Exhibit 99.4
EXECUTION VERSION
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SERVICING AGREEMENT
By and Between
WASHINGTON MUTUAL BANK
(Servicer)
and
LUMINENT MORTGAGE CAPITAL, INC.
MAIA MORTGAGE FINANCE STATUTORY TRUST
MERCURY MORTGAGE FINANCE STATUTORY TRUST
(Owner)
Dated as of November 1, 2006
Residential First Lien Mortgage Loans
Schedule/Schedule Flow Delivery Program
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TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS..................................................................................1
ARTICLE 2 ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...............................................8
Section 2.1 Identification of Mortgage Loans; Servicer to Act as Servicer................................8
Section 2.2 Liquidation of Mortgage Loans...............................................................10
Section 2.3 Collection of Mortgage Loan Payments........................................................11
Section 2.4 Establishment of Account; Deposits in Account...............................................12
Section 2.5 Permitted Withdrawals from the Account......................................................13
Section 2.6 Establishment of Escrow Account; Deposits in Escrow Account; Escrow Analysis................14
Section 2.7 Permitted Withdrawals from the Escrow Account...............................................14
Section 2.8 Payment of Taxes, Insurance and Other Charges...............................................15
Section 2.9 Transfer of Accounts........................................................................15
Section 2.10 Maintenance of Hazard Insurance.............................................................15
Section 2.11 Fidelity Bond; Errors and Omissions Insurance...............................................17
Section 2.12 Title, Management and Disposition of Real Estate Owned......................................17
Section 2.13 Application of Proceeds of Insurance to Repair or Restoration...............................19
Section 2.14 Inspections.................................................................................19
Section 2.15 Maintenance of Primary Mortgage Insurance Policies; Collections Thereunder..................19
Section 2.16 Monthly Advances by the Servicer............................................................20
Section 2.17 Compliance With REMIC Provisions............................................................20
Section 2.18 Owner to Cooperate; Release of Collateral Files.............................................21
ARTICLE 3 PAYMENTS TO THE OWNER.......................................................................22
Section 3.1 Distributions...............................................................................22
Section 3.2 Reports.....................................................................................22
Section 3.3 Delinquency and Foreclosure Statements......................................................24
ARTICLE 4 GENERAL SERVICING PROCEDURE; COVENANTS; REPRESENTATIONS AND WARRANTIES......................24
Section 4.1 Assumption Agreements.......................................................................24
Section 4.2 Satisfaction of Mortgages and Release of Collateral Files...................................25
Section 4.3 Servicing Compensation......................................................................26
Section 4.4 Owner's Right to Examine Servicer Records, etc..............................................26
Section 4.5 Cooperation.................................................................................27
Section 4.6 Consents and Approvals......................................................................27
ARTICLE 5 THE servicer................................................................................27
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Section 5.1 Indemnification; Third Party Claims.........................................................27
Section 5.2 Servicer Covenants; Merger or Consolidation of the Servicer.................................28
Section 5.3 Limitation on Liability of the Servicer and Others..........................................28
Section 5.4 Servicer Not to Resign......................................................................29
Section 5.5 Transfer of Servicing.......................................................................29
Section 5.6 Transfer of Mortgage Loans..................................................................29
Section 5.7 Representations and Warranties of the Servicer..............................................30
ARTICLE 6 DEFAULT.....................................................................................31
Section 6.1 Events of Default...........................................................................31
Section 6.2 Waiver of Defaults..........................................................................33
Section 6.3 Survival of Certain Obligations and Liabilities of the Defaulted Servicer...................33
ARTICLE 7 TERMINATION.................................................................................33
Section 7.1 Termination of Agreement....................................................................33
Section 7.2 Termination of the Servicer Upon Unremedied Event of Default................................33
ARTICLE 8 reconstitutions; regulation ab compliance...................................................34
Section 8.1 Reconstitutions; Servicer's Purchase Right..................................................34
Section 8.2 Reconstitution Agreements...................................................................35
Section 8.3 Intent of the Parties; Reasonableness.......................................................36
Section 8.4 Additional Representations and Warranties of the Servicer...................................36
Section 8.5 Information to Be Provided by the Servicer..................................................37
Section 8.6 Servicer Compliance Statement...............................................................40
Section 8.7 Report on Assessment of Compliance and Attestation..........................................40
Section 8.8 Use of Subservicers and Subcontractors......................................................41
Section 8.9 Indemnification; Remedies...................................................................42
Section 8.10 Third Party Beneficiary.....................................................................44
ARTICLE 9 MISCELLANEOUS PROVISIONS....................................................................44
Section 9.1 Successor to the Servicer...................................................................44
Section 9.2 Amendment...................................................................................45
Section 9.3 Recordation of Agreement; Perfection of Security Interest; Further Assurances...............45
Section 9.4 Duration of Agreement.......................................................................45
Section 9.5 Governing Law...............................................................................45
Section 9.6 General Interpretive Principles.............................................................46
Section 9.7 Reproduction of Documents...................................................................46
Section 9.8 Notices.....................................................................................46
Section 9.9 Severability of Provisions..................................................................47
Section 9.10 Exhibits and Schedules......................................................................48
Section 9.11 Counterparts; Successors and Assigns........................................................48
Section 9.12 Effect of Headings..........................................................................48
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Section 9.13 Other Agreements Superseded; Entire Agreement...............................................48
Section 9.14 Attorneys' Fees.............................................................................48
Section 9.15 Confidential Information....................................................................48
Section 9.16 Nonsolicitation.............................................................................48
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DESCRIPTION OF ATTACHMENTS
Exhibit A FORM OF REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
Exhibit B ACCOUNT LETTER AGREEMENT
Exhibit C ESCROW ACCOUNT LETTER AGREEMENT
Exhibit D SERVICING CRITERIA
Exhibit E FORM OF ANNUAL CERTIFICATION
Exhibit F FORM OF INDEMNIFICATION AGREEMENT
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SERVICING AGREEMENT
This SERVICING AGREEMENT (this "Agreement") dated as of November 1, 2006,
is between Washington Mutual Bank (formerly known as Washington Mutual Bank,
FA), a savings bank organized under the laws of the United States, in its
capacity as servicer (the "Servicer"), and Luminent Mortgage Captial, Inc., a
Maryland corporation, Maia Mortgage Finance Statutory Trust, a Maryland business
Trust and Mercury Mortgage Finance Statutory Trust, a Maryland business Trust
(each, an "Owner and, collectively, the "Owners").
PRELIMINARY STATEMENT
WHEREAS, pursuant to that certain Mortgage Loan Purchase and Sale Agreement
of even date herewith among Washington Mutual Mortgage Securities Corp., as
seller (the "Seller") and each Owner as a purchaser (the "Purchase Agreement"),
and in reliance upon the representations, warranties and covenants of the
Servicer contained herein and of the Seller contained in the Purchase Agreement,
the Owners have agreed to purchase from the Seller, and the Seller has agreed to
sell to the Owners, without recourse and on a servicing-retained basis, certain
residential, first lien mortgage loans;
WHEREAS, the Servicer has agreed to act as Servicer and, on behalf of the
Seller, as agent and subservicer, to service such mortgage loans for the Owners
from and after the purchase by the Owners of such mortgage loans; and
WHEREAS, the Servicer and the Owners desire to prescribe the terms and
conditions regarding the management, servicing, and control of the mortgage
loans purchased by the Owners pursuant to the Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Servicer and the Owners agree
as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings specified
in the Purchase Agreement, except that, whenever used herein, the following
words and phrases shall have the following meanings, unless the context
otherwise requires:
Acceptable Servicing Procedures: The procedures, including prudent
collection and loan administration procedures, and the standard of care employed
by prudent mortgage servicers that service mortgage loans of the same type as
the Mortgage Loans in the jurisdictions in which the related Mortgaged
Properties are located. Such standard of care shall not be lower than that the
Servicer customarily employs and exercises in servicing and administering
similar mortgage loans for its own account and shall be in full compliance with
all applicable federal, state and local laws, ordinances, rules and regulations.
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Account: The account or accounts created and maintained pursuant to Section
2.4 of this Agreement.
Agency Transfer: A transfer of Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac.
Agreement: This Servicing Agreement, including all exhibits and schedules
hereto, and all amendments hereof and supplements hereto.
Applicable Requirements: With respect to each Mortgage Loan, (i) the terms
of the related Mortgage and Mortgage Note, (ii) the federal, state and local
laws, statutes, rules, regulations, ordinances, standards, requirements,
administrative rulings, orders and processes pertaining to such Mortgage Loan,
including but not limited to those pertaining to the processing, origination and
servicing of the Mortgage Loan, (iii) the requirements of the Owner as set forth
in this Agreement and (iv) Acceptable Servicing Procedures.
BIF: The Bank Insurance Fund.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day on
which banking or savings and loan institutions are authorized or obligated by
law or executive order to be closed in the State of New York, the State of
Washington or any state in which the Servicer operates.
Code: The Internal Revenue Code of 1986, as amended from time to time, or
any successor statute thereto.
Commission: The United States Securities and Exchange Commission.
Compensating Interest Cap: An amount equal to 1/12 of the sum of:
the aggregate Unpaid Principal Balance of all (A) fixed rate Mortgage Loans
and (B) Hybrid ARM Loans that bear interest at the initial fixed rate (other
than 3/1 Hybrid ARM Loans), multiplied by 0.25%, and
the aggregate Unpaid Principal Balance of all (A) ARM Loans, (B) Hybrid ARM
Loans that bear interest at an adjustable rate and (C) 3/1 Hybrid ARM Loans,
multiplied by 0.375%.
Condemnation Proceeds: All awards or settlements in respect of a taking of
all or part of a Mortgaged Property by exercise of the power of eminent domain
or condemnation.
Cut-off Date: With respect to any Mortgage Loan purchased on a Closing
Date, the cut-off date specified in the Commitment Letter relating to the
purchase and sale of the related Loan Pool.
Defaulted Servicer: As defined in Section 6.1.
Depositor: The depositor, as such term is defined in Regulation AB, with
respect to any Securitization Transaction.
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Determination Date: The thirteenth (13th) day of each month (or if such day
is not a Business Day, the next Business Day), commencing in the month following
the end of the calendar month in which the initial Cut-off Date occurs. A
Determination Date is related to a Monthly Remittance Date if such Determination
Date and such Monthly Remittance Date occur in the same calendar month.
Disclosure Document: With respect to any Securitization Transaction, a
prospectus, prospectus supplement, private placement memorandum or offering
circular prepared in connection with such Securitization Transaction.
Due Date: With respect to any Mortgage Loan, the day of the month on which
Monthly Payments on such Mortgage Loan are due, exclusive of any days of grace,
which day shall be the first day of the month unless otherwise specified on the
related Mortgage Loan Schedule.
Due Period: With respect to any Mortgage Loan, the period beginning on the
first day of any month and ending on the last day of such month.
Eligible Account: An account or accounts maintained with a Qualified
Depository.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 2.6.
Escrow Payments: The amounts constituting ground rents, taxes, assessments,
water rates, sewer rents, municipal charges, Primary Mortgage Insurance Policy
premiums, if any, fire and hazard insurance premiums, condominium charges and
other payments required to be escrowed by the Mortgagor with the mortgagee
pursuant to any Mortgage Loan.
Event of Default: Any one of the conditions or circumstances enumerated in
Section 6.1.
Exchange Act: The Securities Exchange Act of 1934, as amended.
▇▇▇▇▇▇ ▇▇▇: ▇▇▇▇▇▇ ▇▇▇ (formerly known as the Federal National Mortgage
Association) and any successor thereto.
▇▇▇▇▇▇ Mae Guide: The ▇▇▇▇▇▇ ▇▇▇ Servicing Guide as in effect from time to
time, subject to such waivers, variances and modification as have been and may
be agreed to between ▇▇▇▇▇▇ Mae and the Servicer and/or the Seller.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
Fidelity Bond: A fidelity bond to be obtained by the Servicer pursuant to
Section 2.11.
Final Recovery Determination: With respect to any defaulted Mortgage Loan
or any REO Property, a determination made by the Servicer that all related
Condemnation Proceeds, Insurance Proceeds, Liquidation Proceeds and other
payments or recoveries that the Servicer, in its good faith judgment, expects to
be finally recoverable have been so recovered. The Servicer shall maintain
records, prepared by a servicing officer of the Servicer, of each Final Recovery
Determination.
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▇▇▇▇▇▇▇ Mac: ▇▇▇▇▇▇▇ Mac (formerly known as The Federal Home Loan Mortgage
Corporation) and any successor thereto.
▇▇▇▇▇▇▇ Mac Guide: The ▇▇▇▇▇▇▇ Mac Servicing Guide as in effect from time
to time, subject to such waivers, variances and modification as have been and
may be agreed to between ▇▇▇▇▇▇▇ Mac and the Servicer and/or the Seller.
GAAP: Generally Accepted Accounting Principles, as promulgated by the
Financial Accounting Standards Board from time to time.
Indemnitee: As defined in Section 4.4(c).
Initial Closing Date: November 30, 2006.
Insurance Proceeds: Proceeds of any Primary Mortgage Insurance Policy,
LPMI, title policy, hazard insurance policy or any other insurance policy
covering a Mortgage Loan or the related Mortgaged Property, including any
amounts required to be deposited in the Account pursuant to Section 2.10, to the
extent such proceeds are not to be applied to the restoration of the related
Mortgaged Property or released to the Mortgagor in accordance with Applicable
Requirements.
Issuing Entity: The issuing entity, as such term is defined in Regulation
AB, with respect to any Securitization Transaction.
Late Collections: With respect to any Mortgage Loan, all amounts received
during any Due Period, whether as late payments of Monthly Payments, or as
Insurance Proceeds, Liquidation Proceeds, Condemnation Proceeds or otherwise,
which amounts represent late payments or collections of Monthly Payments due but
delinquent for a previous Due Period and not previously recovered.
Liquidation Proceeds: Cash received in connection with (i) the liquidation
of a defaulted Mortgage Loan (whether through the sale or assignment of the
Mortgage Loan, trustee's sale, foreclosure sale or otherwise) or (ii) the sale
of the Mortgaged Property, if the Mortgaged Property is acquired in satisfaction
of the Mortgage.
LPMI: Lender Paid Primary Mortgage Insurance Policy.
Management Assertion: As defined in Section 4.5.
Monthly Advance: The aggregate of the advances made by the Servicer on any
Monthly Remittance Date pursuant to Section 2.16(a).
Monthly Remittance Date: The eighteenth (18th) day of each month (or if
such day is not a Business Day, the next Business Day) commencing in the month
following the end of the calendar month in which the initial Cut-off Date
occurs. A Determination Date is related to a Monthly Remittance Date if such
Determination Date and such Monthly Remittance Date occur in the same calendar
month.
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Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or any successor thereto.
Mortgage Interest Rate: With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan.
Net Rate: With respect to each Mortgage Loan, the annual rate at which
interest thereon shall be remitted to the Owner (in each case computed on the
basis of a 360-day year consisting of twelve 30-day months), which annual rate
shall be equal to the Mortgage Interest Rate less the Servicing Fee Rate and any
LPMI premiums, if applicable.
Nonrecoverable Advance: Any portion of any Servicing Advance or Monthly
Advance previously made or proposed to be made in respect of a Mortgage Loan by
the Servicer hereunder that the Servicer determines in its good faith judgment
will not be ultimately recoverable from Late Collections.
Officer's Certificate: A certificate signed by a Vice President or other
authorized officer and delivered to the Owner as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an employee of
the Servicer, reasonably acceptable to the Owner.
OTS: The Office of Thrift Supervision, or any successor thereto.
Owner: Luminent Mortgage Capital, Inc., Maia Mortgage Finance Statutory
Trust and Mercury Mortgage Finance Statutory Trust, and any successor owner of
any of the Mortgage Loans.
Participating Entity: As defined in Section 8.7(a)(iii).
Permitted Investments: Any one or more of the following obligations or
securities:
(i) direct obligations of, or obligations fully guaranteed as to
principal and interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and credit of
the United States;
(ii) repurchase obligations with respect to any security described
in clause (i) above, provided that the unsecured long-term obligations of the
party agreeing to repurchase such obligations are at the time rated by S&P or
Moody's in one of its two highest rating categories;
(iii) federal funds, certificates of deposit, time deposits, and
bankers' acceptances of any bank or trust company incorporated under the laws of
the United States or any state, provided that the long-term debt obligations of
such bank or trust company (or, in the case of the principal bank in a bank
holding company system, the long-term debt obligations of the bank holding
company) at the date of acquisition thereof have been rated by S&P or Moody's in
one of its two highest rating categories; and
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(iv) commercial paper of any corporation incorporated under the laws
of the United States or any state thereof that on the date of acquisition has
been rated by S&P or Moody's in its highest short-term rating category.
Permitted Reconstitution: As defined in Section 8.1(a).
Portfolio Loans: As defined in Section 8.1(e).
Prepayment Charge: With respect to any Mortgage Loan, the prepayment
premium or charge, if any, required under the terms of the related Mortgage Note
to be paid in connection with a Principal Prepayment in Full or a Principal
Prepayment in Part, to the extent permitted by applicable law.
Primary Mortgage Insurance Policy: With respect to each Mortgage Loan, the
policy of primary mortgage insurance (including all endorsements thereto) issued
with respect to such Mortgage Loan, if any, or any replacement policy.
Prime: As of any date of determination, the annual interest rate, adjusted
daily, published from time to time in The Wall Street Journal (Western Edition)
as the "PRIME RATE" in the "MONEY RATES" section. In the event that more than
one such rate is specified, "Prime" shall mean the highest of such rates.
Principal Prepayment: Any payment or other recovery of principal in full (
a "Principal Prepayment in Full") or in part (a "Principal Prepayment in Part")
of the then-outstanding principal on a Mortgage Loan (other than Condemnation
Proceeds, Insurance Proceeds, and Liquidation Proceeds) that is received in
advance of its scheduled Due Date and not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment. The term "Principal Prepayment" shall not
refer to any related Prepayment Charge.
Purchase Agreement: That certain Mortgage Loan Purchase and Sale Agreement
of even date herewith among the Seller as the seller and the Owners as the
purchasers.
Qualified Depository: Any of the following: (i) a depository, the long-term
unsecured debt obligations of which are rated by Moody's or S&P (or a comparable
rating agency) in one of its three highest rating categories, (ii) the corporate
trust department of a national bank, (iii) a depository that fully insures the
Account and the Escrow Account with insurance provided by the FDIC, or (iv) the
Servicer.
Reconstitution: Any Securitization Transaction or Whole Loan Transfer.
Reconstitution Agreement: An agreement or agreements including, but not
limited to an assignment assumption and recognition agreement, entered into by
the Servicer and the Owner and/or certain third parties, including a master
servicer, in connection with a Reconstitution with respect to any or all of the
Mortgage Loans serviced under this Agreement.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the
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Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Commission, or as may be provided by the Commission or its staff from
time to time.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to
REMICs, which appear at Section 860G of Subchapter M of Chapter 1 of the Code
and related provisions, and regulations promulgated thereunder, as in effect
from time to time.
REO Management Fee: With respect to each REO Property, an amount equal to
$1,000.
REO Property: A Mortgaged Property acquired in foreclosure or by deed in
lieu of foreclosure, as described in Section 2.12.
Required Notice: With respect to any Reconstitution, 15 days' prior written
notice, in each case (i) accompanied by loan-level data with respect to the
Mortgage Loans intended for inclusion in such Reconstitution and (ii) specifying
the percentage of mortgage loans in the entire related transaction that consist
of Mortgage Loans.
SAIF: The Savings Association Insurance Fund.
S&P: Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., or its successor in interest.
Sarbanes Certification: As defined in Section 8.7(a)(iv).
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: Any transaction involving either (1) a sale or
other transfer of some or all of the Mortgage Loans directly or indirectly to an
issuing entity in connection with an issuance of publicly offered or privately
placed, rated or unrated mortgage-backed securities or (2) an issuance of
publicly offered or privately placed, rated or unrated securities, the payments
on which are determined primarily by reference to one or more portfolios of
residential mortgage loans consisting, in whole or in part, of some or all of
the Mortgage Loans.
Servicer: Washington Mutual Bank, a savings bank organized under the laws
of the United States, or its permitted successor in interest, or any successor
to the Servicer under this Agreement appointed as herein provided.
Servicer Information: The information provided by the Servicer, any
Subservicer or any Subcontractor pursuant to Section 8.5(a).
Servicing Advances: All customary, reasonable, and necessary "out of
pocket" costs and expenses, including reasonable attorneys' fees and
disbursements, incurred by the Servicer in the performance of its servicing
obligations hereunder, including, without limitation, costs related to (i) the
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preservation, restoration, and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the Mortgaged Property if the Mortgaged Property
is acquired in satisfaction of the Mortgage and (iv) Servicer's compliance with
the obligations set forth in Sections 2.2, 2.3, 2.8, 2.10, 2.12 and 2.15 of this
Agreement.
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.
Servicing Fee: With respect to each Mortgage Loan, the amount of the annual
fee payable to the Servicer pursuant to Section 4.3 as compensation for
servicing and administering such Mortgage Loan. Such fee shall, for a period of
one full month, be equal to one-twelfth of the product of (i) the related
Servicing Fee Rate, multiplied by (ii) the outstanding Unpaid Principal Balance
of such Mortgage Loan. Such fee shall be payable monthly and shall be computed
on the basis of the same principal amount and period respecting which any
related interest payment on such Mortgage Loan is computed.
Sponsor: The sponsor, as such term is defined in Regulation AB, with
respect to any Securitization Transaction.
Subcontractor: Any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as "servicing" is commonly understood by
participants in the mortgage-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of Regulation
AB with respect to Mortgage Loans under the direction or authority of the
Servicer or a Subservicer.
Subservicer: Any Person that services Mortgage Loans on behalf of the
Servicer or any Subservicer and is responsible for the performance (whether
directly or through Subservicers or Subcontractors) of a substantial portion of
the material servicing functions required to be performed by the Servicer under
this Agreement or any Reconstitution Agreement that are identified in Item
1122(d) of Regulation AB.
Transferred Loans: As defined in Section 8.1(e).
USAP: As defined in Section 4.5.
Whole Loan Transfer: Any sale or transfer of some or all of the Mortgage
Loans, other than a Securitization Transaction.
ARTICLE 2
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 2.1 Identification of Mortgage Loans; Servicer to Act as Servicer
(a) From each Closing Date, the Servicer, as independent contract servicer,
shall commence servicing and administering the Mortgage Loans purchased by the
Owner on such Closing Date. Such servicing shall be in accordance with this
Agreement and Acceptable Servicing Procedures, and, except as otherwise
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expressly provided in this Agreement, the Servicer shall have full power and
authority, acting alone, to do any and all things in connection with such
servicing and administration that the Servicer may deem necessary or desirable
and consistent with the terms of this Agreement, including, without limitation,
all action permitted or required to be taken under any related Primary Mortgage
Insurance Policy or LPMI. In servicing and administering the Mortgage Loans, the
Servicer shall employ Acceptable Servicing Procedures, except that the Servicer
shall employ the procedures set forth in this Agreement whenever the Acceptable
Servicing Procedures conflict with the requirements under this Agreement
(provided that in no event shall the Servicer act in conflict with any
applicable federal, state and local laws, ordinances, rules or regulations). The
Servicer shall at all times act in the best interests of the Owner in performing
hereunder.
(b) The documents comprising the Collateral File and the Credit File with
respect to each Mortgage Loan serviced hereunder and that are delivered to the
Servicer, together with all other documents with respect to each such Mortgage
Loan that are prepared by or that come into the possession of the Servicer,
shall immediately vest in the Owner and shall be held and maintained in trust by
the Servicer at the will of the Owner and in a custodial capacity only for the
sole purpose of servicing or supervising the servicing of the related Mortgage
Loans. The documents comprising each Collateral File shall be delivered to the
Custodian, and each Credit File and all related documents that come into the
possession of the Servicer and are so held by the Servicer shall be
appropriately marked to clearly reflect the ownership interest of the Owner in
such Credit File and related documents. The Servicer shall release its custody
of any such documents only in accordance with written instructions from the
Owner, unless such release is required as incidental to the Servicer's servicing
of the Mortgage Loans or is in connection with a repurchase or substitution of
any Mortgage Loan pursuant to Section 3.3 of the Purchase Agreement.
(c) Subject to Section 2.17 of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if, in the Servicer's reasonable and prudent determination, such
waiver, modification, variation, postponement or indulgence is in the best
interests of the Owner; provided, however, that the Servicer shall not permit
any modification with respect to any Mortgage Loan that would change the
Mortgage Interest Rate, defer or forgive the payment of any principal or
interest payments, reduce the outstanding principal amount (except for actual
payments of principal) or extend the related Maturity Date (unless the Mortgagor
is in default with respect to the Mortgage Loan or such default is, in the
judgment of the Servicer, imminent). Without limiting the generality of the
foregoing, the Servicer is hereby authorized and empowered to execute and
deliver on behalf of itself and the Owner all instruments of satisfaction,
cancellation, full release, or partial release or discharge, and all other
comparable instruments with respect to the Mortgage Loans and the Mortgaged
Properties. If reasonably required by the Servicer, the Owner shall furnish the
Servicer with any powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties under this Agreement.
(d) As to each ARM Loan, the Servicer shall make periodic Mortgage Interest
Rate and Monthly Payment adjustments, as applicable, and execute and deliver all
appropriate notices regarding the same, in strict compliance with Applicable
Requirements. The Servicer shall establish procedures to monitor the Index in
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order to ensure that it uses the appropriate value for the Index in determining
an interest rate change. If the Servicer fails to make a timely and correct
Mortgage Interest Rate adjustment or Monthly Payment adjustment, the Servicer
shall use its own funds to satisfy any shortage in the Mortgagor's Monthly
Payment for so long as such shortage continues. In the event the Index, as
specified in the related Mortgage Note, becomes unavailable for any reason, the
Servicer shall select an alternative index based on comparable information, in
accordance with the terms of the Mortgage Note, and such alternative index shall
thereafter be the Index for such Mortgage Loan. In such event, the Servicer
shall also determine a new Gross Margin. The new Gross Margin shall be the
difference between (x) the average of the original Index for the most recent
three-year period that ends on the last date the original Index was available
plus the Gross Margin on the last date the original Index was available and (y)
the average of the new Index for the most recent three-year period that ends on
that date (or if not available for such three-year period, for such time as it
is available), rounded as provided in the Mortgage Note.
(e) In connection with the servicing and administration of the Mortgage
Loans and consistent with Acceptable Servicing Procedures, this Agreement and
the Purchase Agreement, the Servicer shall have full power and authority to
execute and deliver or cause to be executed and delivered on behalf of the Owner
such instruments of assignment or other comparable instruments as the Servicer
shall deem appropriate in order to register any Mortgage Loan on the MERS(R)
System or cause the removal of any Mortgage Loan from registration on the
MERS(R) System.
Section 2.2 Liquidation of Mortgage Loans
(a) In the event that any payment due under any Mortgage Loan is not paid
when the same becomes due and payable, or in the event the Mortgagor fails to
perform any other covenant or obligation under the Mortgage Loan and such
failure continues beyond any applicable grace period, the Servicer shall proceed
diligently to collect all payments due and shall take such action, including
commencing foreclosure, as it shall reasonably deem to be in the best interests
of the Owner.
(b) Notwithstanding the foregoing provisions of this Section 2.2, with
respect to any Mortgage Loan as to which the Servicer has received actual notice
of, or has actual knowledge of, the presence of any toxic or hazardous substance
on the related Mortgaged Property, the Servicer shall neither (i) obtain title
to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, (ii) acquire possession of, nor (iii) take any other action with
respect to, such Mortgaged Property if, as a result of any such action, the
Owner would be considered to hold title to, to be a mortgagee-in-possession of,
or to be an owner or operator of such Mortgaged Property within the meaning of
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, or any comparable law, unless the Servicer
has either (x) obtained the written consent of the Owner, or (y) previously
determined, based on its reasonable judgment and a prudent report prepared by a
Person who regularly conducts environmental audits using customary industry
standards, that:
(i) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
10
interest of the Owner to take such actions as are necessary to bring the
Mortgaged Property into compliance therewith; and
(ii) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous substances,
hazardous materials, hazardous wastes, or petroleum-based materials for
which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or local law or
regulation, or that if any such materials are present for which such action
could be required, that it would be in the best economic interest of the
Owner to take such actions with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this Section 2.2(b)
shall be advanced by the Servicer as a Servicing Advance, subject to the
Servicer's right to be reimbursed therefor from the Account and the Servicer's
right to make a judgment about whether any such advance would be a
Nonrecoverable Advance.
(c) If the Servicer has (i) determined that it is in the best economic
interest of the Owner to take such actions as are necessary to bring any such
Mortgaged Property into compliance with applicable environmental laws, or to
take such action with respect to the containment, clean-up or remediation of
hazardous substances, hazardous materials, hazardous wastes, or petroleum-based
materials affecting any such Mortgaged Property, or (ii) obtained the written
consent of the Owner, in each case as described above, then the Servicer shall
take such action as it deems to be in the best economic interest of the Owner
(or as otherwise directed by the Owner). The cost of any such compliance,
containment, clean-up or remediation shall be advanced by the Servicer as a
Servicing Advance, subject to the Servicer's right to be reimbursed therefor
from the Account and the Servicer's right to make a judgment about whether any
such advance would be a Nonrecoverable Advance.
Section 2.3 Collection of Mortgage Loan Payments
Continuously from the related Closing Date until the principal and interest
on all of the Mortgage Loans are paid in full, the Servicer shall proceed
diligently to collect all payments due under each of the Mortgage Loans when the
same shall become due and payable. With respect to those Mortgage Loans, if any,
as to which the Servicer collects Escrow Payments, the Servicer shall ascertain
or estimate annual ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, fire and hazard insurance premiums, condominium charges,
Primary Mortgage Insurance Policy premiums and all other charges that, as
provided in any Mortgage, shall become due and payable, to the end that the
Escrow Payments payable by the Mortgagors shall be sufficient to pay such
charges as and when they become due and payable. The Servicer shall not be
required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Mortgage Note, Primary Mortgage Insurance
Policy or LPMI or otherwise or against any public or governmental authority with
respect to a taking or condemnation) if in the Servicer's reasonable judgment
the Servicer believes that the costs and expenses relating thereto would be
Nonrecoverable Advances. The Servicer shall be entitled to be reimbursed from
the Account for any costs, expenses or other liabilities incurred by the
Servicer in connection with any such litigation. The Servicer's right to such
reimbursement shall be prior to the Owner's right to such proceeds.
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Section 2.4 Establishment of Account; Deposits in Account
(a) The Servicer shall establish and maintain one or more Accounts
(collectively, the "Account") entitled "Washington Mutual Bank, in trust for
HSBC Bank USA, N.A., as trustee for Owner." The Account shall be an Eligible
Account, established with an institution that is a Qualified Depository and
maintained as a segregated account separate and apart from any of the Servicer's
own funds and general assets. If the Account is established with an institution
other than the Servicer, (i) the Account shall be evidenced by a letter
agreement substantially in the form of Exhibit B attached hereto and (ii) the
Servicer shall deliver a copy of such letter agreement to the Owner on or prior
to the Initial Closing Date.
(b) The Servicer shall, upon receipt (and in all events by not later than
the end of the second Business Day following receipt thereof), deposit in the
Account and retain therein, the following payments and collections received or
made by the Servicer subsequent to the related Cut-off Date:
(i) the principal portion of all Monthly Payments on the Mortgage
Loans;
(ii) the interest portion of all Monthly Payments on the Mortgage
Loans less the Servicing Fee;
(iii) all Principal Prepayments in Part and Principal Prepayments in
Full;
(iv) all Liquidation Proceeds;
(v) all Insurance Proceeds, other than Insurance Proceeds to be held
in the Escrow Account and applied to the restoration and repair of the
Mortgaged Property or released to the Mortgagor in accordance with
Applicable Requirements;
(vi) all Condemnation Proceeds that are not released to the Mortgagor
in accordance with the Owner's written consent or Applicable Requirements;
(vii) any amount required to be deposited in the Account pursuant to
Sections 2.4(d), 2.10, 2.12(c), 2.12(e) or 4.2(b);
(viii) all Prepayment Charges;
(ix) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Section 3.3 of the Purchase Agreement and all
amounts required to be deposited in connection with the substitution of any
Qualified Substitute Mortgage Loan pursuant to the Purchase Agreement; and
(x) with respect to each Principal Prepayment, an amount (to be paid
by the Servicer out of its own funds without reimbursement therefor) that,
when added to all amounts allocable to interest received in connection with
such Principal Prepayment, equals one month's interest on the amount of
principal so prepaid at the Net Rate, provided, however, that the aggregate
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of deposits made by the Servicer pursuant to this clause (ix) in respect of
any Monthly Remittance Date shall not exceed the Compensating Interest Cap.
(c) The Servicer shall, no later than 24 hours prior to each Monthly
Remittance Date, deposit in the Account all Monthly Advances.
(d) The Servicer may cause the funds on deposit from time to time in the
Account to be invested in Permitted Investments, which Permitted Investments
shall mature not later than the Business Day immediately preceding the next
Monthly Remittance Date following the date such funds are invested. All
Permitted Investments shall be made in the name of the Servicer or its nominee.
All income and gain realized from any Permitted Investment shall be for the
benefit of the Servicer and shall be subject to its withdrawal or order from
time to time. The Servicer shall indemnify the Owner for any loss incurred in
respect of any Permitted Investment by such Servicer, and the amount of such
loss shall be deposited in the Account by the Servicer out if its own funds,
without reimbursement therefor, no later than 24 hours prior to the next Monthly
Remittance Date following the date of such loss.
Section 2.5 Permitted Withdrawals from the Account
The Servicer may, from time to time, withdraw funds from the Account for
the following purposes:
(i) to make payments and distributions to the Owner in the amounts and
in the manner provided for in Section 3.1, and to pay itself any unpaid
Servicing Fees, unpaid REO Management Fees and other servicing compensation
in accordance with Section 4.3;
(ii) to reimburse itself for any unreimbursed Servicing Advances or
Monthly Advances made with respect to any Mortgage Loan; provided that the
Servicer's right to reimburse itself pursuant to this clause (ii) is
limited to any amounts collected or received by the Servicer with respect
to such Mortgage Loan;
(iii) to pay to itself any interest earned on funds deposited in the
Account;
(iv) to make any payment or reimburse itself for any amount pursuant
to Sections 2.12(c), 2.12(e), 5.1(a) or 5.3;
(v) to reimburse itself for any Monthly Advance or Servicing Advance
previously made that it has determined to be a Nonrecoverable Advance;
(vi) if there shall be amounts deposited in error or there shall be
amounts deposited in the Account not required to be deposited therein,
including the Servicing Fee and other servicing compensation, to withdraw
such amount from the Account any provision herein to the contrary
notwithstanding;
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(vii) to transfer funds to another Qualified Depository in accordance
with Section 2.9; and
(viii) to clear and terminate the Account upon the termination of this
Agreement in accordance with Article 7.
Section 2.6 Establishment of Escrow Account; Deposits in Escrow Account;
Escrow Analysis
(a) The Servicer shall segregate and hold separate and apart from any of
its own funds and general assets all Escrow Payments collected and received
pursuant to the Mortgage Loans and shall establish and maintain one or more
Escrow Accounts (collectively, the "Escrow Account"), in the form of time
deposit or demand accounts, which may be interest bearing, entitled "Washington
Mutual Bank, in trust for HSBC Bank USA, N.A., as trustee for Owner, and any
successor Owner, and certain Mortgagors." The Escrow Account shall be an
Eligible Account established with a Qualified Depository. If the Escrow Account
is established with an institution other than the Servicer, (i) the Escrow
Account shall be evidenced by a letter agreement substantially in the form of
Exhibit C attached hereto and (ii) the Servicer shall deliver a copy of such
letter agreement to the Owner on or prior to the Initial Closing Date.
(b) The Servicer shall, upon receipt (and in all events by not later than
the end of the second Business Day following receipt thereof, or sooner if
required by applicable law), deposit in the Escrow Account and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans for the
purpose of effecting timely payment of escrow items as required under the terms
of this Agreement and (ii) all amounts representing proceeds of any hazard
insurance policy that are to be applied to the restoration or repair of the
related Mortgaged Property. The Servicer shall make withdrawals from the Escrow
Account only in accordance with Section 2.7. The Servicer shall be entitled to
retain any interest earned on funds deposited in the Escrow Account other than
interest on escrowed funds required by law to be paid to the Mortgagor and, to
the extent required by law, the Servicer shall pay interest on escrowed funds to
the Mortgagor without right of reimbursement therefor notwithstanding that the
Escrow Account maintained by the Servicer may not bear interest or that the
interest earned on such escrowed funds is insufficient for such purpose.
Section 2.7 Permitted Withdrawals from the Escrow Account
Withdrawals from the Escrow Account maintained by the Servicer may be made
by the Servicer only (i) to effect timely payments of ground rents, taxes,
assessments, sewer rents, municipal charges, water rates, insurance premiums,
condominium charges, fire and hazard insurance premiums or other items
constituting Escrow Payments for the related Mortgage, (ii) to reimburse the
Servicer for any Servicing Advance made by the Servicer pursuant to Sections 2.8
and 2.10 with respect to a related Mortgage Loan, (iii) to refund to any
Mortgagor any funds found to be in excess of the amounts required under the
terms of the related Mortgage Loan, (iv) for transfer to the Account in
accordance with the terms of this Agreement, (v) for restoration or repair of a
Mortgaged Property, provided the provisions of Section 2.13 have been complied
with, (vi) to pay to the Mortgagor, to the extent required by Applicable
Requirements, interest on the funds deposited in the Escrow Account, (vii) to
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pay to itself any interest earned on funds deposited in the Escrow Account (and
not required to be paid to the Mortgagor), (viii) to remove funds inadvertently
placed in the Escrow Account by the Servicer, or (ix) to clear and terminate the
Escrow Account upon the termination of this Agreement, in accordance with
Article 7
Section 2.8 Payment of Taxes, Insurance and Other Charges
With respect to each Mortgage Loan, the Servicer shall maintain accurate
records reflecting the status of property taxes, assessments and other charges
that are or may become a lien upon the related Mortgaged Property, the status of
Primary Mortgage Insurance premiums, if any, LPMI premiums, if any, and the
status of fire and hazard insurance coverage and flood insurance, all as
required hereunder. If a Mortgage Loan requires Escrow Payments, the Servicer
shall obtain, from time to time, all bills for the payment of such charges
(including renewal premiums) and shall effect payment thereof prior to the
applicable penalty or termination date in a manner consistent with Acceptable
Servicing Procedures, employing for such purpose deposits of the Mortgagor in
the Escrow Account that shall have been estimated and accumulated by the
Servicer in amounts sufficient for such purposes, as allowed under the terms of
the Mortgage. If a Mortgage Loan does not require Escrow Payments, or if there
are insufficient funds in the related Escrow Account, the Servicer shall cause
all such bills to be paid on a timely basis and shall from its own funds (if
necessary) make a Servicing Advance for timely payment of all such bills. The
Servicer shall monitor the payment status of such charges (including renewal
premiums) by the related Mortgagor. The Servicer shall effect payment of such
charges in a manner consistent with Acceptable Servicing Procedures and, in all
events, prior to the foreclosure of any lien against the Mortgaged Property
resulting from non-payment of such property taxes, assessments and other charges
and prior to the termination of any such insurance coverage.
Section 2.9 Transfer of Accounts
The Servicer may, from time to time, transfer the Account or the Escrow
Account to a different Qualified Depository. The Servicer shall notify the Owner
of any such transfer within ten (10) Business Days of transfer.
Section 2.10 Maintenance of Hazard Insurance
(a) The Servicer shall cause to be maintained for each Mortgage Loan
serviced by it fire and hazard insurance with extended coverage customary in the
area where the related Mortgaged Property is located, in an amount that is at
least equal to the lesser of (i) 100% of the replacement value of the
improvements securing the Mortgage Loan, or (ii) the Unpaid Principal Balance of
the Mortgage Loan (so long as it equals at least 80% of the insurable value of
the improvements); provided that in any case such amount shall be sufficient to
prevent either the Mortgagor or the Mortgagee from becoming a co-insurer. If the
Mortgaged Property is in an area that, at the time of origination of the related
Mortgage Loan, is identified on a flood hazard boundary map or flood insurance
rate map issued by the Federal Emergency Management Agency as having special
flood hazards (and such flood insurance was then available), the Servicer shall
15
cause to be maintained a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration with a generally
acceptable insurance carrier, if such insurance is available. Such flood
insurance shall be in an amount representing coverage not less than the least of
(i) the Unpaid Principal Balance of the Mortgage Loan, (ii) the full insurable
value of the improvements securing such Mortgage Loan and (iii) the maximum
amount of insurance available under the National Flood Insurance Act of 1968 and
the Flood Disaster Protection Act of 1973, each as amended. The Servicer shall
also maintain on each REO Property (x) fire and hazard insurance with extended
coverage in an amount that is at least equal to the maximum insurable value of
the improvements that are a part of such property, (y) liability insurance and
(z) to the extent required and available under the National Flood Insurance Act
of 1968 and the Flood Disaster Protection Act of 1973, each as amended, flood
insurance in an amount as provided above. Any amounts collected by the Servicer
under any such policies shall be paid over or applied by the Servicer in
accordance with Applicable Requirements whether (i) for the restoration or
repair of the Mortgaged Property, subject to the related Mortgage, (ii) for
release to the Mortgagor, or (iii) for application in reduction of the Mortgage
Loan, in which event such amounts shall be deposited in the Account, as provided
in Section 2.4. It is understood and agreed that no earthquake or other
additional insurance need be maintained by the Servicer on any Mortgage Loan or
property acquired in respect of a Mortgage Loan, other than as required under
applicable laws and regulations as shall at any time be in force. All policies
required hereunder shall be endorsed with standard mortgagee clauses with loss
payable to the Servicer and shall provide for at least thirty (30) days prior
written notice to the Servicer of any cancellation, reduction in amount, or
material change in coverage. The Servicer shall not interfere with the
Mortgagor's freedom of choice in selecting either the Mortgagor's insurance
carrier or agent upon any policy renewal; provided, however, that upon any such
policy renewal, the Servicer shall accept such insurance policies only from
insurance companies that (A) have a rating of B:III or better in Best's Key
Rating Guide or a financial performance index rating of 6 or better in Best's
Insurance Reports and (B) are licensed to do business in the jurisdiction in
which the related Mortgaged Property is located.
(b) If the Servicer, as servicer for the benefit of the Owner, shall obtain
and maintain a blanket policy that would meet the requirements of ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac if ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac were the purchaser of the Mortgage
Loans, insuring against loss to the Owner as mortgagee from damage to any or all
of the Mortgaged Properties, then, to the extent such blanket policy (i)
provides coverage, without coinsurance, in an amount equal to the aggregate
outstanding Unpaid Principal Balance of the Mortgage Loans, (ii) otherwise
complies with the requirements of Section 2.10(a) and (iii) contains a
deductible not greater than $10,000, the Servicer shall be deemed conclusively
to have satisfied its obligations under Section 2.10(a); provided, however, that
if there shall have been one or more of such losses the Servicer shall deposit
in the Account, as provided in Section 2.4, out of the Servicer's own funds and
without reimbursement therefor, the difference, if any, between the amount that
would have been payable under a policy complying with Section 2.10(a) and the
amount paid under the blanket policy permitted under this Section 2.10(b). At
the request of the Owner, the Servicer shall cause to be delivered to the Owner
a certified true copy of such policy and a statement from the insurer thereunder
that such policy shall not be terminated or materially modified without thirty
(30) days' prior written notice to the Owner.
16
Section 2.11 Fidelity Bond; Errors and Omissions Insurance
The Servicer shall maintain, at its own expense, with companies that meet
the requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, a blanket fidelity bond and an
errors and omissions insurance policy, with broad coverage on all officers,
employees, agents and other persons acting in any capacity that would require
such persons to handle funds, money, documents or papers relating to the
Mortgage Loans (collectively, the "Servicer Employees"). Any such fidelity bond
and errors and omissions insurance shall be in the form of the Mortgage Banker's
Blanket Bond and shall protect and insure the Servicer against losses relating
to forgery, theft, embezzlement, fraud, errors and omissions, failure to
maintain any insurance policies required under this Agreement and negligent acts
of Servicer Employees. Such fidelity bond shall also protect and insure the
Servicer against losses relating to the release or satisfaction of a Mortgage
without having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 2.11 requiring such fidelity bond and errors and
omissions insurance shall diminish or relieve the Servicer from its duties and
obligations as set forth in this Agreement. The terms of any such fidelity bond
and errors and omissions insurance policy shall be at least equal to the
corresponding amounts required by ▇▇▇▇▇▇ Mae in the ▇▇▇▇▇▇ ▇▇▇ MBS Selling and
Servicing Guide or by ▇▇▇▇▇▇▇ Mac in the ▇▇▇▇▇▇▇ Mac Seller's and Servicer's
Guide, as amended or restated from time to time. At the request of the Owner,
the Servicer shall cause to be delivered to the Owner a certified true copy of
such fidelity bond and errors and omissions insurance policy and a statement
from the surety and the insurer that such fidelity bond and errors and omissions
insurance policy shall not be terminated or materially modified without thirty
(30) days' prior written notice to the Owner.
Section 2.12 Title, Management and Disposition of Real Estate Owned
(a) If title to any Mortgaged Property is acquired in foreclosure or by
deed in lieu of foreclosure ("REO Property"), the deed or certificate of sale
shall be taken in the name of the Owner, or in the name of such Person or
Persons designated by the Owner; provided, however, that (i) the Owner shall not
designate the Servicer as holder without the Servicer's prior written consent
and (ii) such designated Person or Persons shall acknowledge in writing that
such title is to be held as nominee for the Owner. The Servicer shall provide
written notice to the Owner after any REO Property is acquired in foreclosure or
by deed in lieu of foreclosure.
(b) The Servicer, shall manage, conserve, protect, and operate each REO
Property solely for the purpose of its prompt disposition and sale. The Servicer
shall either itself, or through an agent selected by the Servicer, manage,
conserve, protect and operate the REO Property in accordance with Acceptable
Servicing Procedures. The Servicer shall attempt to sell the same (and may
temporarily rent the same) on such terms and conditions as the Servicer deems to
be in the best interests of the Owner. If a REMIC election has been made with
respect to the arrangement under which the related Mortgage Loan is held and the
Servicer has been provided with reasonable advance notice of such REMIC
election, the Servicer shall use commercially reasonable efforts to dispose of
the REO Property as soon as practicable and shall sell such REO Property, in any
event, within three (3) years after title has been taken to such REO Property
(unless the Servicer determines, and gives the Owner appropriate notice that a
longer period is necessary for the orderly liquidation of such REO Property).
17
(c) The Servicer shall collect all revenues arising from the operation of
REO Property. The Servicer shall deposit, or cause to be deposited, all such
revenues in the Account in accordance with Section 2.4. The Servicer may use all
such revenues and, if any thereof have been deposited in the Account, withdraw
such revenues therefrom as is necessary for the proper operation, management and
maintenance of any REO Property, including, but not limited to, the cost of
maintaining any hazard insurance pursuant to Section 2.10 and the fees of any
managing agent acting on behalf of the Servicer.
(d) The Servicer shall also maintain on each REO Property fire and hazard
insurance with extended coverage, liability insurance, and flood insurance in
accordance with the provisions of Section 2.10.
(e) The proceeds of sale of an REO Property shall be deposited in the
Account in accordance with Section 2.4. The Servicer shall apply the sale
proceeds of any REO Property (i) first to pay the expenses of such sale, (ii)
second to reimburse itself for any related unpaid Servicing Fees, unpaid REO
Management Fees and unreimbursed Servicing Advances and Monthly Advances and
(iii) the balance to be distributed to the Owner. If the sale proceeds have been
deposited in the Account, the Servicer may withdraw from the Account the amounts
necessary to make such payments and reimbursements.
(f) Upon request, with respect to any REO Property, the Servicer shall
furnish to the Owner a statement covering the Servicer's efforts in connection
with the sale of that REO Property and any rental of the REO Property incidental
to the sale thereof for the previous month (together with an operating statement
for such REO Property). Such statement shall be accompanied by such other
information as the Owner shall reasonably request. The Servicer shall maintain
separate accounting for each REO Property.
(g) The Owner hereby constitutes and appoints the Servicer as its true and
lawful attorney-in-fact, with full power and authority to sign, execute,
acknowledge, deliver, file for record and record any instrument on its behalf
and to perform such other act or acts as may be customarily and reasonably
necessary and appropriate to effectuate the transactions contemplated by this
Section 2.12, in each case as fully as the Owner might or could do. The Owner
ratifies and confirms each action that the Servicer, as such attorney-in-fact,
shall lawfully take or cause to be taken by authority hereof. Third parties
without actual notice may rely upon the exercise of the power granted under this
power of attorney, and may be satisfied that this power of attorney shall
continue in full force and effect and has not been revoked unless this Agreement
is terminated as provided herein. If requested by the Servicer, the Owner shall
furnish the Servicer with any instrument or document necessary or appropriate to
evidence or confirm the power of attorney granted in this Section 2.12(g),
including one (1) or more separate instruments or documents in recordable form
for recordation in any jurisdiction in which any Mortgaged Property is located.
(h) Notwithstanding anything to the contrary contained in this Agreement,
the Owner may, at the Owner's sole option, terminate the Servicer as servicer of
any REO Property without payment of any termination fee, provided that the
Servicer shall on the date said termination takes effect be reimbursed for any
unreimbursed advances of the Servicer's funds made pursuant to Section 2.16 and
any unreimbursed Servicing Advances and Servicing Fees in each case relating to
18
the Mortgage Loan underlying such REO Property. In the event of any such
termination, the provisions of Section 9.1 shall apply to said termination and
the transfer of servicing responsibilities with respect to such REO Property to
the Owner or its designees.
Section 2.13 Application of Proceeds of Insurance to Repair or Restoration
The Servicer shall collect the proceeds from all policies of insurance
required to be maintained pursuant to Section 2.10 with respect to all losses
that may occur. The Servicer may remit such proceeds to the Mortgagor for the
restoration or repair of the related property and shall otherwise take such
actions in connection with such restoration and repair in a manner consistent
with Acceptable Servicing Procedures.
Section 2.14 Inspections
The Servicer shall conduct inspections of the Mortgaged Properties at such
times and in a manner consistent with Acceptable Servicing Procedures and shall
maintain a written report of all such inspections.
Section 2.15 Maintenance of Primary Mortgage Insurance Policies;
Collections Thereunder
The parties acknowledge that, as of any Closing Date, not all Mortgage
Loans purchased on such Closing Date are covered by Primary Mortgage Insurance
or LPMI. In the event that any Mortgage Loans are covered by a Primary Mortgage
Insurance Policy or LPMI on the related Closing Date or subsequently become
covered by a Primary Mortgage Insurance Policy or LPMI, the provisions set forth
below shall apply.
(a) The Servicer shall maintain in full force and effect any Primary
Mortgage Insurance Policy or LPMI, as applicable covering a Mortgage Loan
serviced by the Servicer. The Servicer shall cause the premium for any such
Primary Mortgage Insurance Policy or LPMI to be paid on a timely basis and shall
from its own funds, if necessary, make a Servicing Advance to pay the premium on
a timely basis. The Servicer shall not cancel or refuse to renew any such
Primary Mortgage Insurance Policy or LPMI in effect on the related Closing Date,
unless cancellation or non-renewal is required by applicable law or regulation.
The Servicer shall not take any action or fail to take any action that would
result in non-coverage under any applicable Primary Mortgage Insurance Policy or
LPMI of any loss that, but for the actions of the Servicer, would have been
covered thereunder. In connection with any assumption or substitution agreement
entered into or to be entered into pursuant to Section 4.1, the Servicer shall
promptly notify the insurer under the related Primary Mortgage Insurance Policy
or LPMI, if any, of such assumption or substitution of liability in accordance
with the terms of such policy and shall take all actions that may be required by
such insurer as a condition to the continuation of coverage under such Primary
Mortgage Insurance Policy or LPMI. If such Primary Mortgage Insurance Policy or
LPMI is terminated as a result of such assumption or substitution of liability,
the Servicer shall obtain a replacement Primary Mortgage Insurance Policy or
LPMI as provided above.
(b) As part of its activities as servicer of the Mortgage Loans, the
Servicer agrees to prepare and present, on behalf of itself and the Owner,
claims under any Primary Mortgage Insurance Policy and LPMI in a timely fashion
19
in accordance with the terms thereof and, in this regard, to take such
reasonable action as shall be necessary to permit recovery under any Primary
Mortgage Insurance Policy and LPMI respecting a defaulted Mortgage Loan.
Section 2.16 Monthly Advances by the Servicer
(a) Not later than the close of business on the Business Day preceding each
Monthly Remittance Date, the Servicer shall deposit in the Account an amount
equal to all payments not previously advanced by the Servicer of principal and
interest at the Net Rate that were (i) due on any Mortgage Loan during the Due
Period that commences in the same month in which such Monthly Remittance Date
occurs, (ii) not received as of the close of business on the related
Determination Date (whether or not deferred) and (iii) not due on or prior to
the related Cut-off Date (the aggregate of all such amounts, the "Monthly
Advance"). In lieu of making all or a portion of any Monthly Advance, the
Servicer may cause to be made an appropriate entry in its records relating to
the Account that funds in such account, including but not limited to any amounts
received in respect of scheduled principal and interest on any Mortgage Loan due
after the related Due Period for the related Monthly Remittance Date, have been
used by the Servicer in discharge of its obligation to make any such Monthly
Advance. Any funds so applied shall be replaced by the Servicer by deposit, in
the manner set forth above, in the Account no later than the close of business
on the Business Day immediately preceding the next Monthly Remittance Date to
the extent that funds in the Account on such date are less than the amounts
required to be distributed on such Monthly Remittance Date. The Servicer shall
be entitled to be reimbursed from the Account for all Monthly Advances of its
own funds made pursuant to this Section as provided in Section 2.5.
(b) The obligation of the Servicer to make such Monthly Advances is
mandatory, and, with respect to any Mortgage Loan or REO Property, shall
continue through the earlier of (i) the date on which a Final Recovery
Determination in connection with such Mortgage Loan is made and (ii) the due
date of the last Monthly Payment due prior to the payment in full of such
Mortgage Loan.
(c) Notwithstanding anything herein to the contrary, no Monthly Advance
shall be required to be made hereunder by the Servicer if such Monthly Advance
would, if made, constitute a Nonrecoverable Advance.
Section 2.17 Compliance With REMIC Provisions
If the Servicer has received written notice from the Owner that a REMIC
election has been made with respect to the arrangement under which any Mortgage
Loans and REO Property are held, the Servicer shall not take any action, cause
the REMIC to take any action or fail to take (or fail to cause to be taken) any
action that, under the REMIC Provisions, if taken or not taken, as the case may
be, could (i) endanger the status of the REMIC as a REMIC, or (ii) result in the
imposition of a tax upon the REMIC (including but not limited to the tax on
"prohibited transactions" as defined in Section 860F(a)(2) of the Code and the
tax on "contributions" to a REMIC set forth in Section 860G(d) of the Code)
unless the Servicer has received an Opinion of Counsel (at the expense of the
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party seeking to take such action) to the effect that the contemplated action
will not endanger such REMIC status or result in the imposition of any such tax.
Section 2.18 Owner to Cooperate; Release of Collateral Files
If, at any time prior to termination of this Agreement, the Servicer shall
require the use of any Collateral File (or any portion thereof) to perform its
servicing activities as set forth in this Agreement, the Owner, within five (5)
Business Days of the written request of the Servicer in the form of Exhibit A
hereto (or within such shorter period as may be necessary for the Servicer to
perform its obligations hereunder in compliance with all Acceptable Servicing
Procedures), shall release or shall cause the Custodian to release such
Collateral File, or portion thereof, to the Servicer. Within five (5) Business
Days of the Servicer's request therefor (or, within such shorter period as may
be necessary for the Servicer to perform obligations hereunder in compliance
with all Acceptable Servicing Procedures), the Owner shall execute and deliver
to the Servicer, in the form supplied to the Owner by the Servicer, any court
pleadings, requests for trustee's sale or other documents reasonably necessary
to perform the servicing activities with respect to any Mortgage Loan, including
the foreclosure or sale in respect of any Mortgaged Property, the commencement
and prosecution of any legal action to enforce the related Mortgage Note and
Mortgage and the defense of any legal action or counterclaim filed against the
Owner or the Servicer. The Servicer may execute and deliver any or all of such
pleadings or documents on behalf of the Owner pursuant to the power of attorney
granted pursuant to Section 2.12(g).
Notwithstanding anything in this Agreement to the contrary, in the event of
a Principal Prepayment in full or in part of a Mortgage Loan, the Servicer may
not waive any Prepayment Charge or portion thereof required by the terms of the
related Mortgage Note unless (i) the enforceability thereof shall have been
limited by bankruptcy, insolvency, moratorium, receivership and other similar
laws relating to creditors' rights generally or (ii) the collectability thereof
shall have been limited due to acceleration in connection with a foreclosure or
other involuntary payment, or (iii) in the Servicer's reasonable judgment as
described herein, (x) such waiver relates to a default or a reasonably
foreseeable default, (y) such waiver would maximize recovery of total proceeds
taking into account the value of such Prepayment Charge and related Mortgage
Loan and (z) doing so is standard and customary in servicing similar Mortgage
Loans (including any waiver of a Prepayment Charge in connection with a
refinancing of a Mortgage Loan that is related to a default or a reasonably
foreseeable default). In no event will the Servicer waive a Prepayment Charge in
connection with a refinancing of a Mortgage Loan that is not related to a
default or a reasonably foreseeable default. If the Servicer waives or does not
collect all or a portion of Prepayment Charge relating to a Principal Prepayment
in full or in part due to any action or omission of the Servicer, other than as
provided above, the Servicer shall deposit the amount of such Prepayment Charge
(or such portion thereof as had been properly waived) into the Account for
distribution in accordance with the terms of this Agreement.
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ARTICLE 3
PAYMENTS TO THE OWNER
Section 3.1 Distributions
(a) On each Monthly Remittance Date, the Servicer shall distribute to the
Owner all amounts credited to the Account as of the close of business on the
preceding Determination Date, net of charges against or withdrawals from the
Account pursuant to Section 2.5, plus all Monthly Advances deposited in the
Account prior to such Monthly Remittance Date pursuant to Section 2.4, minus (i)
any amounts attributable to Principal Prepayments received after the last day of
the Due Period immediately preceding the related Monthly Remittance Date and
(ii) any amounts attributable to Monthly Payments collected but due on a Due
Date(s) subsequent to the preceding Determination Date.
(b) All distributions made to the Owner on each Monthly Remittance Date
shall be made to the Owner of record, based on the Mortgage Loans owned and held
by the Owner. All distributions shall be made by wire transfer of immediately
available funds to the account of the Owner at a bank or other entity having
appropriate facilities therefor, if the Owner shall have so notified the
Servicer, or by check mailed to the address of the Owner. Distributions on each
Monthly Remittance Date may be made by more than one (1) wire transfer or check,
as the case may be.
(c) With respect to any remittance received by the Owner on or after the
second Business Day following the Business Day on which such payment was due,
the Owner shall send written notice thereof to the Servicer. The Servicer shall
pay to the Owner interest on any such late payment at an annual rate equal to
Prime plus one percentage point, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be paid by the Servicer to the
Owner on the date such late payment is made and shall cover the period
commencing with the day such payment was due and ending with the Business Day on
which such payment is made, both inclusive. The payment by the Servicer of any
such interest, or the failure of the Owner to notify the Servicer of such
interest, shall not be deemed an extension of time for payment or a waiver of
any Event of Default by the Servicer.
Section 3.2 Reports
(a) On or before the 10th day of each Month, the Servicer shall provide to
the Owner or its designee by means of an electronic or other agreed upon medium,
with respect to the Due Period immediately preceding such Monthly Remittance
Date, the data set forth below on an individual loan basis:
(i) mortgage loan number;
(ii) interest rate;
(iii) pending rate;
(iv) scheduled principal and interest payment;
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(v) scheduled principal;
(vi) gross interest;
(vii) curtailment collected;
(viii) curtailment adjustment;
(ix) PIF principal;
(x) PIF interest difference;
(xi) ARM Index;
(xii) pending Index;
(xiii) ending scheduled balance;
(xiv) investor loan number;
(xv) Servicing Fee Rate;
(xvi) due date;
(xvii) yield rate;
(xviii) beginning balance;
(xix) ending balance;
(xx) beginning scheduled balance;
(xxi) principal collected;
(xxii) scheduled net interest;
(xxiii) scheduled buydown;
(xxiv) Servicing Fee collected; and
(xxv) remittance amount.
The Servicer may submit the foregoing information in more than one (1) report.
Requests for additional data regarding the Mortgage Loans or alternative means
for delivering such reports shall be accommodated at the discretion of the
Servicer and at the Owner's expense. The Servicer shall also provide the Owner
with such other reports as shall be mutually agreed to between the parties.
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(b) Upon reasonable advance notice in writing, and at the Owner's expense,
the Servicer shall provide to any Owner that is a savings and loan association,
a bank, an insurance company or other regulated or supervised entity reports and
access to information and documentation regarding the Mortgage Loans and the
transactions contemplated hereby sufficient to permit the Owner to comply with
the applicable regulations of relevant regulatory or supervisory authorities
with respect to its investment in the Mortgage Loans and Owner's internal and
third-party audit requirements.
(c) The Servicer shall prepare and file any and all information statements
or other filings required to be delivered to any governmental taxing authority
or to Owner pursuant to any applicable law with respect to the Mortgage Loans
and the transactions contemplated hereby. In addition, the Servicer shall
provide Owner with such information concerning the Mortgage Loans as is
necessary for Owner to prepare its federal income tax return as Owner may
reasonably request from time to time. In addition, not more than 120 days after
the end of each calendar year, the Servicer shall furnish to each Person who was
an Owner at any time during such calendar year an annual statement in accordance
with the requirement of applicable federal income tax law as to the aggregate of
remittances for the applicable portion of such year.
Section 3.3 Delinquency and Foreclosure Statements
The Servicer shall provide a monthly statement of delinquents and a
delinquency report on all Mortgage Loans more than 30 days delinquent. The
Servicer shall also provide a monthly statement regarding foreclosure and
bankruptcy status.
ARTICLE 4
GENERAL SERVICING PROCEDURE; COVENANTS;
REPRESENTATIONS AND WARRANTIES
Section 4.1 Assumption Agreements
(a) The Servicer shall use commercially reasonable efforts to enforce any
"due-on-sale" provision contained in any Mortgage or Mortgage Note and to deny
assumption by the person to whom the Mortgaged Property has been or is about to
be sold, whether by absolute conveyance or by contract of sale and whether or
not the Mortgagor remains liable on the Mortgage and the Mortgage Note, provided
that in accordance with the terms of the Mortgage Note, the Servicer may permit
an assumption (i) if the Servicer reasonably believes it is unable under
Applicable Requirements to enforce such "due-on-sale" clause, or (ii) if the
enforcement of such rights would impair or threaten to impair any recovery under
the related Primary Mortgage Insurance Policy or LPMI, if any. In connection
with any such assumption, the related Mortgage Interest Rate, the Unpaid
Principal Balance and the term of the Mortgage Loan may not be changed. If an
assumption is allowed pursuant to this Section 4.1(a), the Servicer is
authorized, at the Servicer's discretion, to prepare a substitution of liability
agreement to be entered into by the Owner and the purchaser of the Mortgaged
Property pursuant to which the original Mortgagor is released from liability and
the purchaser of the Mortgaged Property is substituted as Mortgagor and becomes
liable under the Mortgage Note. Any such substitution of liability agreement
shall be in lieu of an assumption agreement. If an assumption fee is collected
24
by the Servicer for entering into an assumption agreement the entire amount of
such fee may be retained by the Servicer as additional servicing compensation.
(b) The Servicer shall follow Acceptable Servicing Procedures with respect
to any such assumption or substitution of liability (taking into account the
Seller's then current underwriting guidelines applicable to mortgage loans of
the same type as the related Mortgage Loan). The Servicer shall notify the Owner
that any such substitution of liability or assumption agreement has been
completed by forwarding to the Owner or its designee a copy of any such
substitution of liability or assumption agreement, which document shall be added
to the related Collateral File and shall for all purposes be considered a part
of such Collateral File to the same extent as all other documents and
instruments constituting a part thereof.
Section 4.2 Satisfaction of Mortgages and Release of Collateral Files
(a) Upon the payment in full of any Mortgage Loan or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer shall prepare the appropriate
documents and instruments required to satisfy or release the lien of the
Mortgage in accordance with applicable state law requirements. The Servicer,
promptly and within the applicable legal deadlines appropriate to process the
satisfaction or release, shall notify the Owner or its desingee of such event.
(b) The Servicer shall not grant a satisfaction or release of a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage. In the event the Servicer grants a satisfaction or release of a
Mortgage without having obtained payment in full of the indebtedness secured by
the Mortgage, the Servicer, upon becoming aware of the foregoing, shall remit to
the Owner the Unpaid Principal Balance of the related Mortgage Loan plus accrued
and unpaid interest by deposit thereof in the Account pursuant to Section 2.4.
The Owner shall assign the related Mortgage and endorse the related Mortgage
Note to the Servicer and shall do all things necessary to transfer ownership of
the Mortgage Loan to the Servicer. The Servicer shall maintain the Fidelity Bond
as provided for in Section 2.11 protecting and insuring the Servicer against,
losses sustained with respect to any Mortgage Loan satisfied or released other
than in accordance with the procedures set forth herein.
(c) The Owner or its designee shall, within five (5) Business Days
following receipt of any request from the Servicer (or within such shorter
period as is necessary for the Servicer to perform its obligations hereunder in
compliance with all Applicable Servicing Procedures) deliver or cause to be
delivered to the Servicer the Collateral File (or any portion thereof) required
by the Servicer to process any satisfaction or release of any Mortgage pursuant
to this Section 4.2. In addition, if any Mortgage Loan has been paid in full
and, pursuant to Section 2.2(b) of the Purchase Agreement, the Owner has
recorded the related Assignment of Mortgage designating the Owner as the holder
of record of the Mortgage, the Servicer shall prepare and deliver to the Owner,
together with a request for execution, the documents and instruments necessary
to satisfy or release the lien of the Mortgage. The Owner shall, within five (5)
Business Days following its receipt of any such request, send to the Servicer
the fully-executed documents that were prepared and requested by the Servicer.
In the event that applicable state law requires that a satisfaction or release
be recorded within a shorter time period than the foregoing procedure permits,
the Servicer shall advise the Owner accordingly and shall use commercially
25
reasonable efforts to ensure that the lien of the Mortgage is released or
satisfied in accordance with applicable state law requirements, and the Owner
shall assist therewith by, to the extent reasonably practicable, returning to
the Servicer the required portion of the Collateral File and, if applicable, the
executed satisfaction and release documents and instruments within the time
periods reasonably specified by the Servicer.
(d) If a Mortgage Loan that has been paid in full is a MERS Loan, the
Servicer may cause the removal of such Mortgage Loan from registration on the
MERS(R) System and execute and deliver, on behalf of the Owner, any and all
related instruments of satisfaction or release. No expense incurred in
connection with the delivery of any instrument of satisfaction or deed or
reconveyance shall be chargeable to the Account or the Owner.
Section 4.3 Servicing Compensation
The Servicer shall be entitled to pay itself a Servicing Fee for each
Mortgage Loan serviced hereunder. The obligation of the Owner to pay such
Servicing Fee is limited to, and payable solely from, the interest portion of
the Monthly Payments and Late Collections collected by the Servicer with respect
to the related Mortgage Loan. Additional servicing compensation in the form of
non-sufficient funds check fees, assumption fees, conversion fees, other related
administrative fees, late payment charges, Prepayment Charges (except as
otherwise specified in the relevant Commitment Letter) and other similar types
of ancillary fees and charges that are actually received by the Servicer may be
retained by the Servicer to the extent not required to be deposited into the
Account pursuant to the terms of this Agreement. In addition to the Servicing
Fee payable hereunder, the Servicer shall be entitled to pay itself an REO
Management Fee for each REO Property managed by the Servicer or its agent. The
Servicer shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder and shall not be entitled to reimbursement
therefor except as specifically provided for in this Agreement. Any Late
Collections shall be applied by the Servicer in the following order of priority:
(i) first to pay the expenses incurred in connection with collection of such
Late Collections, (ii) second to reimburse itself for any related unpaid
Servicing Fees, unpaid REO Management Fees and unreimbursed Servicing Advances
and Monthly Advances and (iii) the balance to be distributed to the Owner.
Section 4.4 Owner's Right to Examine Servicer Records, etc.
(a) The Owner shall have the right, at its expense, to (i) examine and
audit the Servicer's books of account, records, reports and other papers
relating to (x) the performance by the Servicer of its obligations and duties
under this Agreement, or (y) the Mortgage Loans, (ii) make copies and extracts
therefrom and (iii) discuss the affairs, finances, and accounts of the Servicer
relating to such performance with the Servicer's officers and employees, all at
such times and places, and with such frequency, as may be reasonably requested.
(b) The Servicer shall provide to the Owner and any supervisory agents or
examiners representing a state or federal governmental agency having
jurisdiction over the Owner, including without limitation the OTS, the FDIC and
other similar entities, access to any documentation regarding the Mortgage Loans
in the possession of the Servicer that is required by any applicable
regulations. Such access shall be afforded without charge, upon reasonable
26
request, during normal business hours, at the offices of the Servicer and in
accordance with any applicable regulations.
Section 4.5 Cooperation
The Servicer and the Owner shall cooperate fully with one another and their
respective counsel and other representatives and advisors in connection with the
steps required to be taken as part of their respective obligations under this
Agreement.
Section 4.6 Consents and Approvals
The Servicer shall timely obtain, at its sole cost and expense, the
consents and approvals required by law or pursuant to contract to consummate the
transactions contemplated hereby. All such consents shall be obtained without
any cost or expense to the Owner and shall be obtained without any adverse
modification in the terms of any of the agreements relating to the Mortgage
Loans or the imposition of any burdensome provisions or conditions on the Owner.
ARTICLE 5
THE SERVICER
Section 5.1 Indemnification; Third Party Claims
(a) (i) The Servicer agrees to indemnify and hold harmless the Owner
against any and all losses, penalties, fines, forfeitures, legal fees and
related costs, judgments and any other costs, fees and expenses resulting from
the defense of any claim against the Owner by a third party in any way related
to the failure of the Servicer to service the Mortgage Loans in compliance with
the terms of this Agreement; provided, however, the Servicer shall not be liable
hereunder with respect to (A) any action or inaction taken or omitted upon the
written direction or consent of the Owner, (B) any action or inaction resulting
from the Owner's failure to cause any Collateral File (or portion thereof) to be
released to the Servicer pursuant to Sections 2.18 or 4.2(c), or (C) any action
or inaction resulting from the Owner's failure to comply with Section 5.1(b) or
Section 5.6, or (D) the failure of the Owner to perform any of its obligations
under this Agreement, or (E) any indirect, special or consequential damages,
losses, costs or expenses incurred by Owner.
(ii) The Servicer shall notify the Owner if a claim is made by
a third party with respect to this Agreement or the Mortgage Loans that the
Servicer determines in its good faith judgment will materially affect the
Owner's interest in such Mortgage Loans. The Servicer shall assume (with the
written consent of the Owner) the defense of any such claim and, subject to
clause (iii) of this Section 5.1, pay all reasonable expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree that may be entered against the Servicer or the Owner in
respect of such claim. The Servicer shall follow any written instructions
received from the Owner in connection with any such claim. The Servicer shall
have the right to reimburse itself from the Account for all expenses, advances
and liabilities incurred by the Servicer in respect of any such claim (whether
or not the Servicer has assumed the defense thereof), except when the claim (x)
is related to the Servicer's obligations to indemnify the Owner pursuant hereto,
27
(y) results from the failure of the Servicer to service the Mortgage Loans in
compliance with the terms of this Agreement, or (z) results from the Servicer's
willful misconduct or gross negligence in performing its duties under this
Agreement.
(iii) If the Owner receives service of a summons or other first
legal process, the Servicer shall not be liable for any costs or expenses
pursuant to the indemnity in this Section 5.1 unless the Owner provides written
notice to the Servicer that describes the nature of the claim within a
reasonable time after service of such summons or other first legal process upon
the Owner; provided, however, that the Owner's failure to notify the Servicer
pursuant to this paragraph shall not relieve the Servicer from any liability
that the Servicer may have to the Owner otherwise than on account of this
indemnity. The Servicer shall not be required to indemnify any person for any
settlement of any claim effected without the Servicer's consent, which consent
shall not be unreasonably withheld.
(b) With respect to any Mortgage Loan, if the Owner records or causes to be
recorded the related Assignment of Mortgage designating the Owner as the holder
of record of the Mortgage in the appropriate public recording office of the
jurisdiction in which the related Mortgaged Property is located, and the Owner,
in its capacity as the holder of record, receives written notice of any action
with respect to the related Mortgage or Mortgaged Property, the Owner shall
promptly send a copy of such notice to the Servicer in accordance with Section
9.8. The Servicer shall have no liability to the Owner for claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, or any
other costs or expenses, that result from the Owner's failure to comply with the
provisions set forth in this paragraph.
Section 5.2 Servicer Covenants; Merger or Consolidation of the Servicer
(a) The Servicer covenants that, subject to Section 5.2(b), it shall keep
in full force and effect its existence, rights and franchises as a corporation
and its status as a ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac approved servicer in good
standing.
(b) Any Person into which the Servicer may be merged or consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Servicer shall be a party, or any Person succeeding to all, or substantially
all, of the business or assets of the Servicer (whether or not related to loan
servicing), shall be the successor of the Servicer hereunder, without the
execution or filing of any paper, or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the Servicer shall not be a party to any such merger,
consolidation or conversion, or sell or otherwise dispose of all, or
substantially all, of its business or assets, unless the successor or surviving
Person shall be (i) an institution that is a ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac approved
servicer in good standing and a member of MERS in good standing, (ii) an
institution the deposits of which are insured by the FDIC, SAIF and/or BIF, or
which is a HUD-approved mortgagee whose primary business is in origination and
servicing of first lien mortgage loans and (iii) an institution that has a
minimum net worth of $30 million.
Section 5.3 Limitation on Liability of the Servicer and Others
The Servicer and the directors, officers, employees or agents of the
Servicer shall not be under any liability to the Owner (i) for any action taken,
or for refraining from the taking of any action, in good faith pursuant to this
28
Agreement, (ii) for errors in judgment made in good faith, (iii) for any action
or inaction in accordance with the written direction or consent of the Owner,
(iv) for any action or inaction resulting from the Owner's failure to cause any
Collateral File (or portion thereof) to be released to the Servicer pursuant to
Sections 2.18 or 4.2(c), or (v) for any action or inaction resulting from the
Owner's failure to comply with Section 5.1(b) or Section 5.6; provided, however,
this provision shall not protect the Servicer against any breach of warranties
or representations made herein, any failure to perform its obligations in
accordance with any standard of care set forth in this Agreement (unless in
accordance with the written direction or consent of the Owner) or any liability
that would otherwise be imposed by reason of willful misconduct or gross
negligence in the performance of duties. The Servicer and any officer, employee
or agent of the Servicer may rely in good faith on any document of any kind that
appears, on its face, to be properly executed and submitted by any Person
respecting any matters arising hereunder. Subject to Section 5.1(a), the
Servicer shall not be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its duties under this Agreement and that
may result in any expense or liability to the Servicer; provided, however, that
the Servicer may, with the written consent of the Owner, undertake any such
action that it may deem necessary or desirable with respect to this Agreement
and the rights, duties, and the interests of the parties hereto. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs, and liabilities for which the Owner shall be
liable and the Servicer shall be entitled to be reimbursed therefor from the
Account, unless any such costs or liabilities shall result from the gross
negligence or willful misfeasance of the Servicer in performing such action.
Section 5.4 Servicer Not to Resign
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon the determination that such Servicer's duties
hereunder are no longer permissible under Applicable Requirements and such
incapacity cannot be cured by such Servicer. Any such determination permitting
the resignation of the Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Owner. No such resignation shall become effective
until a successor that satisfies the requirements set forth in Section 9.1 has
assumed the Servicer's responsibilities and obligations hereunder in accordance
with such Section.
Section 5.5 Transfer of Servicing
The Servicer acknowledges that the Owner has entered into this Agreement in
reliance upon the adequacy of the Servicer's servicing facilities, plan,
personnel, records and procedures, its integrity, reputation and financial
standing and the continuance thereof. Without in any way limiting the generality
of this Section 5.5, the Servicer shall not either assign this Agreement or any
of the servicing rights or obligations hereunder except (i) in connection with a
merger or consolidation permitted under Section 5.2(b), or (ii) with the prior
written consent of the Owner, which consent shall not be unreasonably withheld
or delayed.
Section 5.6 Transfer of Mortgage Loans
(a) The Owner shall have the right, without the consent of the Servicer, to
assign its interest under this Agreement with respect to any Mortgage Loans that
29
have been assigned in accordance with Article 6 of the Purchase Agreement;
provided, however, that the Owner shall give the Servicer Required Notice prior
to any such assignment of its interest under this Agreement. In any such case,
all references to the Owner shall be deemed to include such assignee.
(b) The Servicer shall keep books and records in which, subject to such
reasonable regulations as it may prescribe, the Servicer shall note transfers of
Mortgage Loans. For the purposes of this Agreement, the Servicer shall be under
no obligation to deal with any Person with respect to this Agreement or any
Mortgage Loan unless the books and records show such person as the owner of such
Mortgage Loan. Upon receipt of a written notice from the Owner of any assignment
of any Mortgage Loan permitted under the Purchase Agreement, the Servicer shall
▇▇▇▇ its books and records to reflect the ownership of such Mortgage Loan by
such assignee.
Section 5.7 Representations and Warranties of the Servicer
The Servicer hereby represents and warrants to the Owner as of each Closing
Date as follows:
(a) The Servicer is a federally chartered savings bank, duly organized,
validly existing and in good standing under the laws of the United States and
has all licenses necessary to carry on its business as now being conducted. The
Servicer has the corporate power and authority to enter into, execute and
deliver this Agreement and all documents and instruments executed and delivered
pursuant hereto and to perform its obligations in accordance therewith. The
execution, delivery and performance of this Agreement by the Servicer and the
consummation of the transactions contemplated hereby have been duly and validly
authorized. This Agreement evidences the valid, binding and enforceable
obligations of the Servicer, subject as to enforcement, (i) to bankruptcy,
insolvency, receivership, conservatorship, reorganization, arrangement,
moratorium and other laws of general applicability relating to or affecting
creditors' rights and (ii) to general principles of equity, whether such
enforcement is considered in a proceeding in equity or at law. All requisite
corporate action has been taken by the Servicer to make this Agreement valid and
binding upon the Servicer in accordance with its terms.
(b) No consent, approval, authorization, or order of any court or
governmental agency or body relating to the transactions contemplated by this
Agreement is required as to the Servicer or, if required, such consent,
approval, authorization, or order has been obtained.
(c) The consummation of the transactions contemplated by this Agreement,
including without limitation the fulfillment of, or compliance with, the terms
and conditions of this Agreement, are in the ordinary course of business of the
Servicer and shall not (i) result in the breach of any term or provision of the
charter or by-laws of the Servicer, (ii) result in the breach of any term or
provision of, or conflict with or constitute a default under, or result in the
acceleration of any obligation under, any material agreement, indenture, loan or
credit agreement, or other instrument to which the Servicer or its property is
subject, or (iii) result in the violation of any law, rule, regulation, order,
judgment, or decree to which the Servicer or its property is subject.
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(d) There is no action, suit, proceeding or investigation pending or, to
the best of the Servicer's knowledge, threatened against the Servicer that,
either in any one instance or in the aggregate, is likely (in the Servicer's
judgment), to result in any material impairment of the right or ability of the
Servicer to carry on its business substantially as now conducted, or that would
adversely affect the validity of this Agreement, or of any action taken or to be
taken in connection with the obligations of the Servicer contemplated herein, or
that would be likely to materially impair the ability of the Servicer to perform
its obligations hereunder.
(e) The Servicer is an approved servicer of mortgage loans for ▇▇▇▇▇▇ Mae
and ▇▇▇▇▇▇▇ Mac, in good standing. No event has occurred, including but not
limited to a change in insurance coverage, that would make the Servicer unable
to comply with ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac eligibility requirements.
(f) The Servicer is a member of MERS in good standing. The Servicer shall
comply in all material respects with the rules and procedures of MERS in
connection with the servicing of each MERS Loan for as long as each such
Mortgage Loan is registered on the MERS(R) System.
ARTICLE 6
DEFAULT
Section 6.1 Events of Default
In case one or more of the following Events of Default by the Servicer
shall occur and be continuing:
(i) any failure by the Servicer to remit to the Owner when due any
payment required to be made under the terms of this Agreement, which
failure continues unremedied for a period of three (3) Business Days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been received by the Servicer, from the Owner; or
(ii) any failure by the Servicer to duly observe or perform, in any
material respect, any other covenant, obligation or agreement of the
Servicer as set forth in this Agreement, which failure continues unremedied
for a period of sixty (60) (or, in the case of any failure to pay the
premium for any insurance policy that is required to be maintained
hereunder, thirty (30)) days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Owner; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets
and liabilities, or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force, undischarged or
unstayed for a period of sixty (60) days; or
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(iv) the Servicer shall consent to the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings of or relating to the
Servicer or relating to all, or substantially all, of the Servicer's
property; or
(v) the Servicer shall admit in writing its inability to pay its debts
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of
its creditors, or voluntarily suspend payment of its obligations; or
(vi) the Servicer shall fail to be an approved servicer of mortgage
loans for ▇▇▇▇▇▇ Mae in good standing; or
(vii) the Servicer shall attempt to assign this Agreement or the
servicing responsibilities hereunder in contravention of this Agreement; or
(viii) any failure by the Servicer to perform any of its obligations
under Section 8.6 or 8.7, or any failure by the Servicer to identify
pursuant to Section 8.8(b) any Subcontractor that is a Participating Entity
(unless such failure to identify a Subcontractor as a Participating Entity
was attributable solely to the role or function of such Subcontractor with
respect to mortgage loans other than Mortgage Loans);
then, and in each and every such case, so long as such Event of Default shall
not have been remedied, the Owner, by notice in writing to the Servicer (in each
such instance, the "Defaulted Servicer"), may, in addition to whatever rights
the Owner may have at law or equity, including injunctive relief and specific
performance, commence termination of all of the rights and obligations of the
Defaulted Servicer under this Agreement pursuant to Section 7.2, and may
exercise any and all other remedies available at law or at equity. Upon receipt
by the Defaulted Servicer of such written notice from the Owner stating the
intent to terminate the Defaulted Servicer as servicer under this Agreement as a
result of such Event of Default, all authority and power of the Defaulted
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the successor appointed pursuant to
Section 9.1. Upon written request from the Owner, the Defaulted Servicer shall,
at its sole expense, prepare, execute, and place in such successor's possession
or control all Collateral Files and Credit Files, and do or cause to be done all
other acts or things necessary or appropriate to effect the purposes of such
notice of termination, all of which shall be undertaken immediately and shall be
completed as soon as possible and in all events by not later than forty-five
(45) Business Days following the Owner's request therefor. The Defaulted
Servicer agrees to cooperate with the Owner and such successor in effecting the
termination of the Defaulted Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to such successor of all cash
amounts that have been credited by the Defaulted Servicer to the Account or the
Escrow Account at the time of transfer, and all other amounts that may
thereafter be received with respect to the Mortgage Loans and to which the
Defaulted Servicer is not entitled pursuant to the terms of this Agreement.
Notwithstanding the foregoing, any unremedied failure by the Servicer, any
Subservicer or any Subcontractor under clause (viii) above shall not constitute
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an Event of Default with respect to the Servicer under this Agreement and any
applicable Reconstitution Agreement, provided that (A) such failure may not
reasonably be expected to have a material adverse effect on the Purchaser, any
Depositor or the Sponsor, and (B) such failure is cured as soon as practicable.
Section 6.2 Waiver of Defaults
The Owner may waive any default by the Defaulted Servicer in the
performance of its obligations hereunder and its consequences. Any such waiver
must be in writing to be effective. Upon any waiver of a past default, such
default shall cease to exist, and any Event of Default arising therefrom shall,
unless otherwise specified in such waiver, be deemed to have been remedied for
every purpose of this Agreement unless the Defaulted Servicer fails to comply
with the terms of such waiver. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived.
Section 6.3 Survival of Certain Obligations and Liabilities of the
Defaulted Servicer
The representations, warranties, covenants, indemnities and agreements of
the parties provided in this Agreement and the parties' obligations hereunder
shall survive the execution and delivery and the termination or expiration of
this Agreement. Notwithstanding any termination of the rights and obligations of
the Servicer pursuant to this Article 6, the Defaulted Servicer shall remain
liable for any actions of the Defaulted Servicer taken prior to the effective
time of such termination.
ARTICLE 7
TERMINATION
Section 7.1 Termination of Agreement
This Agreement shall terminate upon either (i) the later of the
distribution to the Owner of final payment or liquidation with respect to the
last Mortgage Loan subject to this Agreement and each REO Property or the
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure with respect to the last Mortgage Loan subject to this Agreement and
the remittance of all funds due hereunder, or (ii) the mutual written consent of
the parties.
Section 7.2 Termination of the Servicer Upon Unremedied Event of Default
The Owner may, at its sole option, following an unremedied Event of Default
and in accordance with Section 6.1, terminate any rights the Servicer may have
hereunder. The Owner, with full cooperation of the Servicer, shall arrange for
the transfer of servicing, at the Owner's option, to the Owner or a third party
successor servicer pursuant to Section 9.1, and the Servicer shall continue
servicing the Mortgage Loans under this Agreement, for the Servicing Fee
provided herein, until the Owner gives the Servicer notice of such transfer.
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ARTICLE 8
RECONSTITUTIONS; REGULATION AB COMPLIANCE
Section 8.1 Reconstitutions; Servicer's Purchase Right
(a) Upon Required Notice to the Servicer and subject to the terms and
conditions in Article 6 of the Purchase Agreement, the Owner may, at its sole
option, effect one or more Whole Loan Transfers or Securitization Transactions
with respect to some or all of the Mortgage Loans (each, a "Permitted
Reconstitution"). In connection with any Permitted Reconstitution, the Owner, in
its sole discretion, may assign its rights under this Agreement with respect to
the Mortgage Loans subject to such Permitted Reconstitution, and the Servicer
shall service the affected Mortgage Loans as the servicer, or as subservicer, if
a master servicer is employed as provided in clause (iii) of Section 8.2, on the
terms and conditions set forth herein and in any related Reconstitution
Agreement.
(b) The Owner shall promptly notify the Servicer if the percentage of
Mortgage Loans in the entire related transaction increases above the percentage
specified in the Required Notice.
(c) Unless otherwise set forth in writing between the Owner and the
Servicer, the Owner shall reimburse the Servicer for all reasonable
out-of-pocket expenses, including attorneys' fees, incurred by the Servicer in
connection with any Reconstitution.
(d) With respect to any Permitted Reconstitution, the Servicer shall (i)
provide the Owner with information and appropriate verification of information
in its possession or control as may reasonably be necessary in order to effect
such Reconstitution (and, to the extent any such information is in the
possession or control of any third party, use commercially reasonable efforts to
cause such third party to provide such information) and (ii) cooperate with all
reasonable requests and due diligence procedures not otherwise addressed herein.
(e) If, at any time, either (i) the aggregate Unpaid Principal Balance of
any pool of Mortgage Loans that are transferred pursuant to a Whole Loan
Transfer ("Transferred Loans") is less than or equal to one percent (1%) of the
Unpaid Principal Balance of such Transferred Loans on the date of such Whole
Loan Transfer, or (ii) the aggregate Unpaid Principal Balance of any Mortgage
Loans serviced hereunder and retained by the Owner ("Portfolio Loans") is less
than or equal to one percent (1%) of the Unpaid Principal Balance of such
Portfolio Loans on the date of purchase from the Seller, the Servicer may elect,
in its sole discretion, to purchase such Transferred Loans or Portfolio Loans,
as the case may be. The purchase price of Mortgage Loans purchased by the
Servicer pursuant to this Section 8.1(d) shall equal the lesser of (i) the
aggregate fair market value of such Mortgage Loans at the time of purchase by
the Servicer and (ii) the aggregate Unpaid Principal Balance of such Mortgage
Loans, plus the amount of interest on such Unpaid Principal Balance at the
applicable Net Rate from the date to which interest has last been paid and
distributed to the Owner to, and including, the last day of the month in which
such purchase occurs. Notwithstanding the foregoing, if the Owner notifies (the
"Notice") the Servicer that such Transferred Loans or Portfolio Loans are to be
included in a Securitization Transaction, the Servicer shall not be entitled to
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exercise its rights to purchase such Transferred Loans or Portfolio Loans
pursuant to this Section 8.1(e) until ninety (90) days following receipt of the
Notice if such Mortgage Loans have not been included in a Securitization
Transaction.
(f) The Servicer agrees that with respect to any Agency Transfer the
Servicer shall service in accordance with Acceptable Servicing Procedures and in
accordance with the ▇▇▇▇▇▇ ▇▇▇ Guides or ▇▇▇▇▇▇▇ Mac Guides, as applicable. The
Owner agrees that with respect to any Agency Transfer, the Owner will execute
and deliver to the Servicer a letter agreement relating to the Agency Transfer
that is satisfactory to both the Owner and the Servicer.
Section 8.2 Reconstitution Agreements
In connection with each Permitted Reconstitution, the Servicer shall:
(i) execute and deliver a Reconstitution Agreement containing terms
and conditions that are consistent with the terms and conditions set forth
herein and in the Purchase Agreement and, in the case of a Securitization
Transaction, that are customary for publicly offered securities or
privately placed securities, as the case may be, backed by mortgage loans
similar to the Mortgage Loans included in such Securitization Transaction,
provided that (A) any servicing reporting requirements must be consistent
with the standard practices of the Servicer; and (B) such Reconstitution
Agreement does not expand in any material respect any of the obligations,
duties or liabilities of the Servicer under this Agreement or result in any
increased cost to the Servicer;
(ii) with respect to any Securitization Transaction in which all or
substantially all of the mortgage loans in the entire related transaction
consist of Mortgage Loans, (A) execute and deliver a pooling and servicing
agreement that meets the requirements of clause (i) above, provided that
each of the parties to such pooling and servicing agreement negotiates in
good faith any terms or conditions in such pooling and servicing agreement
not specifically referenced or provided for under this Agreement or the
Purchase Agreement; and (B) provide the Owner with opinions of counsel as
to the Servicer's corporate authority and the enforceability of the pooling
and servicing agreement against the Servicer and certificates from public
officials, each as the Servicer shall reasonably determine to be necessary
to effect such Securitization Transaction; and
(iii) in the event the Owner or its assignee elects to appoint and
designate a master servicer of Mortgage Loans pursuant to a Reconstitution
Agreement, (A) the Servicer shall service the Mortgage Loans, and remit and
report to the master servicer, in accordance with the terms of this
Agreement and the related Reconstitution Agreement; (B) the master servicer
shall have the right as designee of the Owner to enforce the covenants and
conditions set forth in, and to give any waivers or consents required or
allowed under, this Agreement on behalf of the Owner; and (C) the Servicer
shall follow and shall be entitled to rely on the instructions and any
waiver or consents of the master servicer under this Agreement as if such
instructions were the instructions of the Owner.
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Section 8.3 Intent of the Parties; Reasonableness
The Owner and the Servicer acknowledge and agree that the purpose of
Sections 8.4, 8.5, 8.6, 8.7, 8.8 and 8.9 is to facilitate compliance by the
Owner and any Depositor with the provisions of Regulation AB and related rules
and regulations of the Commission. Although Regulation AB is applicable by its
terms only to offerings of asset-backed securities that are registered under the
Securities Act, the Servicer acknowledges that investors in privately offered
securities may require that the Owner or any Depositor provide comparable
disclosure in unregistered offerings. References in this Agreement to compliance
with Regulation AB include provision of comparable disclosure in private
offerings.
Neither the Owner nor any Depositor shall exercise its right to request
delivery of information or other performance under these provisions other than
in good faith, or for purposes other than compliance with the Securities Act,
the Exchange Act and the rules and regulations of the Commission thereunder (or
the provision in a private offering of disclosure comparable to that required
under the Securities Act). The Servicer acknowledges that interpretations of the
requirements of Regulation AB may change over time due to interpretive guidance
provided by the Commission or its staff, and agrees to comply with requests made
by the Owner or any Depositor in good faith for delivery of information under
these provisions on the basis of evolving interpretations of Regulation AB. Each
party agrees that it shall cooperate in good faith to amend this Agreement in
light of any changes in the interpretations of the requirements of Regulation AB
over time, due to interpretive guidance provided by the Commission or its staff.
In connection with any Securitization Transaction, the Servicer shall cooperate
fully with the Owner to deliver to the Owner (including any of its assignees or
designees) and any Depositor, any and all statements, reports, certifications,
records and any other information necessary in the good faith determination of
the Owner or such Depositor to permit the Owner or such Depositor to comply with
the provisions of Regulation AB, together with such disclosures relating to the
Servicer, any Subservicer, any Third-Party Originator and the Mortgage Loans, or
the servicing of the Mortgage Loans, reasonably believed by the Owner or such
Depositor to be necessary in order to effect such compliance.
The Owner (including any of its assignees or designees) shall cooperate
with the Servicer by providing timely notice of requests for information under
these provisions and by reasonably limiting such requests to information
required, in the Owner's reasonable judgment, to comply with Regulation AB.
Section 8.4 Additional Representations and Warranties of the Servicer
(a) The Servicer hereby represents to the Owner and to any Depositor, as of
the date on which information is first provided to the Owner or such Depositor
under Section 8.5 for a Permitted Reconstitution that, except as disclosed in
writing to the Owner or such Depositor, as applicable prior to such date: (i)
the Servicer is not aware and has not received notice that any default, early
amortization or other performance triggering event has occurred as to any other
securitization due to any act or failure to act of the Servicer; (ii) the
Servicer has not been terminated as servicer in a residential mortgage loan
securitization, either due to a servicing default or to application of a
servicing performance test or trigger; (iii) no material noncompliance with the
applicable servicing criteria with respect to other securitizations of
36
residential mortgage loans involving the Servicer as servicer has been disclosed
or reported by the Servicer; (iv) no material changes to the Servicer's policies
or procedures with respect to the servicing function it will perform under this
Agreement and any Reconstitution Agreement for mortgage loans of a type similar
to the Mortgage Loans have occurred during the three-year period immediately
preceding the related Securitization Transaction; (v) there are no aspects of
the Servicer's financial condition that could have a material adverse effect on
the performance by the Servicer of its servicing obligations under this
Agreement or any Reconstitution Agreement; (vi) there are no legal proceedings
pending against the Servicer or any Subservicer or proceedings known to be
contemplated by governmental authorities against the Servicer or a Subservicer
which in the judgment of the Servicer would be material to the purchasers of
securities backed by the Mortgage Loans; and (vii) there are no affiliations,
relationships or transactions relating to the Servicer or any Subservicer with
respect to any Securitization Transaction and any party thereto identified by
the related Depositor of a type described in Item 1119 of Regulation AB other
than the affiliation between the Servicer and Washington Mutual Mortgage
Securities Corp.
(b) If so requested by the Owner or any Depositor on any date following the
date on which information is first provided to the Owner or such Depositor under
Section 8.5, the Servicer shall, within five Business Days following such
request, confirm in writing the accuracy of the representations and warranties
set forth in Section 8.4(a) or, if any such representation and warranty is not
accurate as of the date of such request, provide reasonably adequate disclosure
of the pertinent facts, in writing, to the requesting party.
Section 8.5 Information to Be Provided by the Servicer
In connection with any Securitization Transaction that is a Permitted
Reconstitution, the Servicer shall (x) within five Business Days following
request by the Owner or any Depositor, provide to the Owner and such Depositor
(or, as applicable, cause each Subservicer to provide), in writing and in form
and substance reasonably satisfactory to the Owner and such Depositor, the
information and materials specified in Sections 8.5(a), (d) and (e), and (y) as
promptly as practicable following notice to or discovery by the Servicer,
provide to the Owner and any Depositor (in writing and in form and substance
reasonably satisfactory to the Owner and such Depositor) the information
specified in Section 8.5(b).
(a) If so requested by the Owner or any Depositor, the Servicer shall
provide such information regarding the Servicer, as servicer of the Mortgage
Loans, and, as applicable, each Subservicer, as is requested for the purpose of
compliance with Item 1108, 1117 and 1119 of Regulation AB. Such information
shall include, at a minimum:
(i) the Servicer's and each Subservicer's form of organization;
(ii) a description of any legal proceedings pending against the
Servicer and each Subservicer; proceedings known to be contemplated by
governmental authorities against the Servicer or a Subservicer which in the
judgment of the Servicer would be material to the purchasers of securities
backed by the Mortgage Loans
37
(iii) a description of any affiliation or relationship between the
Servicer and each Subservicer and any of the following parties to a
Securitization Transaction, as such parties are identified to the Servicer
by the Owner or any Depositor in writing in advance of such Securitization
Transaction:
(A) the Sponsor;
(B) the Depositor;
(C) the Issuing Entity;
(D) any servicer;
(E) any trustee;
(F) any originator;
(G) any significant obligor;
(H) any enhancement or support provider; and
(I) any other material transaction party.
(iv) a description of how long the Servicer and each Subservicer have
been servicing residential mortgage loans; a general discussion of the
Servicer's and each Subservicer's experience in servicing assets of any
type as well as a more detailed discussion of the Servicer's and each
Subservicer's experience in, and procedures for, the servicing function it
will perform under this Agreement and any Reconstitution Agreement;
information regarding the size, composition and growth of the Servicer's
and each Subservicer's portfolio of residential mortgage loans of a type
similar to the Mortgage Loans and information on factors related to the
Servicer and each Subservicer that may be material, in the good faith
judgment of the Owner or any Depositor, to any analysis of the servicing of
the Mortgage Loans or the related asset-backed securities, as applicable,
including, without limitation:
(A) whether any prior securitizations of mortgage loans of a type
similar to the Mortgage Loans involving the Servicer or any Subservicer have
defaulted or experienced an early amortization or other performance triggering
event because of servicing during the three-year period immediately preceding
the related Securitization Transaction;
(B) the extent of outsourcing the Servicer and each Subservicer
utilizes;
(C) whether there has been previous disclosure of material
noncompliance with the applicable servicing criteria with respect to other
securitizations of residential mortgage loans involving the Servicer or any
Subservicer during the three-year period immediately preceding the related
Securitization Transaction;
(D) whether the Servicer or any Subservicer has been terminated as
servicer in a residential mortgage loan securitization, either due to a
servicing default or to application of a servicing performance test or trigger;
and
(E) such other information as the Owner or any Depositor may
reasonably request for the purpose of compliance with Item 1108(b)(2) of
Regulation AB;
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(v) a description of any material changes during the three-year period
immediately preceding the related Securitization Transaction to the
Servicer's and each Subservicer's policies or procedures with respect to
the servicing function it will perform under this Agreement and any
Reconstitution Agreement for mortgage loans of a type similar to the
Mortgage Loans;
(vi) information regarding the Servicer's and each Subservicer's
financial condition, to the extent that there is a material risk that an
adverse financial event or circumstance involving the Servicer or
Subservicer could have a material adverse effect on the performance by the
Servicer or Subservicer of its servicing obligations under this Agreement
or any Reconstitution Agreement;
(vii) information regarding advances made by the Servicer and each
Subservicer on the Mortgage Loans and the Servicer's and Subservicer's
overall servicing portfolio of residential mortgage loans for the
three-year period immediately preceding the related Securitization
Transaction, which may be limited to a statement by an authorized officer
of the Servicer or Subservicer to the effect that the Servicer or
Subservicer has made all advances required to be made on residential
mortgage loans serviced by it during such period, or, if such statement
would not be accurate, information regarding the percentage and type of
advances not made as required, and the reasons for such failure to advance;
(viii) a description of the Servicer's and each Subservicer's
processes and procedures designed to address any special or unique factors
involved in servicing loans of a similar type as the Mortgage Loans;
(ix) a description of the Servicer's and each Subservicer's processes
for handling delinquencies, losses, bankruptcies and recoveries, such as
through liquidation of mortgaged properties, sale of defaulted mortgage
loans or workouts; and
(x) information as to how the Servicer and each Subservicer defines or
determines delinquencies and charge-offs, including the effect of any grace
period, re-aging, restructuring, partial payments considered current or
other practices with respect to delinquency and loss experience.
(b) For the purpose of satisfying the Owner's or Depositor's reporting
obligation under the Exchange Act with respect to any class of asset-backed
securities, the Servicer shall (or shall cause each Subservicer to) (i) notify
the Owner and such Depositor in writing of (A) any material litigation or
governmental proceedings pending against the Servicer or any Subservicer and (B)
any affiliations or relationships that develop following the closing date of a
Securitization Transaction between the Servicer or any Subservicer and any of
the parties specified in clause (iii) of Section 8.5(a) (and any other parties
identified in writing by the requesting party) with respect to such
Securitization Transaction, and (ii) provide to the Owner and such Depositor a
description of such proceedings, affiliations or relationships.
(c) As a condition to the succession to the Servicer or any Subservicer as
servicer or subservicer under this Agreement or any Reconstitution Agreement by
any Person (i) into which the Servicer or such Subservicer may be merged or
39
consolidated, or (ii) which may be appointed as a successor to the Servicer or
any Subservicer, the Servicer shall provide to the Owner and any Depositor, at
least 15 calendar days prior to the effective date of such succession or
appointment, (x) written notice to the Owner and such Depositor of such
succession or appointment and (y) in writing and in form and substance
reasonably satisfactory to the Owner and such Depositor, all information
reasonably requested by the Owner or any Depositor in order to comply with its
reporting obligation under Item 6.02 of Form 8-K with respect to any class of
asset-backed securities.
(d) In addition to such information as the Servicer is obligated to provide
pursuant to other provisions of this Agreement, if so requested by the Owner or
any Depositor, the Servicer shall provide such information which is available to
the Servicer without unreasonable effort or expense regarding the performance or
servicing of the Mortgage Loans as is reasonably required to facilitate
preparation of distribution reports in accordance with Item 1121 of Regulation
AB. Such information shall be provided concurrently with the monthly reports
otherwise required to be delivered by the Servicer under this Agreement,
commencing with the first such report due not less than ten (10) Business Days
following such request.
Section 8.6 Servicer Compliance Statement
On or before March 15th of each calendar year, commencing in 2007, the
Servicer shall deliver to the Owner, the Master Servicer and any Depositor a
statement of compliance addressed to the Owner and such Depositor and signed by
an authorized officer of the Servicer, to the effect that (i) a review of the
Servicer's activities during the immediately preceding calendar year (or
applicable portion thereof) and of its performance under this Agreement and any
applicable Reconstitution Agreement during such period has been made under such
officer's supervision, and (ii) to the best of such officer's knowledge, based
on such review, the Servicer has fulfilled all of its obligations under this
Agreement and any applicable Reconstitution Agreement in all material respects
throughout such calendar year (or applicable portion thereof) or, if there has
been a failure to fulfill any such obligation in any material respect,
specifically identifying each such failure known to such officer and the nature
and the status thereof.
Section 8.7 Report on Assessment of Compliance and Attestation
(a) On or before March 15th of each calendar year, commencing in 2007, the
Servicer shall:
(i) deliver to the Owner, any Master Servicer and any Depositor a
report (in form and substance reasonably satisfactory to the Owner and such
Depositor) regarding the Servicer's assessment of compliance with the
Servicing Criteria during the immediately preceding calendar year, as
required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of
Regulation AB. Such report shall be addressed to the Owner, any Master
Servicer and such Depositor and signed by an authorized officer of the
Servicer, and shall address each of the applicable Servicing Criteria
specified on Exhibit D hereto delivered to the Owner;
40
(ii) deliver to the Owner, any Master Servicer and any Depositor a
report of a registered public accounting firm reasonably acceptable to the
Owner, any Master Servicer and such Depositor that attests to, and reports
on, the assessment of compliance made by the Servicer and delivered
pursuant to the preceding paragraph. Such attestation shall be in
accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the
Securities Act and the Exchange Act;
(iii) cause each Subservicer and each Subcontractor determined by the
Servicer pursuant to Section 8.8(b) to be "participating in the servicing
function" within the meaning of Item 1122 of Regulation AB (each such
Subcontractor, a "Participating Entity"), to deliver to the Owner, any
Master Servicer and any Depositor an assessment of compliance and
accountants' attestation as and when provided in paragraphs (i) and (ii) of
this Section 8.7(a); and
(iv) not later than February 1 of the calendar year in which such
certification is to be delivered, deliver, and cause each Subservicer and
Subcontractor described in clause (iii) of this Section to provide to the
Owner, any Master Servicer and the Depositor and any other Person that will
be responsible for signing the certification (a "Sarbanes Certification")
required by Rules 13a-14(d) and 15d-14(d) under the Exchange Act (pursuant
to Section 302 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002) on behalf of an
asset-backed issuer with respect to a Securitization Transaction a
certification, signed by the appropriate officer of such Person, in the
form attached hereto as Exhibit E.
The Servicer acknowledges that the parties identified in clause (iv) above
may rely on the certification provided by the Servicer pursuant to such clause
in signing a Sarbanes Certification and filing such with the Commission. Neither
the Owner nor any Depositor will require delivery of a certification under
clause (iv) above unless such Depositor is required under the Exchange Act to
file an annual report on Form 10-K with respect to an issuing entity whose asset
pool includes Mortgage Loans. Further, no certification delivered under clause
(iv) above shall be filed by the Owner or such Depositor or any designee thereof
as an exhibit to, or otherwise included in, any filing with the Commission.
(b) Each assessment of compliance provided by a Subservicer pursuant to
Section 8.7(a)(iii) shall address each of the Servicing Criteria identified as
applicable to such Subservicer and specified on a certification substantially in
the form of Exhibit D hereto delivered to the Owner on or prior to the date on
which such Subservicer is appointed. An assessment of compliance provided by a
Subcontractor pursuant to Section 8.7(a)(iii) need not address any elements of
the Servicing Criteria other than those specified by the Servicer pursuant to
Section 8.8(b).
Section 8.8 Use of Subservicers and Subcontractors
The Servicer shall not hire or otherwise utilize the services of any
Subservicer to fulfill any of the obligations of the Servicer as servicer under
this Agreement or any Reconstitution Agreement unless the Servicer complies with
the provisions of paragraph (a) of this Section 8.8. The Servicer shall not hire
or otherwise utilize the services of any Subcontractor, and shall not permit any
Subservicer to hire or otherwise utilize the services of any Subcontractor, to
41
fulfill any of the obligations of the Servicer as servicer under this Agreement
or any Reconstitution Agreement unless the Servicer complies with the provisions
of paragraph (b) of this Section 8.8.
(a) It shall not be necessary for the Servicer to seek the consent of the
Owner, any Master Servicer or any Depositor to the utilization of any
Subservicer. The Servicer shall cause any Subservicer used by the Servicer (or
by any Subservicer) for the benefit of the Owner and any Depositor to comply
with the provisions of this Section 8.8(a) and with Sections 8.4, 8.5(b) and
(d), 8.6, 8.7 and 8.9 of this Agreement to the same extent as if such
Subservicer were the Servicer, and to provide the information required with
respect to such Subservicer under Section 8.5(b) of this Agreement. The Servicer
shall be responsible for obtaining from each Subservicer and delivering to the
Owner and any Depositor any servicer compliance statement required to be
delivered by such Subservicer under Section 8.6, any assessment of compliance
and attestation required to be delivered by such Subservicer under Section 8.7
and any certification required to be delivered to the Person that will be
responsible for signing the Sarbanes Certification under Section 8.7 as and when
required to be delivered.
(b) It shall not be necessary for the Servicer to seek the consent of the
Owner, any Master Servicer or any Depositor to the utilization of any
Subcontractor. The Servicer shall promptly upon request provide to the Owner,
any Master Servicer and any Depositor (or any designee of such Depositor, such
as a master servicer or administrator) a written description (in form and
substance satisfactory to the Owner, any Master Servicer and such Depositor) of
the role and function of each Subcontractor utilized by the Servicer or any
Subservicer, specifying (i) the identity of each such Subcontractor, (ii) which
(if any) of such Subcontractors are Participating Entities, and (iii) which
elements of the Servicing Criteria will be addressed in assessments of
compliance provided by each Subcontractor identified pursuant to clause (ii) of
this paragraph.
As a condition to the utilization of any Subcontractor determined to be
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, the Servicer shall cause any such Subcontractor used by the
Servicer (or by any Subservicer) for the benefit of the Owner and any Depositor
to comply with the provisions of Sections 8.7 and 8.9 of this Agreement to the
same extent as if such Subcontractor were the Servicer. The Servicer shall be
responsible for obtaining from each Subcontractor and delivering to the Owner
and any Depositor any assessment of compliance and attestation required to be
delivered by such Subcontractor under Section 8.7, in each case as and when
required to be delivered.
Section 8.9 Indemnification; Remedies
(a) With respect to any Securitization Transaction for which Servicer
Information is included in a related Disclosure Document, the Servicer, on the
one hand, and the Owner and the Depositor, on the other hand, shall execute and
deliver an Indemnification Agreement in substantially the form attached as
Exhibit F hereto, pursuant to which each such party shall indemnify the other
party or parties and each Person who controls any of such parties (within the
meaning of Section 15 of the Securities Act) for the matters set forth in such
Indemnification Agreement.
42
(b) The Servicer shall indemnify the Owner, the Master Servicer, the
Depositor, each Sponsor, each Issuing Entity and each Person responsible for the
preparation, execution or filing of any report required to be filed with the
Commission with respect to such Securitization Transaction, or for execution of
a certification pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange
Act with respect to such Securitization Transaction and each Person who controls
any of such parties (within the meaning of Section 20 of the Exchange Act), and
shall hold each of them harmless from and against any losses damages, penalties,
fines, forfeitures, legal fees and expenses and related costs, judgments, and
any other costs, fees and expenses that any of them may sustain arising out of
or based upon:
(i) any failure by the Servicer, any Subservicer or any Subcontractor
to deliver any information report, certification, accountants' letter or
other material when and as required under this Article 8, including any
failure by the Servicer to identify pursuant to Section 8.8(b) any
Subcontractor "participating in the servicing function" within the meaning
of Item 1122 of Regulation AB;
(ii) (A) any untrue statement of a material fact contained in any
information, report or certification delivered in written or electronic
form by the Servicer, any Subservicer or any Subcontractor pursuant to
Sections 8.4(b), 8.5(a), 8.5(b), 8.5(d), 8.6, 8.7(a)(i) or 8.7(a)(iv)
(collectively, the "Servicer Information"), or (B) the omission to state in
the Servicer Information a material fact required to be stated in the
Servicer Information or necessary in order to make the statements therein,
in the light of the circumstances in which they were made, not misleading;
provided, by way of clarification, that clause (B) of this paragraph shall
be construed solely by reference to the Servicer Information and not to any
other information communicated in connection with a sale or purchase of
securities, without regard to whether the Servicer Information or any
portion thereof is presented together with or separately from such other
information..
In the case of any failure of performance described in clause (i) of this
Section 8.9(b), the Servicer shall promptly reimburse the Owner, any Depositor,
as applicable, and each Person responsible for the preparation, execution or
filing of any report required to be filed with the Commission with respect to
such Securitization Transaction, or for execution of a certification pursuant to
Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such
Securitization Transaction, for all costs reasonably incurred by each such party
in order to obtain the information, report, certification, accountants' letter
or other material not delivered as required by the Servicer, any Subservicer or
any Subcontractor. This indemnification obligation shall survive the termination
of this Agreement or the termination of any party to this Agreement.
(c) The Owner shall indemnify and hold harmless the Servicer and, if
applicable, any Subservicer or Participating Entity, and each Person who
controls any of such parties (within the meaning of Section 20 of the Exchange
Act), and shall hold each of them harmless from and against any losses damages,
penalties, fines, forfeitures, legal fees and expenses and related costs,
judgments, and any other costs, fees and expenses that any of them may sustain
arising out of or based upon any untrue statement or alleged untrue statement of
any material fact contained in any filing with the Commission under the Exchange
Act or the omission or alleged omission to state in any filing with the
43
Commission under the Exchange Act a material fact required to be stated or
necessary to be stated in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, in each case,
except to the extent, that such untrue statement, alleged untrue statement,
omission, or alleged omission relates to any information provided or required to
be provided by the Servicer or any Subservicer or Participating Entity (i)
pursuant to Sections 8.4(b), 8.5(b), 8.5(c), 8.5(d), 8.6, 8.7(a)(i) or
8.7(a)(iv) or (ii) in any servicing report under this Agreement.
(d) Notwithstanding anything in this Section 8.9 to the contrary, in no
event shall any party have any liability for any indirect, special or
consequential damages, losses, costs or expenses incurred by the other party or
any other Person entitled to indemnification or other remedies hereunder.
Section 8.10 Third Party Beneficiary
For purposes of Sections 8.3, 8.6, 8.7 and 8.9 and any related provisions
thereto, the Master Servicer shall be considered a third-party beneficiary of
this Agreement, entitled to all of the rights and benefits as if it were a
direct party to this Agreement.
ARTICLE 9
MISCELLANEOUS PROVISIONS
Section 9.1 Successor to the Servicer
(a) Prior to termination of the Servicer's responsibilities and duties
under this Agreement pursuant to Sections 5.4, 6.1, 7.1, or 7.2, the Owner shall
either (i) succeed to and assume all of the Servicer's responsibilities, rights,
duties, and obligations under this Agreement from and after the date of such
succession, or (ii) appoint a successor to the Servicer that shall succeed to
all rights and assume all of the responsibilities, duties and liabilities of the
Servicer under this Agreement prior to the termination of the Servicer's
responsibilities, duties, and liabilities under this Agreement. If the
Servicer's duties, responsibilities, and liabilities under this Agreement shall
be terminated pursuant to any of the foregoing Sections, the Servicer shall
discharge such duties and responsibilities with the same degree of diligence and
prudence that it is obligated to exercise under this Agreement, from the date it
acquires knowledge of such termination until the effective date thereof.
(b) The Servicer shall promptly deliver to its successor (i) the funds in
the Account and the Escrow Account to which the Owner is entitled pursuant to
the terms of this Agreement and all other amounts that may thereafter be
received with respect to the Mortgage Loans and to which the Servicer is not
entitled pursuant to the terms of this Agreement and (ii) all Collateral Files
and Credit Files and related documents and statements held by it hereunder. The
Servicer shall account for all funds and shall execute and deliver such
instruments and do such other things as may reasonably be required to more fully
and definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer.
44
(c) Upon a successor's acceptance of appointment as such, the Owner shall
notify the Servicer of such appointment.
(d) Notwithstanding any termination pursuant to this Agreement, the
Servicer shall continue to be entitled to receive all amounts accrued or owing
to it under this Agreement on or prior to the effective date of such
termination, whether in respect of (i) unreimbursed Servicing Advances or
Monthly Advances, (ii) unpaid Servicing Fees or REO Management Fees, or (iii)
other servicing compensation, and shall continue to be entitled to the benefits
of Section 5.3 notwithstanding any such termination, with respect to events
occurring prior to such termination.
Section 9.2 Amendment
This Agreement may be amended from time to time solely by written agreement
signed by each of the parties.
Section 9.3 Recordation of Agreement; Perfection of Security Interest;
Further Assurances
(a) To the extent necessary under applicable law to protect the interests
of the Owner, this Agreement, or a memorandum thereof, is subject to recordation
in all appropriate public offices for real property records in all the counties
or other comparable jurisdictions in which any or all of the Mortgaged
Properties are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Owner at the Owner's expense.
(b) The Servicer agrees to execute or cause to be executed such documents
and take or cause to be taken such actions as may be necessary to effect the
intent of this Agreement, including, without limitation, the execution and
delivery of instruments of further assurance and the execution and delivery of
such other documents, and the taking of such other actions, as may be reasonably
requested by the Owner.
Section 9.4 Duration of Agreement
This Agreement shall continue in existence and effect until terminated as
herein provided.
Section 9.5 Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York (including Section 5-1401 of the New York General
Obligations Law) and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws without giving effect
to conflict of laws principles other than Section 5-1401 of the New York General
Obligations Law.
45
Section 9.6 General Interpretive Principles
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(i) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
(ii) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles;
(iii) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs, and other
subdivisions of this Agreement;
(iv) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section
in which the reference appears, and this rule shall also apply to
Paragraphs and other subdivisions;
(v) the words "herein," "hereof," "hereunder," and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(vi) the term "include" or "including" shall mean without limitation
by reason of enumeration.
Section 9.7 Reproduction of Documents
This Agreement and all documents relating hereto, including, without
limitation, (i) consents, waivers, and modifications that may hereafter be
executed, (ii) documents received by any party on any Closing Date, and (iii)
financial statements, certificates, and other information previously or
hereafter furnished, may be reproduced by any photographic, photostatic,
microfilm, microcard, miniature photographic, or other similar process. Any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business. Any enlargement, facsimile or further reproduction
of such reproduction shall likewise be admissible in evidence.
Section 9.8 Notices
All demands, notices, consents, waivers and other communications hereunder
shall be in writing and shall be deemed to have been duly given upon receipt (x)
in the case of any notice of an Event of Default, if mailed by registered mail,
postage prepaid and (y) in the case of any other demand, notice, consent, waiver
or other communication, if personally delivered, mailed by registered mail,
postage prepaid, delivered by air courier or sent by facsimile to:
(i) in the case of the Servicer, at the address set forth below or
such other address as may hereafter be furnished to the Owner in writing by
the Servicer:
46
Washington Mutual Bank
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President, Investor Reporting
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) in the case of the Owner, at the address set forth below, or such
other address as may hereafter be furnished to the Servicer by the Owner:
Luminent Mortgage Capital, Inc.
Maia Mortgage Finance Statutory Trust
Mercury Mortgage Finance Statutory Trust
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Luminent Mortgage Capital, Inc.
Maia Mortgage Finance Statutory Trust
Mercury Mortgage Finance Statutory Trust
▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and in the case of any subsequent Owner, as set forth in written notice supplied
to the Servicer by such subsequent Owner.
Notwithstanding the foregoing any demand, notice, consent, waiver or
communication (other than those referred to in clause (x) above) may be given by
any other means if the parties hereto agree to such alternative means in
writing.
Section 9.9 Severability of Provisions
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other covenants, agreements,
provisions or terms of this Agreement or the rights of the Owner hereunder. If
the invalidity of any part, provision, representation or warranty of this
Agreement shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate in good faith to
47
develop a new structure, the economic effect of which is nearly as possible the
same as the economic effect of this Agreement without regard to such invalidity.
Section 9.10 Exhibits and Schedules
The exhibits and schedules to this Agreement are hereby incorporated and
made an integral part of this Agreement.
Section 9.11 Counterparts; Successors and Assigns
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Sections 5.4, 5.5, 5.6, 6.1,
7.1 and 8.1, this Agreement shall inure to the benefit of and be binding upon
the Servicer, the Owner and their respective successors and assigns.
Section 9.12 Effect of Headings
The headings in this Agreement are for purposes of reference only and shall
not limit or otherwise affect the meaning hereof.
Section 9.13 Other Agreements Superseded; Entire Agreement
This Agreement and the Letter Agreement supersede all prior agreements and
understandings relating to the subject matter hereof. This Agreement and the
Letter Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof.
Section 9.14 Attorneys' Fees
If either party retains an attorney to enforce any of the provisions of
this Agreement, the prevailing party shall be entitled to reasonable attorneys'
fees from the other party, including, without limitation, fees incurred in
arbitration and in trial and appellate courts, fees incurred without suit, and
all arbitration, court and accounting costs.
Section 9.15 Confidential Information
Each party understands that certain information that has been furnished and
shall be furnished in connection with the transactions contemplated under this
Agreement is required by applicable law (including, without limitation, the
▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and the regulations promulgated thereunder) to be kept
confidential. Each party shall maintain the confidentiality of such information
and shall not, without the written consent of the party furnishing such
information, disclose it to third parties or use it except in connection with
the transactions contemplated by this Agreement or as permitted by applicable
law.
Section 9.16 Nonsolicitation
Each party covenants and agrees that it shall not take any action to
solicit the refinancing of any Mortgage Loan following the date hereof or
provide information to any other entity to solicit the refinancing of any
48
Mortgage Loan; provided that, the foregoing shall not preclude either party or
any of its affiliates from (a) engaging in general solicitations to its customer
base, including by mass mailing or as part of monthly or periodic statements
mailed to its borrowers or to holders of deposit or other accounts, (b) engaging
in solicitations to the general public including without limitation by mass
mailing, newspaper, radio, television or other media which are not specifically
directed toward the Mortgagors, (c) engaging in solicitations of optional
insurance or other bank products (not including mortgage loans), (d) refinancing
the Mortgage Loan of any Mortgagor who, without solicitation, contacts such
party to request the refinancing of the related Mortgage Loan, or (e) engaging
in any action to solicit the refinancing of any Mortgage Loan to the extent such
action would be permitted under the ▇▇▇▇▇▇ Mae Selling Guide or the ▇▇▇▇▇▇ ▇▇▇
Servicing Guide.
[signatures follow]
49
TO WITNESS THIS, the Servicer and the Owner have caused their names to be
signed to this Servicing Agreement by their respective officers duly authorized
as of the day and year first written above.
SERVICER: WASHINGTON MUTUAL MORTGAGE SECURITIES
CORP.
By: _________________________________
Name:
Title:
OWNER: LUMINENT MORTGAGE CAPITAL, INC.
By: _________________________________
Name:
Title:
MAIA MORTGAGE FINANCE STATUTORY TRUST
By: _________________________________
Name:
Title:
MERCURY MORTGAGE FINANCE STATUTORY
TRUST
By: _________________________________
Name:
Title:
EXHIBIT A
FORM OF REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
To: [Name/Address of Owner]
Attention:
Telephone:
Facsimile:
Re: Servicing Agreement dated as of __________, 200_ (the "Servicing
Agreement") between [_______________________________] (the
"Owner") and Washington Mutual Bank (the "Servicer")
In connection with the administration of the Mortgage Loans that we service
on your behalf pursuant to the Servicing Agreement, we request the release, and
acknowledge receipt of the Collateral File/[specify documents]) for the Mortgage
Loan described below, for the reason indicated.
Mortgagor's Name, Address and Zip Code:
Mortgage Loan Number:
Reason for Requesting Documents: (check one)
_____ 1. Mortgage Loan paid in full. (The Servicer hereby certifies that
all amounts received in connection therewith have been credited to the
Account as provided in the Servicing Agreement.)
_____ 2. Mortgage Loan in foreclosure.
_____ 3. Repurchase pursuant to the Servicing Agreement or the Purchase
Agreement. (The Servicer hereby certifies that the repurchase price
has been credited to the Account.)
_____ 4. Mortgage Loan liquidated by . (The Servicer hereby certifies that
all proceeds of the foreclosure, insurance, condemnation or other
liquidation have been finally received and credited to the Account
pursuant to the Servicing Agreement.)
_____ 5. Other (Explain):
If box 1, 2 or 3 above is checked, and if all or part of the Collateral
File was previously released to us, please release to us our previous request
and receipt on file with you, as well as any additional documents in your
possession relating to the specified Mortgage Loan.
A-1
If box 4 or 5 above is checked, upon our return of all of the above
documents to you, please acknowledge your reception by signing in the space
indicated below and returning this form.
WASHINGTON MUTUAL BANK
By:
Name:
Title:
Acknowledgment of Documents
returned to the Owner:
[_____________________________]
By:
Name:
Title:
Date:
A-2
EXHIBIT B
ACCOUNT LETTER AGREEMENT
_______________, ______
To:________________________________
________________________________
________________________________
________________________________
(the "Depository")
As the "Servicer" under the Servicing Agreement dated as of
_________________, 200_, between the Servicer and the Owner named therein (the
"Agreement"), we hereby authorize and request you to establish an account, as an
Account pursuant to Section 2.4 of the Agreement, to be designated as
"Washington Mutual Bank, in trust for ______________________, as Owner, and any
successor Owner." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. You may refuse any deposit that would
result in violation of the requirement that the account be fully insured as
described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
________________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
The undersigned, as the "Depository," hereby certifies that the
above-described account has been established under Account Number
_________________, at the office of the Depository indicated above, and agrees
to honor withdrawals on such account as provided above.
________________________________________
(Name of Depository)
By:_____________________________________
Name:___________________________________
Title:__________________________________
B-1
EXHIBIT C
ESCROW ACCOUNT LETTER AGREEMENT
____________________, ___
To::________________________________
________________________________
________________________________
________________________________
(the "Depository")
As the "Servicer" under the Servicing Agreement dated as of
_________________, 200_, between the Servicer and the Owner named therein (the
"Agreement"), we hereby authorize and request you to establish an account, as an
Escrow Account pursuant to Section 2.6 of the Agreement, to be designated as
"Washington Mutual Bank, in trust for ___________________________, as Owner, and
any successor Owner, and certain Mortgagors." All deposits in the account
pursuant to the Agreement shall be subject to withdrawal therefrom by order
signed by the Servicer. You may refuse any deposit that would result in
violation of the requirement that the account by fully insured as described
below. This letter is submitted to you in duplicate. Please execute and return
one original to us.
________________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
The undersigned, as the "Depository," hereby certifies that the
above-described account has been established under Account Number
_________________, at the office of the Depository indicated above, and agrees
to honor withdrawals on such account as provided above.
________________________________________
(Name of Depository)
By:_____________________________________
Name:___________________________________
Title:__________________________________
C-1
EXHIBIT D
SERVICING CRITERIA
The assessment of compliance to be delivered by [the Servicer] [Name of
Subservicer] shall address the criteria identified as below as "Applicable
Servicing Criteria":
----------------------------------------------------------------------------------------------------------------------
Applicable
Servicing
Servicing Criteria Criteria
----------------------------------------------------------------------------------------------------------------------
Reference Criteria
----------------------------------------------------------------------------------------------------------------------
General Servicing Considerations
----------------------------------------------------------------------------------------------------------------------
Policies and procedures are instituted to monitor any performance or X
other triggers and events of default in accordance with the transaction
agreements.
1122(d)(1)(i)
----------------------------------------------------------------------------------------------------------------------
1122(d)(1)(ii) If any material servicing activities are outsourced to third parties, X
policies and procedures are instituted to monitor the third party's
performance and compliance with such servicing activities.
----------------------------------------------------------------------------------------------------------------------
1122(d)(1)(iii) Any requirements in the transaction agreements to maintain a back-up
servicer for the mortgage loans are maintained.
----------------------------------------------------------------------------------------------------------------------
1122(d)(1)(iv) A fidelity bond and errors and omissions policy is in effect on the X
party participating in the servicing function throughout the reporting
period in the amount of coverage required by and otherwise in accordance
with the terms of the transaction agreements.
----------------------------------------------------------------------------------------------------------------------
Cash Collection and Administration
----------------------------------------------------------------------------------------------------------------------
1122(d)(2)(i) Payments on mortgage loans are deposited into the appropriate custodial X
bank accounts and related bank clearing accounts no more than two
business days following receipt, or such other number of days specified
in the transaction agreements.
----------------------------------------------------------------------------------------------------------------------
1122(d)(2)(ii) Disbursements made via wire transfer on behalf of an obligor or to an X
investor are made only by authorized personnel.
----------------------------------------------------------------------------------------------------------------------
1122(d)(2)(iii) Advances of funds or guarantees regarding collections, cash flows or X
distributions, and any interest or other fees charged for such advances,
are made, reviewed and approved as specified in the transaction
agreements.
----------------------------------------------------------------------------------------------------------------------
D-1
----------------------------------------------------------------------------------------------------------------------
Applicable
Servicing
Servicing Criteria Criteria
----------------------------------------------------------------------------------------------------------------------
Reference Criteria
----------------------------------------------------------------------------------------------------------------------
1122(d)(2)(iv) The related accounts for the transaction, such as cash reserve accounts
or accounts established as a form of overcollateralization, are
separately maintained (e.g., with respect to commingling of cash) as set X
forth in the transaction agreements.
----------------------------------------------------------------------------------------------------------------------
1122(d)(2)(v) Each custodial account is maintained at a federally insured depository X
institution as set forth in the transaction agreements. For purposes of
this criterion, "federally insured depository institution" with respect
to a foreign financial institution means a foreign financial institution
that meets the requirements of Rule 13k-1(b)(1) of the Securities
Exchange Act.
----------------------------------------------------------------------------------------------------------------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized access. X
----------------------------------------------------------------------------------------------------------------------
1122(d)(2)(vii) Reconciliations are prepared on a monthly basis for all asset-backed X
securities related bank accounts, including custodial accounts and
related bank clearing accounts. These reconciliations are (A)
mathematically accurate; (B) prepared within 30 calendar days after the
bank statement cutoff date, or such other number of days specified in
the transaction
agreements; (C) reviewed and approved by someone other than the person
who prepared the reconciliation; and (D) contain explanations for
reconciling items. These reconciling items are resolved within 90
calendar days of their original identification, or such other number of
days specified in the transaction agreements.
----------------------------------------------------------------------------------------------------------------------
Investor Remittances and Reporting
----------------------------------------------------------------------------------------------------------------------
1122(d)(3)(i) Reports to investors, including those to be filed with the Commission, X
are maintained in accordance with the transaction agreements and
applicable Commission requirements. Specifically, such reports (A) are
prepared in accordance with timeframes and other terms set forth in the
transaction agreements; (B) provide information calculated in accordance
with the terms specified in the transaction agreements; (C) are filed
with the Commission as required by its rules and regulations; and (D)
agree with investors' or the trustee's records as to the total unpaid
principal balance and number of mortgage loans serviced by the Servicer.
----------------------------------------------------------------------------------------------------------------------
D-2
----------------------------------------------------------------------------------------------------------------------
Applicable
Servicing
Servicing Criteria Criteria
----------------------------------------------------------------------------------------------------------------------
Reference Criteria
----------------------------------------------------------------------------------------------------------------------
1122(d)(3)(ii) Amounts due to investors are allocated and remitted in accordance with X
timeframes, distribution priority and other terms set forth in the
transaction agreements.
----------------------------------------------------------------------------------------------------------------------
1122(d)(3)(iii) Disbursements made to an investor are posted within two business days to
the Servicer's investor records, or such other number of days specified X
in the transaction agreements.
----------------------------------------------------------------------------------------------------------------------
1122(d)(3)(iv) Amounts remitted to investors per the investor reports agree with X
cancelled checks, or other form of payment, or custodial bank statements.
----------------------------------------------------------------------------------------------------------------------
Pool Asset Administration
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(i) Collateral or security on mortgage loans is maintained as required by X
the transaction agreements or related mortgage loan documents.
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(ii) Mortgage loan and related documents are safeguarded as required by the X
transaction agreements
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(iii) Any additions, removals or substitutions to the asset pool are made, X
reviewed and approved in accordance with any conditions or requirements
in the transaction agreements.
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(iv) Payments on mortgage loans, including any payoffs, made in accordance X
with the related mortgage loan documents are posted to the Servicer's
obligor records maintained no more than two business days after receipt,
or such other number of days specified in the transaction agreements,
and allocated to principal, interest or other items (e.g., escrow) in
accordance with the related mortgage loan documents.
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(v) The Servicer's records regarding the mortgage loans agree with the X
Servicer's records with respect to an obligor's unpaid principal balance.
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(vi) Changes with respect to the terms or status of an obligor's mortgage X
loans (e.g., loan modifications or re-agings) are made, reviewed and
approved by authorized personnel in accordance with the transaction
agreements and related pool asset documents.
----------------------------------------------------------------------------------------------------------------------
D-3
----------------------------------------------------------------------------------------------------------------------
Applicable
Servicing
Servicing Criteria Criteria
----------------------------------------------------------------------------------------------------------------------
Reference Criteria
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., forbearance plans, X
modifications and deeds in lieu of foreclosure, foreclosures and
repossessions, as applicable) are initiated, conducted and concluded in
accordance with the timeframes or other requirements established by the
transaction agreements.
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(viii) Records documenting collection efforts are maintained during the period X
a mortgage loan is delinquent in accordance with the transaction
agreements. Such records are maintained on at least a monthly basis, or
such other period specified in the transaction agreements, and describe
the entity's activities in monitoring delinquent mortgage loans
including, for example, phone calls, letters and payment rescheduling
plans in cases where delinquency is deemed temporary (e.g., illness or
unemployment).
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(ix) Adjustments to interest rates or rates of return for mortgage loans with X
variable rates are computed based on the related mortgage loan documents.
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(x) Regarding any funds held in trust for an obligor (such as escrow X
accounts): (A) such funds are analyzed, in accordance with the
obligor's mortgage loan documents, on at least an annual basis, or such
other period specified in the transaction agreements; (B) interest on
such funds is paid, or credited, to obligors in accordance with
applicable mortgage loan documents and state laws; and (C) such funds
are returned to the obligor within 30 calendar days of full repayment of
the related mortgage loans, or such other number of days specified in
the transaction agreements.
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(xi) Payments made on behalf of an obligor (such as tax or insurance X
payments) are made on or before the related penalty or expiration dates,
as indicated on the appropriate bills or notices for such payments,
provided that such support has been received by the servicer at least 30
calendar days prior to these dates, or such other number of days
specified in the transaction agreements.
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(xii) Any late payment penalties in connection with any payment to be made on X
behalf of an obligor are paid from the servicer's funds and not charged
to the obligor, unless the late payment was due to the obligor's error
or omission.
----------------------------------------------------------------------------------------------------------------------
D-4
----------------------------------------------------------------------------------------------------------------------
Applicable
Servicing
Servicing Criteria Criteria
----------------------------------------------------------------------------------------------------------------------
Reference Criteria
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(xiii) Disbursements made on behalf of an obligor are posted within two X
business days to the obligor's records maintained by the servicer, or
such other number of days specified in the transaction agreements.
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible accounts are recognized and X
recorded in accordance with the transaction agreements.
----------------------------------------------------------------------------------------------------------------------
1122(d)(4)(xv) Any external enhancement or other support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation AB, is maintained as set forth in
the transaction agreements.
----------------------------------------------------------------------------------------------------------------------
[WASHINGTON MUTUAL BANK]
[NAME OF SUBSERVICER]
Date:______________________
By:________________________
Name:
Title:
D-5
EXHIBIT E
FORM OF ANNUAL CERTIFICATION
Re: The [ ] agreement dated as of [ ], 200[ ] (the "Agreement"), among
[IDENTIFY PARTIES]
I, ________________________________, the _____________________ of
Washington Mutual Bank (formerly known as Washington Mutual Bank, FA) (the
"Servicer"), certify to [the Purchaser], [the Depositor], and the [Master
Servicer] [Securities Administrator] [Trustee], and their officers, with the
knowledge and intent that they will rely upon this certification, that:
(1) I have reviewed the servicer compliance statement of the Servicer
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Servicer's compliance with the
servicing criteria set forth in Item 1122(d) of Regulation AB (the
"Servicing Criteria"), provided in accordance with Rules 13a-18 and 15d-18
under Securities Exchange Act of 1934, as amended (the "Exchange Act") and
Item 1122 of Regulation AB (the "Servicing Assessment"), the registered
public accounting firm's attestation report provided in accordance with
Rules 13a-18 and 15d-18 under the Exchange Act and Section 1122(b) of
Regulation AB (the "Attestation Report"), and all servicing reports
relating to the servicing of the Mortgage Loans by the Servicer during 200[
] that were delivered by the Servicer to the [Depositor] [Master Servicer]
[Securities Administrator] [Trustee] pursuant to the Agreement
(collectively, the "Servicing Information");
(2) Based on my knowledge, the Servicing Information, taken as a
whole, does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in the light
of the circumstances under which such statements were made, not misleading
with respect to the period of time covered by the Servicing Information;
(3) Based on my knowledge, all of the Servicing Information required
to be provided by the Servicer under the Agreement has been provided to the
[Depositor] [Master Servicer] [Securities Administrator] [Trustee];
(4) I am responsible for reviewing the activities performed by the
Servicer as servicer under the Agreement, and based on my knowledge and the
compliance review conducted in preparing the Compliance Statement and
except as disclosed in the Compliance Statement, the Servicing Assessment
or the Attestation Report, the Servicer has fulfilled its obligations under
the Agreement; and
(5) The Compliance Statement required to be delivered by the Servicer
pursuant to the Agreement, and the Servicing Assessment and Attestation
Report required to be provided by the Servicer and by each Participating
Entity pursuant to the Agreement, have been provided to the [Depositor]
[Master Servicer]. Any material instances of noncompliance described in
such reports have been disclosed to the [Depositor] [Master Servicer]. Any
E-1
material instance of noncompliance with the Servicing Criteria has been
disclosed in such reports.
Date:______________________
By:________________________
Name:
Title:
E-2
EXHIBIT F
FORM OF INDEMNIFICATION AGREEMENT
__________, 200__
[Depositor]
[Owner]
Re: [Issuer Name], [Title of Securities], Series [____-____],
Class [___]
Ladies and Gentlemen:
Reference is hereby made to the [Offering Document] (the "Offering
Materials"), dated as of ________, 200_ relating to _____________, Series
____________ (the "Securities").
Washington Mutual Mortgage Securities Corp. (the "Seller"), agrees upon the
terms and subject to the conditions provided herein, to indemnify and hold
harmless (i) [Depositor] (the "Depositor"), (ii) [Owner] (the "Owner"), and
(iii) each person, if any, who controls the Depositor or the Owner within the
meaning of Section 15 of the Securities Act of 1933 (the "1933 Act") or Section
20 of the Securities Exchange Act of 1934 (the "Exchange Act") ((i) through
(iii) collectively, the "Depositor indemnified party") against any losses,
claims, damages, liabilities or expenses (including, but not limited to,
reasonable attorneys' fees and any and all expenses incurred in investigating,
preparing and defending against any claims therefore, and any amounts paid in
settlement of any claim or litigation, except as otherwise provided herein), to
which such Depositor indemnified party may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages, liabilities and expenses
arise out of or are based upon (a) any untrue statement of alleged untrue
statement of a material fact contained in the information with respect to the
Seller attached hereto as Exhibit A (the "Seller Information") or (b) the
omission or alleged omission to state in the Seller Information a material fact
required to be stated therein or necessary to make the statements in the Seller
Information, in the light of the circumstances under which they were made, not
misleading (as of the date thereof), in each case to the extent and only to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in strict conformity with the
Seller Information furnished by the Seller specifically for use in the Offering
Materials as attached hereto as Exhibit A. The Seller's liability under this
letter agreement shall be in addition to any other liability the Seller may
otherwise have.
Washington Mutual Bank (the "Servicer') agrees, upon the terms and subject
to the conditions provided herein, to indemnify and hold harmless each Depositor
indemnified party against any losses, claims, damages, liabilities or expenses
(including, but not limited to, reasonable attorneys' fees and any and all
expenses incurred in investigating, preparing and defending against any claims
therefore, and any amounts paid in settlement of any claim or litigation, except
as otherwise provided herein), to which such Depositor indemnified party may
become subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages, liabilities and expenses, arise out of or are based upon (a) any untrue
statement or alleged untrue statement of a material fact contained in the
information with respect to the Servicer attached hereto as Exhibit B (the
F-1
"Servicer Information") or (b) the omission or alleged omission to the state in
the Servicer Information a material fact required to be stated therein or
necessary to make the statements in the Servicer Information, in the light of
the circumstances under which they were made, not misleading (as of the date
thereof), in each case to the extent and only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in strict conformity with the Servicer Information
furnished by the Servicer specifically for use in the Offering Materials as
attached hereto as Exhibit B. The Servicer's liability under this letter
agreement shall be in addition to any other liability the Servicer may otherwise
have.
Each Owner and Depositor, jointly and severally, agree, upon the terms and
subject to the conditions provided herein, to indemnify and hold harmless (i)
the Seller, (ii) the Servicer and (iii) each person, if any, who controls the
Seller or Servicer within the meaning of Section 15 of the 1933 Act or Section
20 of the Exchange Act ((i) through (iii) collectively, the "Seller indemnified
party") against any losses, claims, damages, liabilities or expenses (including,
but not limited to, reasonable attorneys' fees and any and all expenses incurred
in investigating, preparing and defending against any claims therefore, and any
amounts paid in settlement of any claim or litigation, except as otherwise
provided herein), to which such Seller indemnified party may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses, arise out of or are based upon (a) any untrue
statement or alleged untrue statement of a material fact contained in the
Offering Materials or (b) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (as of the date thereof), except to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission relates to
the Seller Information or the Servicer Information. Each Owner's or Depositor's
liability under this letter agreement shall be in addition to any other
liability such Owner or Depositor may otherwise have.
With respect to each claim for indemnification made hereunder, the
indemnified party shall notify the indemnifying party in writing, giving notice
of the nature of the claim, promptly after receipt of a service of a summons or
other first legal process that shall have been served upon such indemnified
party, but failure to notify the indemnifying party of any such claim shall not
relieve the indemnifying party from any liability which it may have to the
indemnified party on account of the indemnity contained in this letter
agreement, except to the extent that the indemnifying party has been materially
prejudiced by such failure.
The indemnifying party will be entitled to participate at its own expense
in the defense or, if the indemnifying party so elects, to assume the defense of
any suit brought to enforce any such liability (jointly with any other
indemnifying party similarly notified), but if the indemnifying party elects to
assume the defense, such defense shall be conducted by counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying party
to such indemnified party of its election to so assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
letter agreement for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. In the event the indemnifying party elects to assume the
defense of any such suit and retain such counsel, the indemnified party or
persons, defendant or defendants in the suit, may retain additional counsel but
shall bear the fees and expenses of such counsel unless: (i) the indemnifying
F-2
party shall have agreed to the retention of such counsel at the expense of the
indemnifying party; or (ii) the named parties to any such proceeding (including
any impleaded parties) include both the indemnifying party and the indemnified
party, and representation of both by the same counsel would be inappropriate due
to actual or potential differing interests between them. In no event shall the
indemnifying party be liable, in connection with any proceeding or separate but
similar proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, for the fees and expenses of more than one counsel
(separate from its own counsel) for the indemnified party.
The indemnifying party shall not be liable to indemnify any person for any
settlement of any claim effected without the indemnifying party's written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. If the indemnifying party assumes the defense of any proceeding, the
indemnifying party shall not, without the prior written consent of an
indemnified party, which consent will not be unreasonably withheld, effect any
settlement of any pending or threatened proceeding in respect of which such
indemnified party is or could have been a party and indemnity is or could have
been sought hereunder by such indemnified party unless such settlement (i)
includes an unconditional release of such indemnified party from all liability
on any claims that are the subject of such action and (ii) does not include a
statement as to, or an admission of, fault, culpability or failure to act by or
on behalf of an indemnified party.
If the indemnification provided for in this letter agreement is determined
to be insufficient or unavailable to an indemnified party in respect of any
liabilities referred to herein (on the grounds of public policy or otherwise),
then the indemnifying party, in lieu of indemnifying the indemnified party,
shall contribute to the liabilities and expenses incurred by the indemnified
party in such proportion as is appropriate equally to reflect (i) the relative
fault and benefits of (a) the indemnifying party on the one hand and (b) the
indemnified party on the other hand, in connection with the statements or
omissions which resulted in such liabilities (or actions in respect thereof) as
well as (ii) any other relevant equitable considerations. The relative fault of
each indemnifying party, on the one hand, and of each indemnified party, on the
other, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of material fact or the omission or alleged
omission to state a material fact relates to information supplied by, or action
within the control of such indemnifying party or such indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The indemnifying party and the
indemnified party agree that it would not be just and equitable if contribution
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
Upon the incurrence of any losses, claims, damages or other liabilities for
which a person is entitled to contribution hereunder, the contributor shall
reimburse such person entitled to contribution promptly upon establishment by
F-3
the person entitled to contribution to the contributor of the losses, claims,
damages or other liabilities incurred.
Notwithstanding anything to the contrary contained in this letter
agreement, in no event shall the Seller or the Servicer have any liability for
any indirect, special, punitive or consequential damages, losses, costs or
expenses incurred by any Depositor indemnified party or any other party entitled
to indemnification or other remedies hereunder.
All demands, notices and other communications to be given hereunder shall
be in writing (except as otherwise specifically provided herein) and shall be
mailed by registered mail or personally delivered and telecopied to the
recipient as follows:
(a) To the Seller:
Washington Mutual Mortgage Securities Corp.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Master Servicing Department
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Washington Mutual Legal Department
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ 1706
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: WMMSC
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) To the Servicer:
Washington Mutual Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile:
(c) To the Owner:
_______________________________
_______________________________
_______________________________
_______________________________
Attention:
F-4
Facsimile:
(d) To the Depositor:
_______________________________
_______________________________
_______________________________
_______________________________
Attention:
Facsimile:
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
This letter agreement shall be governed by and construed in accordance with
the laws of the State of New York (without giving effect to the conflict of laws
provisions thereof, other than Sections 5-1401 and 5-1402 of the New York
General Obligations Law). This letter agreement may not be assigned by any part)
without the express written consent of each other party. Any assignment made in
violation of this letter agreement shall be null and void. Amendments of this
letter agreement shall be in writing signed by each party hereto. The indemnity
and contribution agreements contained in this letter agreement shall remain
operative and in full force and effect, regardless of (i) any investigation made
by or on behalf of any indemnified party, (ii) the issuance of the Securities or
(iii) any termination of this letter agreement. The parties to this letter
agreement may execute this letter agreement in counterparts, and all such
counterparts shall constitute one and the same instrument. In the event that any
provision of this letter agreement shall be held invalid or unenforceable by any
court of competent jurisdiction, the parties hereto agree that such holding
shall not invalidate or render unenforceable any other provision hereof. The
parties hereto further agree that the holding by any court of competent
jurisdiction that any remedy pursued by any party hereto is unavailable or
unenforceable shall not affect in any way the ability of such party to pursue
any other remedy available to it.
No recourse under this letter agreement shall be had against, and no
personal liability shall attach to, any officer, employee, director, affiliate
or shareholder of any party hereto, as such, by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise in respect hereof it being expressly agreed and understood that this
letter agreement is solely a corporate obligation of each party hereto, and that
any and all personal liability, either at common law or in equity, or by statute
or constitution, of every such officer, employee, director, affiliate or
shareholder for breaches of any party hereto of any obligations hereunder is
hereby expressly waived as a condition of and in consideration for the execution
and delivery of this letter agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
F-5
Please signify your acceptance of this letter agreement by signing below
and returning to the undersigned. This letter agreement shall be effective as of
the date first stated above upon delivery of written acceptance by all parties
hereto.
Very truly yours,
WASHINGTON MUTUAL MORTGAGE SECURITIES CORP.
By: _______________________________
Name:_______________________________
Title:______________________________
WASHINGTON MUTUAL BANK
By: _______________________________
Name:_______________________________
Title:______________________________
Agreed and Accepted,
[OWNER]
a ___________________________
By: _______________________________
Name:_______________________________
Title:______________________________
[DEPOSITOR]
a ___________________________
By: _______________________________
Name:_______________________________
Title:______________________________
F-6
Exhibit A
SELLER INFORMATION
F-A-1
Exhibit B
SERVICER INFORMATION
F-B-1