluntary case under
the federal bankruptcy laws of the United States of America or file a
voluntary petition or answer seeking reorganization, an arrangement with
creditors or an order for relief or seeking to take advantage of any
insolvency law or file an answer admitting the material allegations of a
petition filed against it in any bankruptcy, reorganization or insolvency
proceeding or (VI) take corporate action for the purpose of effecting any
of the foregoing.
(iii) If without the application, approval or consent of the
Master Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the Master
Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of a
Indenture Trustee, receiver, liquidator or custodian or similar entity
with respect to the Master Servicer or of all or any substantial part of
its assets, or other like relief in respect thereof under any bankruptcy
or insolvency law, and, if such proceeding is being contested by the
Master Servicer in good faith, the same shall (A) result in the entry of
an order for relief or any such adjudication or appointment or (B)
continue undismissed or pending and unstayed for any period of
seventy-five (75) consecutive days; or
(iv) The Master Servicer shall fail to cure any breach of any
of its representations and warranties set forth in Section 3.2 or perform
any covenants hereunder, which failure materially and adversely affects
the interests of the Noteholders or Insurer for a period of 30 days after
the Master Servicer's discovery or receipt of notice thereof from the
Indenture Trustee, the Insurer, or Noteholders evidencing not less than
25% of the Note Balance; provided, however, that if the Master Servicer
can demonstrate to the reasonable satisfaction of the Insurer that it is
diligently pursuing remedial action, then the cure period may be extended
with the written consent of the Insurer.
(v) The Master Servicer shall fail to make any required
Servicing Advance which failure continues for thirty (30) days or more
after written notice from the Insurer if such failure has a material and
adverse affect on Net Liquidation Proceeds, in the sole determination of
the Insurer.
then, and in each and every such case, so long as an Event of Servicing
Termination shall not have been remedied by the Master Servicer, either the
Indenture Trustee or the Noteholders evidencing not less than 51% of the Note
Balance in each case with the written consent of the Insurer, or the Insurer, by
notice then given in writing to the Master Servicer (and to the Indenture
Trustee if given by the Insurer of the Noteholders) may terminate all of the
rights and obligations of the Master Servicer as servicer under this
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Agreement. Any such notice to the Master Servicer shall also be given to each
Rating Agency and the Insurer. On and after the receipt by the Master Servicer
of such written notice, all authority and power of the Master Servicer under
this Agreement, whether with respect to the Notes or the Mortgage Loans or
otherwise, shall pass to and be vested in the Indenture Trustee pursuant to and
under this Section 5.1 and, without limitation, the Indenture Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan and related
documents, or otherwise. The Master Servicer agrees to cooperate with the
Indenture Trustee in effecting the termination of the responsibilities and
rights of the Master Servicer hereunder, including, without limitation, the
transfer to the Indenture Trustee for the administration by it of all cash
amounts that shall at the time be held by the Master Servicer and to be
deposited by it in the Note Account, or that have been deposited by the Master
Servicer in the Note Account or thereafter received by the Master Servicer with
respect to the Mortgage Loans. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with amending this Agreement to reflect
such succession as Master Servicer pursuant to this Section 5.1 shall be paid by
the predecessor Master Servicer (or if the predecessor Master Servicer is the
Indenture Trustee, the initial Master Servicer) upon presentation of reasonable
documentation of such costs and expenses.
Nothing herein shall relieve the Master Servicer from using its best
efforts to perform its respective obligations in a timely manner in accordance
with the terms of this Agreement and the Master Servicer shall provide the
Indenture Trustee, the Sponsor, the Insurer and the Noteholders with an
Officer's Certificate giving prompt notice of such failure or delay by it,
together with a description of its efforts to so perform its obligations. The
Master Servicer shall immediately notify the Indenture Trustee and the Insurer
in writing of any Events of Servicing Termination.
(b) In addition to the foregoing, the Insurer may remove the Master
Servicer upon the occurrence of an "Insurance Agreement Event of Servicing
Termination" under the Insurance Agreement.
(c) No removal or resignation of the Master Servicer shall become
effective until the Indenture Trustee or a successor servicer acceptable to the
Insurer shall have assumed the Master Servicer's responsibilities and
obligations in accordance with this Section.
(d) Upon removal or resignation of the Master Servicer, the Master
Servicer also shall promptly deliver or cause to be delivered to a successor
servicer or the Indenture Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Master Servicer has
maintained for the Mortgage Loans, including all tax bills, assessment notices,
insurance premium notices and all other documents as well as all original
documents then in the Master Servicer's possession.
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(e) Any collections received by the Master Servicer after removal or
resignation shall be endorsed by it to the Indenture Trustee and remitted
directly and immediately to the Indenture Trustee or the successor Master
Servicer.
(f) Upon removal or resignation of the Master Servicer, the Indenture
Trustee (x) may solicit bids for a successor servicer as described below, and
(y) pending the appointment of a successor Master Servicer as a result of
soliciting such bids, shall serve as Master Servicer. The Indenture Trustee
shall, if it is unable to obtain a qualifying bid and is prevented by law from
acting as Master Servicer, appoint, or petition a court of competent
jurisdiction to appoint, any housing and home finance institution, bank or
mortgage servicing institution which has shareholders' equity of not less than
$5,000,000, as determined in accordance with generally accepted accounting
principles, and acceptable to the Insurer as the successor to the Master
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Master Servicer hereunder. The compensation of any
successor servicer (including, without limitation, the Indenture Trustee) so
appointed shall be the aggregate Servicing Fees, together with the other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in Sections 4.9 and 4.15; provided, however, that if the
Indenture Trustee acts as successor Master Servicer then the Sponsor agrees to
pay to the Indenture Trustee at such time that the Indenture Trustee becomes
such successor Master Servicer a fee of twenty-five dollars ($25.00) for each
Mortgage Loan then included in the Trust Estate. The Indenture Trustee shall be
obligated to serve as successor Master Servicer whether or not the $25.00 fee
described in the preceding sentence is paid by the Sponsor, but shall in any
event be entitled to receive, and to enforce payment of, such fee from the
Originator.
(g) In the event the Indenture Trustee solicits bids as provided above,
the Indenture Trustee shall solicit, by public announcement, bids from housing
and home finance institutions, banks and mortgage servicing institutions meeting
the qualifications set forth above. Such public announcement shall specify that
the successor Master Servicer shall be entitled to the full amount of the
aggregate Servicing Fees as servicing compensation, together with the other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in Sections 4.9 and 4.15. Within thirty days after any
such public announcement, the Indenture Trustee shall negotiate and effect the
sale, transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest satisfactory bid. The
Indenture Trustee shall deduct from any sum received by the Indenture Trustee
from the successor to the Master Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder.
After such deductions, the remainder of such sum shall be paid by the Indenture
Trustee to the Master Servicer at the time of such sale, transfer and assignment
to the Master Servicer's successor.
(h) The Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Master Servicer agrees to cooperate with the Indenture Trustee
and any successor Master Servicer in effecting the termination of the Master
Servicer's servicing responsibilities
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and rights hereunder and shall promptly provide the Indenture Trustee or such
successor Master Servicer, as applicable, all documents and records reasonably
requested by it to enable it to assume the Master Servicer's functions hereunder
and shall promptly also transfer to the Indenture Trustee or such successor
Master Servicer, as applicable, all amounts which then have been or should have
been deposited in the Principal and Interest Account by the Master Servicer or
which are thereafter received with respect to the Mortgage Loans. Neither the
Indenture Trustee nor any other successor Master Servicer shall be held liable
by reason of any failure to make, or any delay in making, any distribution
hereunder or any portion thereof caused by (i) the failure of the Master
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Master Servicer.
(i) The Master Servicer which is being removed or is resigning shall give
notice to the Mortgagors and to ▇▇▇▇▇'▇ and S&P of the transfer of the servicing
to the successor.
(j) The Indenture Trustee shall give notice to the Insurer, ▇▇▇▇▇'▇ and
S&P and to the Noteholders of the occurrence of any event specified in Section
5.1(a) of which the Indenture Trustee has actual knowledge.
(k) The Indenture Trustee or any other successor Master Servicer, upon
assuming the duties of Master Servicer hereunder, shall immediately make all
Servicing Advances which the Master Servicer has theretofore failed to pay with
respect to the Mortgage Loans; provided, however, that if the Indenture Trustee
is acting as successor Master Servicer, the Indenture Trustee shall only be
required to make Servicing Advances if, in the Indenture Trustee's reasonable
good faith judgment, such Servicing Advances will ultimately be recoverable from
the related Mortgage Loans.
Section 5.2 Inspections by Insurer; Errors and Omissions Insurance.
(a) At any reasonable time and from time to time upon reasonable notice,
the Insurer, the Indenture Trustee, or any agents or representatives thereof may
inspect the Master Servicer's servicing operations and discuss the servicing
operations of the Master Servicer with any of its officers or directors.
(b) The Master Servicer agrees to maintain errors and omissions coverage
and a fidelity bond, each at least to the extent generally maintained by prudent
mortgage loan servicers having servicing portfolios of a similar size.
Section 5.3 Merger, Conversion, Consolidation or Succession to Business of
Master Servicer.
Any corporation into which the Master Servicer may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Master Servicer shall be a
party, or any corporation succeeding to all or substantially all of the business
of the Master Servicer, shall be the successor of the Master Servicer hereunder,
without the execution or filing of
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any paper or any further act on the part of any of the parties hereto provided
that such corporation meets the qualifications set forth in Section 5.1(f).
Section 5.4 Notification to Noteholders.
Upon any termination or appointment of a successor to the Master Servicer
pursuant to this Article V, the Indenture Trustee shall give prompt written
notice thereof to the Noteholders at their respective addresses appearing in the
Note Register, the Insurer and each Rating Agency.
Section 5.5 Notices of Material Events.
The Master Servicer shall give prompt notice to the Insurer, the Indenture
Trustee, Moody's and S&P of the occurrence of any of the following events:
(a) Any default or any fact or event which results in the occurrence of a
default by the Sponsor, any Originator or the Master Servicer under any
Operative Document or would constitute a material breach of a representation,
warranty or covenant under any Operative Document.
(b) The submission of any claim or the initiation of any legal process,
litigation or administrative or judicial investigation against any Originator,
the Sponsor, the Master Servicer or AMHC in any federal, state or local court or
before any governmental body or agency, or before any arbitration board, or any
such proceedings threatened by any governmental agency, which, if adversely
determined, would have a material adverse effect upon any of such Originator's,
the Sponsor's, the Master Servicer's or AMHC's ability to perform its
obligations under any Operative Document.
(c) The commencement of any proceedings by or against any Originator, the
Sponsor, the Master Servicer or AMHC under any applicable bankruptcy,
reorganization, liquidation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator, trustee or other
similar official shall have been, or may be, appointed or requested for such
Originator, the Sponsor, the Master Servicer or AMHC; and
(d) The receipt of notice from any agency or governmental body having
authority over the conduct of any Originator's, the Sponsor's, the Master
Servicer's or AMHC's business that such Originator, the Sponsor, the Master
Servicer or AMHC is to cease and desist, or to undertake any practice, program,
procedure or policy employed by such Originator, the Sponsor, the Master
Servicer or AMHC in the conduct of the business of any of them, and such
cessation or undertaking will materially adversely affect the conduct of such
Originator's, the Sponsor's, the Master Servicer's or AMHC's business or its
ability to perform under the Operative Documents or materially adversely affect
the financial affairs of such Originator, the Sponsor, the Master Servicer or
AMHC.
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ARTICLE VI.
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER
Section 6.1 Administrative Duties with Respect to the Indenture
The Master Servicer shall perform all its duties and the duties of the
Trust under the Indenture. In addition, the Master Servicer shall consult with
the Owner Trustee as the Master Servicer deems appropriate regarding the duties
of the Trust under the Indenture. The Master Servicer shall monitor the
performance of the Trust and shall advise the Owner Trustee when action is
necessary to comply with the Trust's duties under the Indenture. The Master
Servicer shall prepare for execution by the Trust or shall cause the preparation
by other appropriate Persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the Trust to
prepare, file or deliver pursuant to the Indenture. In furtherance of the
foregoing, the Master Servicer shall take all necessary action that is the duty
of the Trust to take pursuant to the Indenture.
(a) Duties with Respect to the Trust.
(i) In addition to the duties of the Master Servicer set forth in
this Agreement or any of the Documents, the Master Servicer shall perform
such calculations and shall prepare for execution by the Trust or the
Owner Trustee or shall cause the preparation by other appropriate Persons
of all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Trust or the Owner Trustee to
prepare, file or deliver pursuant to this Agreement or any of the
Operative Documents or under state and federal tax and securities laws,
and at the request of the Owner Trustee shall take all appropriate action
that it is the duty of the Trust to take pursuant to this Agreement or any
of the Operative Documents. In accordance with the directions of the Trust
or the Owner Trustee, the Master Servicer shall administer, perform or
supervise the performance of such other activities in connection with the
Mortgage Loans (including the Operative Documents) as are not covered by
any of the foregoing provisions and as are expressly requested by the
Trust or the Owner Trustee and are reasonably within the capability of the
Master Servicer.
(ii)Notwithstanding anything in this Agreement or any of the
Operative Documents to the contrary, the Master Servicer shall be
responsible for promptly notifying the Owner Trustee and the Indenture
Trustee in the event that any withholding tax is imposed on the Trust's
payments (or allocations of income) with respect to the
Certificateholders' interest in the Trust as contemplated by this
Agreement. Any such notice shall be in writing and specify the amount of
any withholding tax required to be withheld by the Owner Trustee or the
Indenture Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Operative
Documents to the contrary, the Master Servicer shall be responsible for
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performance of the duties of the Trust or the Sponsor set forth in Section
5.1(a), (b), (c) and (d) of the Trust Agreement with respect to, among
other things, accounting and reports with respect to the
Certificateholders' interest in the Trust.
(iv)In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Master Servicer may enter into
transactions with or otherwise deal with any of its Affiliates; provided,
however, that the terms of any such transactions or dealings shall be in
accordance with any directions received from the Trust (with the written
consent of the Insurer) and shall be, in the Master Servicer's opinion, no
less favorable to the Trust or the Insurer in any material respect.
(b) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Master Servicer are non-ministerial, the Master
Servicer shall not take any action pursuant to this Article VI unless within a
reasonable time before the taking of such action, the Master Servicer shall have
notified the Owner Trustee and the Insurer of the proposed action and the Owner
Trustee and the Insurer shall have consented in writing thereto or provided an
alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:
(i) the amendment of or any supplement to the Indenture.
(ii) the initiation of any claim or lawsuit by the Trust and the
compromise of any action, claim or lawsuit brought by or against the Trust
(other than in connection with the collection of the Mortgage Loans).
(iii) the amendment, change or modification of this Agreement or
any of the Operative Documents.
(iv)the appointment of successor Note Registrars, successor Paying
Agents and successor Indenture Trustees pursuant to the Indenture or the
appointment of Successor Servicers or the consent to the assignment by the
Note Registrar, Paying Agent or Indenture Trustee of its obligations under
the Indenture; and
(v) the removal of the Indenture Trustee.
(c) Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Operative
Documents, the Master Servicer, in its capacity hereunder, shall not be
obligated to, and shall not, (1) make any payments to the Noteholders to the
Originator under the Operative Documents, (2) sell the Trust Property pursuant
to Section 5.6 of the Indenture, (3) take any other action that the Trust
directs the Master Servicer not to take on its behalf (unless the Insurer so
directs) or (4) in connection with its duties hereunder assume any
indemnification obligation of any other Person.
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(d) Responsibility. The Indenture Trustee or any successor Master Servicer
shall not be responsible for any obligations or duties of the Master Servicer
under this Section 6.1.
Section 6.2 Records
. The Master Servicer shall maintain appropriate books of account and
records relating to services performed under this Agreement, which books of
account and records shall be accessible for inspection by the Trust and the
Indenture Trustee at any time during normal business hours.
Section 6.3 Additional Information to be Furnished to the Trust
. The Master Servicer shall furnish to the Trust, the Indenture Trustee
and the Insurer from time to time such additional information regarding the
Mortgage Loans as the Trust, the Indenture Trustee or the Insurer shall
reasonably request.
ARTICLE VII.
MISCELLANEOUS
Section 7.1 Compliance Certificates and Opinions.
Upon any application or request by the Sponsor, the Insurer or the
Noteholders to the Indenture Trustee to take any action under any provision of
this Agreement, the Sponsor or the Noteholders, as the case may be, shall
furnish to the Indenture Trustee a certificate stating that all conditions
precedent, if any, provided for in this Agreement relating to the proposed
action have been complied with, except that in the case of any such application
or request as to which the furnishing of any documents is specifically required
by any provision of this Agreement relating to such particular application or
request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement shall include:
(a) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto.
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
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Section 7.2 Form of Documents Delivered to the Indenture Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate of an Authorized Officer of the Indenture Trustee may be
based, insofar as it relates to legal matters, upon an opinion of counsel,
unless such Authorized Officer knows, or in the exercise of reasonable care
should know, that the opinion is erroneous. Any such certificate of an
Authorized Officer of the Indenture Trustee or any opinion of counsel may be
based, insofar as it relates to factual matter upon a certificate or opinion of,
or representations by, one or more Authorized Officers of the Sponsor or of the
Master Servicer, stating that the information with respect to such factual
matters is in the possession of the Sponsor or of the Master Servicer, unless
such Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Any opinion of counsel may also be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Indenture Trustee, stating that
the information with respect to such matters is in the possession of the
Indenture Trustee, unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous. Any opinion of counsel may be based on
the written opinion of other counsel, in which event such opinion of counsel
shall be accompanied by a copy of such other counsel's opinion and shall include
a statement to the effect that such counsel believes that such counsel and the
Indenture Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 7.3 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by the
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee and the Insurer has consented thereto in
writing, and, where it is hereby expressly required, to the Sponsor. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any
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such agent shall be sufficient for any purpose of this Agreement and conclusive
in favor of the Indenture Trustee and the Trust, if made in the manner provided
in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of the Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by any Noteholder shall bind the Noteholder of every Note issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Trust in reliance thereon, whether or not notation of
such action is made upon such Notes.
Section 7.4 Notices, etc. to Indenture Trustee.
Any request, demand, authorization, direction, notice, consent, waiver or
act of the Noteholders or other documents provided or permitted by this
Agreement to be made upon, given or furnished to, or filed with the Indenture
Trustee by any Noteholder, the Insurer or by the Sponsor shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with
and received by the Indenture Trustee at its Corporate Trust Office as set forth
in the Indenture.
Section 7.5 Notices and Reports to Noteholders; Waiver of Notices.
Where this Agreement provides for notice to Noteholders of any event or
the mailing of any report to Noteholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Noteholder affected by such event or to
whom such report is required to be mailed, at the address of such Noteholder as
it appears on the Note Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice or the mailing
of such report. In any case where a notice or report to Noteholders is mailed in
the manner provided above, neither the failure to mail such notice or report nor
any defect in any notice or report so mailed to any particular Noteholder shall
affect the sufficiency of such notice or report with respect to other
Noteholders, and any notice or report which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.
Where this Agreement provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
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In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency that rated
any Notes, failure to give such notice shall not affect any other rights or
obligations created hereunder.
Section 7.6 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto shall
bind its successors and assigns, whether so expressed or not.
Section 7.7 Severability.
In case any provision in this Agreement or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 7.8 Benefits of Agreement.
Nothing in this Agreement or in the Notes, expressed or implied, shall
give to any Person, other than the Noteholders, the Insurer and the parties
hereto and their successors hereunder, any benefit or any legal or equitable
right, remedy or claim under this Agreement.
Section 7.9 Legal Holidays.
In any case where the date of any Payment Date, any other date on which
any distribution to any Noteholder is proposed to be paid, or any date on which
a notice is required to be sent to any Person pursuant to the terms of this
Agreement shall not be a Business Day, then (notwithstanding any other provision
of the Notes or this Agreement) payment or mailing need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made or mailed on the nominal date of any such Payment Date, or
such other date for the payment of any distribution to any Noteholder or the
mailing of such notice, as the case may be, and no interest shall accrue for the
period from and after any such nominal date, provided such payment is made in
full on such next succeeding Business Day.
Section 7.10 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
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Section 7.11 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 7.12 Usury.
The amount of interest payable or paid on any Note under the terms of this
Agreement shall be limited to an amount which shall not exceed the maximum
nonusurious rate of interest allowed by the applicable laws of the State of New
York or any applicable law of the United States permitting a higher maximum
nonusurious rate that preempts such applicable New York laws, which could
lawfully be contracted for, charged or received (the "Highest Lawful Rate"). In
the event any payment of interest on any Note exceeds the Highest Lawful Rate,
the Trust stipulates that such excess amount will be deemed to have been paid to
the Noteholder inadvertently in error by the Indenture Trustee acting on behalf
of the Trust and the Noteholder receiving such excess payment shall promptly,
upon discovery of such error or upon notice thereof from the Indenture Trustee
on behalf of the Trust, refund the amount of such excess or, at the option of
such Noteholder, apply the excess to the payment of principal of such Note, if
any, remaining unpaid in any event, the Indenture Trustee shall not be
responsible for any repayment of such excess payments. In addition, all sums
paid or agreed to be paid to the Indenture Trustee for the benefit of
Noteholders of Notes for the use, forbearance or detention of money shall, to
the extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full term of such Notes.
Section 7.13 Amendment.
(a) The Indenture Trustee, the Sponsor and the Master Servicer, may at any
time and from time to time, with the prior written approval of the Insurer but
without the giving of notice to or the receipt of the consent of the
Noteholders, amend this Agreement, and the Indenture Trustee shall consent to
such amendment, for the purpose of (i) curing any ambiguity, or correcting or
supplementing any provision hereof which may be inconsistent with any other
provision hereof, or to add provisions hereto which are not inconsistent with
the provisions hereof, or (ii) complying with the requirements of the Code and
the regulations proposed or promulgated thereunder; provided, however, that any
such action shall not, (i) as evidenced in writing from the Rating Agencies
delivered to the Indenture Trustee, reduce the then-current rating on the Notes
or (ii) as evidenced by an opinion of counsel delivered to the Indenture
Trustee, materially and adversely affect the interests of any Noteholder
(without its written consent).
(b) The Indenture Trustee, the Sponsor and the Master Servicer may, at any
time and from time to time, with the prior written approval of the Insurer but
without the giving of notice to or the receipt of the consent of the
Noteholders, amend this Agreement, and the Indenture Trustee shall consent to
such amendment, for the purpose of changing the definition of "Specified
Overcollateralization Amount" (as defined in the Insurance Agreement); provided,
however, that no such change shall affect the weighted
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average life of the Notes (assuming an appropriate prepayment speed as
determined by the Underwriters as evidenced in writing) by more than five
percent, as determined by the Underwriters.
(c) In addition to (a) and (b) this Agreement may also be amended by the
Indenture Trustee, the Sponsor, and the Master Servicer at any time and from
time to time, with the prior written approval of the Insurer and not less than a
majority of the Percentage Interest represented by the Notes then Outstanding,
for the purpose of adding any provisions or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders hereunder; provided, however, that no such
amendment shall (a) change in any manner the amount of, or change the timing of,
payments which are required to be distributed to any Noteholder without the
consent of such Noteholder or (b) reduce the aforesaid percentages of Percentage
Interests which are required to consent to any such amendments, without the
consent of all Noteholders then Outstanding.
(d) The Insurer, the Noteholders, Moody's and S&P shall be provided with
copies of any amendments to this Agreement, together with copies of any opinions
or other documents or instruments executed in connection therewith.
Section 7.14 The Insurer.
The Insurer is a third-party beneficiary of this Agreement. Any right
conferred to the Insurer shall be suspended during any period in which the
Insurer is in default in its payment obligations under the Policy except with
respect to amendments to this Agreement pursuant to Section 7.13. During any
period of suspension the Insurer's rights hereunder shall vest in the
Noteholders of the Notes and shall be exercisable by the Noteholders of at least
a majority in Percentage Interest of the Notes then Outstanding. At such time as
the Notes are no longer Outstanding hereunder and the Insurer has been
reimbursed for all payments made pursuant to the Policy to which it is entitled
hereunder, the Insurer's rights hereunder shall terminate. Except at such time
as an Insurer Default has occurred and is continuing, the Insurer shall be
deemed the 100% Noteholder for purposes of all voting rights, consents,
directions, notices and waivers hereunder.
Section 7.15 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Indenture Trustee: Bankers Trust Company
of California, N.A.
▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ADVANTA REVOLVING HOME
EQUITY LOAN TRUST 1999-A
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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The Sponsor: Advanta Mortgage Conduit Services, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy addressed to the attention of the
General Counsel at the same address.
The Master Servicer: Advanta Mortgage Corp. USA
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Senior Vice President, Loan Service
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Insurer: Ambac Assurance Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance Department -MBS
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
In each case in which notice or other communication to the Insurer refers
to an Event of Servicing Termination, a claim on the Policy or with respect to
which failure on the part of the Insurer to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of the general counsel (fax
no. ▇▇▇-▇▇▇-▇▇▇▇ and with the same confirmation number as stated above) and
should be marked "URGENT MATERIAL ENCLOSED".
Moody's: ▇▇▇▇▇'▇ Investors Service
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: The Home Equity
Monitoring Department
S&P: Standard & Poor's Ratings Group
▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Mortgage Surveillance Group
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The Trust: Advanta Revolving Home Equity Loan
Trust 1999-A
c/o Wilmington Trust Company, as Owner Trustee
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Section 7.16 Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as Owner Trustee of the Trust under the
Trust Agreement, in the exercise of the powers and authority conferred and
vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of the Trust is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but is
made and intended for the purpose for binding only the Trust, (c) nothing herein
contained shall be construed as creating any liability on Wilmington Trust
Company individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by
the parties to this Agreement and by any person claiming by, through or under
them and (d) under no circumstances shall Wilmington Trust Company be personally
liable for the payment of any indebtedness or expenses of the Trust or be liable
for the breach or failure of any obligation, representation, warranty or
covenant made or undertaking by the Trust under this Agreement or any related
documents.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized, all as of
the day and year first above written.
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
ADVANTA MORTGAGE CORP. USA
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
ADVANTA REVOLVING HOME EQUITY LOAN
TRUST 1999-A,
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
ADVANTA HOLDING TRUST 1999-A
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
not in its individual capacity but solely as
Indenture Trustee
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Secretary
[Signature Page of Sale and Servicing Agreement]
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EXHIBIT B
FORM OF CREDIT LINE AGREEMENTS
[Attached]
B-1
77
EXHIBIT C
[Reserved]
C-1
78
EXHIBIT D
FORM OF TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
Bankers Trust Company of California, N.A., a national banking
association, in its capacity as indenture trustee (the "Indenture Trustee")
under that certain Sale and Servicing Agreement, dated as of May 1, 1999 (the
"Sale and Servicing Agreement"), by and among Advanta Mortgage Conduit Services,
Inc., a Delaware corporation, as sponsor (the "Sponsor"), Advanta Mortgage Corp.
USA, a Delaware corporation, as Master Servicer, Advanta Holding Trust 1999-A,
Advanta Revolving Home Equity Loan Trust 1999-A, as Trust, and the Indenture
Trustee, hereby acknowledges receipt of the items delivered to it by the Sponsor
with respect to the Mortgage Loans.
The Schedule of Mortgage Loans is attached to this Receipt.
The Indenture Trustee hereby additionally acknowledges that it
shall review such items as required by Section 2.2(a) of the Sale and Servicing
Agreement and shall otherwise comply with Section 2.2(b) of the Sale and
Servicing Agreement as required thereby.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Indenture Trustee
By:_________________________________
Name:
Title:
Dated: May __, ▇▇▇▇
▇-▇
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EXHIBIT E
FORM OF CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Bankers Trust Company
of California, N.A., a national banking association, acting in its capacity as
indenture trustee (the "Indenture Trustee") of a certain pool of mortgage loans
(the "Pool") heretofore conveyed in trust to the Indenture Trustee, pursuant to
that certain Sale and Servicing Agreement, dated as of May 1, 1999 (the "Sale
and Servicing Agreement"), by and among Advanta Mortgage Conduit Services, Inc.,
a Delaware corporation, as sponsor (the "Sponsor"), Advanta Mortgage Corp. USA,
a Delaware corporation, as Master Servicer, Advanta Holding Trust 1999-A,
Advanta Revolving Home Equity Loan Trust 1999-A, as Trust, and the Indenture
Trustee; and
WHEREAS, the Indenture Trustee is required, pursuant to Section 2.2(a) of
the Sale and Servicing Agreement, to review the Files relating to the Pool
within a specified period following the Closing Date and Transfer Date and to
notify the Sponsor promptly of any defects with respect to the Pool, and the
Sponsor is required to remedy such defects or take certain other action, all as
set forth in Section 2.2(b) of the Sale and Servicing Agreement; and
WHEREAS, Section 2.2(a) of the Sale and Servicing Agreement requires the
Indenture Trustee to deliver this Certification upon the satisfaction of certain
conditions set forth therein;
NOW, THEREFORE, the Indenture Trustee has determined that as to each
Mortgage Loan listed in the Schedule of Mortgage Loans (other than any Mortgage
Loan paid in full or any Mortgage Loan specifically identified in such Pool
Certification as not covered by such Pool Certification), (i) all documents
required to be delivered to it (contained in a Mortgage File) pursuant to this
Agreement are in its possession and (ii) such documents have been reviewed by it
and on their face appear to relate to such Mortgage Loan. The Indenture Trustee
makes no certification hereby, however, with respect to any intervening
assignments or assumption and modification agreements.
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
By:__________________________________
Name:
Title:
Date:_______________
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇
FORM OF MASTER SERVICER'S TRUST RECEIPT
To: Bankers Trust Company of California, N.A.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust
Date: _________________
In connection with the administration of the mortgage loans held by you as
Indenture Trustee under that certain Sale and Servicing Agreement dated as of
May 1, 1999 by and among Advanta Mortgage Conduit Services, Inc., a Delaware
corporation, as Sponsor, Advanta Mortgage Corp. USA, a Delaware corporation, as
Master Servicer, Advanta Holding Trust 1999-A, Advanta Revolving Home Equity
Loan Trust 1999-A, as Trust, and you (the "Agreement"), the Master Servicer
hereby requests a release of the File held by you as Indenture Trustee with
respect to the following described Mortgage Loan for the reason indicated below:
Mortgagor's Name:
Loan No.:
Reason for requesting file:
_______ 1. Mortgage Loan paid in full.
(The Master Servicer hereby certifies that all amounts received
in connection with the loan have been or will be credited to the
Note Account (whichever is applicable) pursuant to the
Agreement.)
_______ 2. Mortgage Loan reacquired pursuant to Section 3.3(c), 3.4, or 2.2(b)
of the Agreement.
(The Master Servicer hereby certifies that the Loan
Reacquisition Price has been or will be paid to the Note Account
pursuant to the Agreement.)
_______ 3. Mortgage Loan substituted.
(The Master Servicer hereby certifies that a Qualified
Replacement Mortgage Loan has been or will be assigned and
delivered to you along with the related Mortgage File pursuant
to the Agreement.)
_______ 4. The Mortgage Loan is being foreclosed.
_______ 5. Other. (Describe)
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The undersigned acknowledges that the above Mortgage File will be held by
the undersigned in accordance with the provisions of the Agreement and will be
returned to you, except if the Mortgage Loan has been paid in full, or purchased
or substituted for by a Qualified Replacement Mortgage Loan (in which case the
Mortgage File will be retained by us permanently) and except if the Mortgage
Loan is being foreclosed (in which case the Mortgage File will be returned when
no longer required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed to them in
the Agreement.
ADVANTA MORTGAGE CORP. USA
By:______________________________
Name:
Title: