EXHIBIT 99.1
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CWHEQ, INC.
Depositor
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2005-C
the Trust
JPMORGAN CHASE BANK, N.A.
Indenture Trustee
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SALE AND SERVICING AGREEMENT
Dated as of June 30, 2005
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REVOLVING HOME EQUITY LOAN ASSET BACKED NOTES
SERIES 2005-C
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Table of Contents
Page
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ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions. .........................................1
Section 1.02. Other Terms. .........................................1
Section 1.03. Rules of Construction. ...............................1
Section 1.04. Interest Calculations. ...............................1
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation
to Fund Advances Under Credit Line Agreement..........3
Section 2.02. Acceptance by Indenture Trustee. .....................6
Section 2.03. Representations, Warranties, and Covenants Regarding
the Master Servicer...................................8
Section 2.04. Representations and Warranties of the Sponsor
Regarding the Mortgage Loans; Retransfer of Certain
Mortgage Loans........................................9
Section 2.05. Covenants of the Depositor. .........................12
Section 2.06. Transfers of Mortgage Loans at Election of
Transferor...........................................12
Section 2.07. Tax Treatment. ......................................13
Section 2.08. Representations and Warranties of the Depositor. ....14
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. The Master Servicer. ................................15
Section 3.02. Collection of Certain Mortgage Loan Payments;
Establishment of Accounts............................18
Section 3.03. Deposits to Payment Account. ........................19
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses.............................................20
Section 3.05. Assumption and Modification Agreements...............20
Section 3.06. Realization Upon Defaulted Mortgage Loans;
Repurchase of Certain Mortgage Loans.................21
Section 3.07. Indenture Trustee to Cooperate. .....................22
Section 3.08. Servicing Compensation; Payment of Certain Expenses
by Master Servicer...................................23
Section 3.09. Annual Statement as to Compliance. ..................23
Section 3.10. Annual Servicing Report. ............................24
Section 3.11. Access to Certain Documentation and Information
Regarding the Mortgage Loans.........................24
Section 3.12. Maintenance of Certain Servicing Insurance Policies. 25
Section 3.13. Reports to the Securities and Exchange Commission. ..25
Section 3.14. Tax Treatment. ......................................25
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Section 3.15. Information Required by the Internal Revenue
Service Generally and Reports of Foreclosures and
Abandonments of Mortgaged Property...................25
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01. Servicing Certificate. ..............................26
Section 4.02. Acknowledgement and Cooperation. ....................28
Section 4.03. Optional Advances of the Master Servicer. ...........29
Section 4.04. Statements to Noteholders. ..........................29
ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01. Liability of the Sponsor, the Master Servicer, and
the Depositor. ......................................31
Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Master Servicer or the Depositor.31
Section 5.03. Limitation on Liability of the Master Servicer and
Others. .............................................31
Section 5.04. Master Servicer Not to Resign. ......................31
Section 5.05. Delegation of Duties. ...............................33
Section 5.06. Indemnification by the Master Servicer. .............33
ARTICLE VI
SERVICING TERMINATION
Section 6.01. Events of Servicing Termination. ....................34
Section 6.02. Indenture Trustee to Act; Appointment of Successor. .35
Section 6.03. Notification to Noteholders and the Transferor. .....36
ARTICLE VII
TERMINATION
Section 7.01. Termination. ........................................37
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment. ..........................................38
Section 8.02. Governing Law. ......................................38
Section 8.03. Notices. ........................................... 38
Section 8.04. Severability of Provisions. .........................40
Section 8.05. Assignment. .........................................40
Section 8.06. Third-Party Beneficiaries. ..........................40
Section 8.07. Counterparts. .......................................40
Section 8.08. Effect of Headings and Table of Contents. ...........41
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EXHIBIT A - MORTGAGE LOAN SCHEDULE..................................A-1
EXHIBIT B - LETTER OF REPRESENTATIONS...............................B-1
EXHIBIT C - FORM OF REQUEST FOR RELEASE.............................C-1
ANNEX 1 DEFINITIONS...........................................▇▇▇-1-1
ANNEX 2 ADOPTION ANNEX........................................▇▇▇-2-1
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This SALE AND SERVICING AGREEMENT, dated as of June 30, 2005, among CWHEQ,
Inc., as depositor, COUNTRYWIDE HOME LOANS, INC., as sponsor and master
servicer, CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 2005-C, and JPMORGAN
CHASE BANK, N.A., as Indenture Trustee,
WITNESSETH THAT
The parties agree as follows.
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
Unless the context requires a different meaning, capitalized terms are
used in this Agreement as defined in Annex 1.
Section 1.02. Other Terms.
Capitalized terms used in this Agreement that are not otherwise defined
have the meanings given to them in the Indenture. Defined terms that are used
only in one section or only in another definition may be omitted from the list
of defined terms in Annex 1. Defined terms used in this Agreement are sometimes
defined after their first use without a reference such as "(as hereinafter
defined)."
Section 1.03. Rules of Construction.
Except as otherwise expressly provided in this Agreement or unless the
context clearly requires otherwise:
(a) Defined terms include, as appropriate, all genders and the plural as
well as the singular.
(b) References to designated articles, sections, subsections, exhibits,
and other subdivisions of this Agreement, such as "Section 6.12 (a)," refer to
the designated article, section, subsection, exhibit, or other subdivision of
this Agreement as a whole and to all subdivisions of the designated article,
section, subsection, exhibit, or other subdivision. The exhibits and other
attachments to this Agreement are a part of this Agreement. The words "herein,"
"hereof," "hereto," "hereunder," and other words of similar import refer to this
Agreement as a whole and not to any particular article, section, exhibit, or
other subdivision of this Agreement.
(c) Any term that relates to a document or a statute, rule, or regulation
includes any amendments, modifications, supplements, or any other changes that
may have occurred since the document, statute, rule, or regulation came into
being, including changes that occur after the date of this Agreement. References
to law are not limited to statutes. References to statutes include any rules or
regulations promulgated under them by a governmental authority charged
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with the administration of the statute. Any reference to any person includes
references to its successors and assigns.
(d) Any party may execute any of the requirements under this Agreement
either directly or through others, and the right to cause something to be done
rather than doing it directly shall be implicit in every requirement under this
Agreement. Unless a provision is restricted as to time or limited as to
frequency, all provisions under this Agreement are implicitly available from
time to time.
(e) The term "including" and all its variations mean "including but not
limited to." Except when used in conjunction with the word "either," the word
"or" is always used inclusively (for example, the phrase "A or B" means "A or B
or both," not "either A or B but not both").
(f) A reference to "a [thing]" or "any [of a thing]" does not imply the
existence or occurrence of the thing referred to even though not followed by "if
any," and "any [of a thing]" is any and all of it. A reference to the plural of
anything as to which there could be either one or more than one does not imply
the existence of more than one (for instance, the phrase "the obligors on a
note" means "the obligor or obligors on a note"). "Until [something occurs]"
does not imply that it must occur, and will not be modified by the word
"unless." The word "due" and the word "payable" are each used in the sense that
the stated time for payment has passed. The word "accrued" is used in its
accounting sense, i.e., an amount paid is no longer accrued. In the calculation
of amounts of things, differences and sums may generally result in negative
numbers, but when the calculation of the excess of one thing over another
results in zero or a negative number, the calculation is disregarded and an
"excess" does not exist. Portions of things may be expressed as fractions or
percentages interchangeably. The word "shall" is used in its imperative sense,
as for instance meaning a party agrees to something or something must occur or
exist.
(g) All accounting terms used in an accounting context and not otherwise
defined, and accounting terms partly defined in this Agreement, to the extent
not completely defined, shall be construed in accordance with generally accepted
accounting principles in the United States. To the extent that the definitions
of accounting terms in this Agreement are inconsistent with their meanings under
generally accepted accounting principles, the definitions in this Agreement
shall control. Capitalized terms used in this Agreement without definition that
are defined in the Uniform Commercial Code of the relevant jurisdiction are used
in this Agreement as defined in that Uniform Commercial Code.
(h) In the computation of a period of time from a specified date to a
later specified date or an open-ended period, the words "from" and "beginning"
mean "from and including," the word "after" means "from but excluding," the
words "to" and "until" mean "to but excluding," and the word "through" means "to
and including." Likewise, in setting deadlines or other periods, "by" means "on
or before." The words "preceding," "following," and words of similar import,
mean immediately preceding or following. References to a month or a year refer
to calendar months and calendar years.
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(i) Any reference to the enforceability of any agreement against a party
means that it is enforceable against the party in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, and other similar
laws of general applicability relating to or affecting creditors' rights and to
general equity principles.
Section 1.04. Interest Calculations.
All calculations of interest on the Asset Balance of a Mortgage Loan under
this Agreement are on a daily basis using a 365-day year. All calculations of
interest on the Notes are on the basis of the actual number of days in an
Interest Period and a year of 360 days. The calculation of the Servicing Fee is
on the basis of a 360-day year consisting of twelve 30-day months. All dollar
amounts calculated under this Agreement are rounded to the nearest cent with
one-half of one cent being rounded down.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to
Fund Advances Under Credit Line Agreements.
(a) Concurrently with the execution and delivery of this Agreement, the
Depositor hereby transfers to the Trust without recourse (subject to Sections
2.02 and 2.04) all of its right, title, and interest in
(i) each Mortgage Loan, including its Asset Balance (including all
Additional Balances), the related Mortgage File, all property that secures
the Mortgage Loan, and all collections received on it after the Cut-off
Date (excluding payments due by the Cut-off Date);
(ii) property that secured a Mortgage Loan that is acquired by
foreclosure or deed in lieu of foreclosure;
(iii) the Depositor's rights under the Purchase Agreement;
(iv) the Depositor's rights under the hazard insurance policies;
(v) all rights under any guaranty executed in connection with a
Mortgage Loan;
(vi) all other assets included or to be included in the Trust for the
benefit of the Noteholders and the Credit Enhancer; and
(vii) all proceeds of the foregoing.
This transfer to the Trust is to the Owner Trustee, on behalf of the Trust, and
each reference in this Agreement to this transfer shall be construed
accordingly. In addition, by the Closing Date, the Depositor shall cause the
Credit Enhancer to deliver the Policy to the Indenture Trustee for the benefit
of the Noteholders.
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(b) Reserved.
(c) Additional Balances; Future Fundings. Additional Balances shall be
part of the Asset Balance and are hereby transferred to the Trust on the Closing
Date pursuant to this Section 2.01, and therefore are part of the Trust
property. Neither the Owner Trustee nor the Trust nor the Indenture Trustee
assumes the obligation under any Credit Line Agreement that provides for the
funding of future advances to the mortgagor under it, and neither the Trust nor
the Owner Trustee nor the Indenture Trustee may fund these future advances.
(d) Delayed Delivery. In connection with the transfer under Section
2.01(a) by the Depositor, the Depositor shall effect delivery of the Mortgage
Loan Schedule to the Trust and the Indenture Trustee by the Closing Date and
delivery of the Mortgage Files to the Trust, and the Trust shall deliver them to
the Indenture Trustee,
(i) no later than the Closing Date, with respect to no less than 50%
of the Mortgage Loans in each Loan Group,
(ii) no later than the twentieth day after the Closing Date, with
respect to no less than 40% of the Mortgage Loans in each Loan Group in
addition to those delivered on the Closing Date, and
(iii) within thirty days following the Closing Date, with respect to
the remaining Mortgage Loans.
In lieu of delivery of original documentation, the Depositor may deliver
documents that have been imaged optically on delivery of an opinion of counsel
to the Indenture Trustee and the Credit Enhancer that the imaged documents are
enforceable to the same extent as the originals and do not impair the
enforceability of the transfer to the Trust of the Mortgage Loans, if the
retention of the imaged documents in the delivered format will not result in a
reduction in the then current rating of the Notes without regard to the Policy.
(e) ▇▇▇▇ Records. The Sponsor hereby confirms to the Owner Trustee and the
Indenture Trustee, on behalf of itself and any other Seller, that each Seller
has caused the portions of the Electronic Ledgers relating to the Mortgage Loans
to be clearly and unambiguously marked, and has made the appropriate entries in
its general accounting records, to indicate that the Mortgage Loans have been
transferred to the Trust at the direction of the Depositor. The Master Servicer
hereby confirms to the Owner Trustee and the Indenture Trustee that it has
clearly and unambiguously made appropriate entries in its general accounting
records indicating that those Mortgage Loans constitute part of the Trust and
are serviced by it on behalf of the Trust in accordance with this Agreement.
(f) UCC Filings. The Depositor and the Trust agree (subject to Section
2.01(h)) to effect any actions and execute any documents necessary to perfect
and protect the Trust's, the Indenture Trustee's, the Noteholders', and the
Credit Enhancer's interests in each Cut-off Date Asset Balance and Additional
Balances and their proceeds, including filing all necessary Continuation
Statements for the UCC1 Financing Statements filed in the State of Delaware
(which shall have been filed by the Closing Date) describing the Cut-off Date
Asset Balances and Additional Balances and naming the Depositor as debtor and
the Trust as secured party or
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naming the Trust as debtor and the Indenture Trustee as secured party and any
amendments to UCC1 Financing Statements required to reflect a change in the UCC
or in the name or organizational structure of the Depositor or the Trust or the
filing of any additional UCC1 Financing Statements due to the change in the
state of organization of the Depositor or the Trust (within 30 days of any event
necessitating the filing).
(g) Sponsor Rating Downgrade. If the long term senior unsecured corporate
debt rating of Countrywide Home Loans, Inc. falls below "BBB" by Standard &
Poor's or "Baa2" by ▇▇▇▇▇'▇, as promptly as practicable but in any case within
90 days of the event, the Master Servicer shall, at its expense, either
(x)request that the Indenture Trustee deliver to it the original
Assignment of Mortgage previously delivered to the Indenture Trustee
pursuant to Section 2.01(d) and then record the Assignment of Mortgage in
favor of the Indenture Trustee (which may be a blanket assignment if
permitted by applicable law) in the appropriate real property or other
records,
(y)deliver to the Indenture Trustee an Opinion of Counsel addressed
to the Indenture Trustee and the Credit Enhancer to the effect that
recording is not required to protect the Indenture Trustee's interest in
the related Mortgage Loan or, in case a court should recharacterize the
sale of the Mortgage Loans as a financing, to perfect a first priority
Security Interest in favor of the Indenture Trustee in the related
Mortgage Loan, which Opinion of Counsel also shall be reasonably
acceptable to each of the Rating Agencies (as evidenced in writing) and
the Credit Enhancer, or
(z)cause the MERS(R) System to indicate (and provide evidence to the
Indenture Trustee that it has done so) that the Mortgage Loans have been
assigned by the Trust to the Indenture Trustee in accordance with this
Agreement for the benefit of the Noteholders and the Credit Enhancer by
including (or deleting, in the case of Mortgage Loans that are repurchased
in accordance with this Agreement) in the MERS computer files (a) the
appropriate code that identifies the Indenture Trustee in the field for
identifying the assignee and (b) the appropriate code that has been
assigned to identify the Notes to the MERS(R) System in the field "Pool
Field" identifying the Notes issued in connection with the Mortgage Loans.
(h) Sale Treatment. Notwithstanding the characterization of the Notes as
debt of the Transferor for federal, state, and local income and franchise tax
purposes, the transfer of the Mortgage Loans is a sale by each Seller to the
Depositor and by the Depositor to the Trust of all of each Seller's and then all
the Depositor's interest in the Mortgage Loans and other property described
above. From the time the Notes are issued until such time as all or a portion of
the Notes are sold to one or more unaffiliated parties, each Seller will report
the transfer of the Mortgage Loans and the related Additional Balances to the
Depositor as a transfer of assets in exchange for beneficial interests in the
form of asset-backed securities and servicing rights. If the transfer were to be
characterized as a transfer for security and not as a sale, however, then the
Depositor hereby grants to the Trust a Security Interest in all of the
Depositor's right, title,
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and interest in the Mortgage Loans whether existing now or in the future, all
monies due or to become due on the Mortgage Loans, and all their proceeds; and
this Agreement shall constitute a Security Agreement under applicable law.
Section 2.02. Acceptance by Indenture Trustee.
(a) On the Closing Date, the Custodian shall execute and deliver to the
Depositor, the Master Servicer, and the Sponsor (with a copy to the Credit
Enhancer) the Initial Certification pursuant to the Custodial Agreement. If
Mortgage Loans have been delivered after the Closing Date pursuant to Section
2.01(e), the Custodian shall execute and deliver to the Depositor, the Master
Servicer, and the Sponsor (with a copy to the Credit Enhancer) a Delay Delivery
Certification pursuant to the Custodial Agreement within the period specified in
the Custodial Agreement. Within 180 days after the Closing Date, Custodian shall
deliver to the Depositor, the Master Servicer, and the Sponsor (with a copy to
the Credit Enhancer) a Final Certification pursuant to the Custodial Agreement.
The Sponsor shall correct any defect noted in the Final Certification within 90
days of its receipt.
(b) Upon the satisfaction of the requirements of Section 2.07, all
interest of the Trust in a Mortgage Loan shall automatically be retransferred
without recourse, representation, or warranty to the Sponsor and the Asset
Balance of the Mortgage Loan shall be deducted from the Loan Group Balance of
the related Loan Group, if
(i) the Indenture Trustee does not receive the Mortgage File for any
Mortgage Loan as required by Section 2.01(d),
(ii) the time to correct any defect in the Mortgage Loan noted on the
Final Certification has expired,
(iii) the Trust ever incurs any loss on the Mortgage Loan because any
document in its Mortgage File is defective, or
(iv) an Assignment of Mortgage to the Indenture Trustee has not been
recorded in accordance with Section 2.01(g) and the Mortgage Loan is not
registered on the MERS(R) System.
Subject to the prior satisfaction of the requirements of Section 2.07,the
Owner Trustee shall execute any documents of transfer presented by the Sponsor,
without recourse, representation, or warranty, and take any other actions
reasonably requested by the Sponsor to effect the transfer by the Trust of the
Defective Mortgage Loan pursuant to this Section as promptly as practical.
The sole remedy of the Noteholders, the Transferor, the Owner Trustee, the
Indenture Trustee, and the Credit Enhancer against the Sponsor for the transfer
of a Defective Mortgage Loan to the Trust is the Sponsor's obligation to accept
a transfer of a Defective Mortgage Loan and to convey an Eligible Substitute
Mortgage Loan or to make a deposit of any Transfer Deposit Amount into the
Collection Account in accordance with Section 2.07.
Promptly following the transfer of any Defective Mortgage Loan from the
Trust pursuant to this Section or Section 2.07, the Master Servicer shall amend
the Mortgage Loan
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Schedule, deliver the amended Mortgage Loan Schedule to the Indenture Trustee,
and make appropriate entries in its general account records to reflect the
transfer. Following the retransfer, the Master Servicer shall appropriately
▇▇▇▇ its records to indicate that it is no longer servicing the Mortgage Loan
on behalf of the Trust. The Sponsor shall appropriately ▇▇▇▇ its Electronic
Ledger and make appropriate entries in its general account records to reflect
the transfer promptly following the transfer.
(c) The Sponsor shall deliver to the Indenture Trustee any documents
required to be held by the Indenture Trustee in accordance with Section 2.01
with respect to any Eligible Substitute Mortgage Loans. The Master Servicer
shall determine the Transfer Deposit Amount in any Collection Period during
which the Sponsor substitutes Eligible Substitute Mortgage Loans and the Sponsor
shall deposit that amount in the Collection Account at the time of substitution.
All amounts received on the Eligible Substitute Mortgage Loans during the
Collection Period in which the circumstances giving rise to their transfer to
the Trust occur shall not be a part of the Trust and shall not be deposited by
the Master Servicer in the Collection Account. All amounts received on a removed
Defective Mortgage Loan during the Collection Period in which the circumstances
giving rise to its transfer to the Trust occur shall be a part of the Trust and
shall be deposited by the Master Servicer in the Collection Account. An Eligible
Substitute Mortgage Loan will be subject to the terms of this Agreement in all
respects when transferred to the Trust, and the Sponsor hereby makes the
representations, warranties, and covenants in Section 2.04 with respect to the
Eligible Substitute Mortgage Loan as of the date of substitution.
(d) The Custodian shall retain possession of each Mortgage File on behalf
of the Indenture Trustee in accordance with the Custodial Agreement. The Master
Servicer shall promptly deliver to the Indenture Trustee the originals of any
other documents constituting the Mortgage File coming into its possession on
their execution or receipt. Any documents to be delivered to the Indenture
Trustee under this Agreement may be delivered to the Custodian acting on behalf
of the Indenture Trustee.
(e) If (x) the credit ratings of the Sponsor are reduced to below "Baa1"
by ▇▇▇▇▇'▇ or "BBB+" by Standard & Poor's (a "Stamping Trigger Event") and (y)
the Credit Enhancer so instructs the Sponsor, the Indenture Trustee, and the
Custodian in writing, the Sponsor shall cause the Custodian, within 30 days of
such written instruction by the Credit Enhancer, to stamp on the blank
endorsement on each loan agreement the following: "JPMorgan Chase Bank, as
Indenture Trustee for the CWHEQ Revolving Home Equity Loan Trust, Series
2005-C." After the occurrence a Stamping Trigger Event and after the earlier of
(i) receipt of confirmation from the Sponsor that the endorsements have been
completed by the Custodian as outlined above and (ii) 60 days after the Credit
Enhancer instructs the Custodian to stamp the loan agreements in accordance with
this Section 2.02(e), the Credit Enhancer shall have the right to inspect the
loan agreements upon 5 day's written notice to the Custodian, the Indenture
Trustee and the Sponsor. If the Custodian fails to stamp the loan agreements in
accordance with the requirements of this Section 2.02(e), the Custodian will
make the Mortgage Loans available for stamping by the Credit Enhancer or its
agent under the supervision (but not the direction) of the Custodian. All costs
in connection with any stamping in accordance with this Section 2.02(e) shall be
at the
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sole expense of the Credit Enhancer and shall not be charged to the
Sponsor, the Trust or the Custodian. If a Mortgage Loan is released from the
lien of the Indenture in accordance with the terms thereof the stamping shall be
removed from the related loan agreement at the sole expense of the Credit
Enhancer.
Section 2.03. Representations, Warranties, and Covenants Regarding the
Master Servicer.
The Master Servicer represents and warrants to the Indenture Trustee and
the Credit Enhancer that as of the Closing Date:
(i) The Master Servicer is a New York corporation, validly existing
and in good standing under the laws of the State of New York, and has the
corporate power to own its assets and to transact the business in which it
is currently engaged. The Master Servicer is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in
which the character of its business or any properties owned or leased by
it requires such qualification and in which the failure so to qualify
would have a material adverse effect on the business, properties, assets,
or condition (financial or other) of the Master Servicer.
(ii) The Master Servicer has the power and authority to make,
execute, deliver, and perform this Agreement and all of the transactions
contemplated under this Agreement, and has taken all necessary corporate
action to authorize the execution, delivery, and performance of this
Agreement. When executed and delivered, this Agreement will constitute a
valid and legally binding obligation of the Master Servicer enforceable in
accordance with its terms.
(iii) The Master Servicer is not required to obtain the consent of
any other party or any consent, license, approval or authorization from,
or registration or declaration with, any governmental authority, bureau,
or agency in connection with the execution, delivery, performance,
validity, or enforceability of this Agreement, except for consents,
licenses, approvals or authorizations, or registrations or declarations
that have been obtained or filed, as the case may be, before the Closing
Date.
(iv) The execution, delivery, and performance of this Agreement by
the Master Servicer will not violate any existing law or regulation or any
order or decree of any court applicable to the Master Servicer or the
certificate of incorporation or bylaws of the Master Servicer, or
constitute a material breach of any mortgage, indenture, contract, or
other agreement to which the Master Servicer is a party or by which the
Master Servicer may be bound.
(v) No litigation or administrative proceeding of or before any
court, tribunal, or governmental body is currently pending, or to the
knowledge of the Master Servicer threatened, against the Master Servicer
or any of its properties or with respect to this Agreement, the Indenture,
or the Notes that in the opinion of the Master Servicer has a reasonable
likelihood of resulting in a material adverse effect on the transactions
contemplated by the Transaction Documents.
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(vi) If any Mortgage Loan has been registered on the MERS(R) System,
the Master Servicer is a member of MERS in good standing.
The Master Servicer covenants that it will fully furnish, in accordance
with the Fair Credit Reporting Act and its implementing regulations, accurate
and complete information (i.e., favorable and unfavorable) on its credit files
for the related Mortgagor for each Mortgage Loan to Equifax, Experian, and Trans
Union Credit Information Company on a monthly basis.
The representations, warranties, and covenants in this Section shall
survive the transfer of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representation, warranty, or covenant that materially and
adversely affects the interests of the Transferor, the Noteholders, or the
Credit Enhancer, the person discovering the breach shall give prompt notice to
the other parties and to the Credit Enhancer. The Master Servicer shall cure in
all material respects any breach of any representation, warranty, or covenant
within 90 days of becoming aware of it or, with the consent of a Responsible
Officer of the Indenture Trustee, any longer period specified in the consent.
Section 2.04. Representations and Warranties Regarding the Mortgage Loans;
Retransfer of Certain Mortgage Loans.
(a) The Sponsor by this reference repeats and incorporates in this
Agreement each representation and warranty made by it (as a Seller) in Section
3.02(a) of the Purchase Agreement (other than Section 3.02(a)(1) and (2)) to the
Indenture Trustee, the Trust, and the Credit Enhancer and, in addition,
represents and warrants to the Indenture Trustee, the Trust, and the Credit
Enhancer that as of the Cut-off Date, unless specifically stated otherwise:
(i) As of the Closing Date (or, with respect to any Eligible
Substitute Mortgage Loan, the applicable date of substitution) this
Agreement constitutes a valid and legally binding obligation of the
Sponsor, enforceable against the Sponsor in accordance with its terms.
(ii) As of the Closing Date (or, with respect to any Eligible
Substitute Mortgage Loan, the applicable date of substitution), either
(A) the Purchase Agreement constitutes a valid transfer to the
Depositor of all right, title, and interest of the Sellers in the
Mortgage Loans, all collections received from the Mortgage Loans after
the Cut-off Date (excluding payments due by the Cut-off Date), all
proceeds of the Mortgage Loans, and any funds from time to time
deposited in the Collection Account and in the Payment Account and all
other property specified in Section 2.01(a) or (b), as applicable, and
this Agreement constitutes a valid transfer to the Trust of the
foregoing property such that, on execution of this Agreement, it is
owned by the Trust free of all liens and other encumbrances, and is
part of the corpus of the Trust conveyed to the Trust by the
Depositor, and upon payment for the Additional Balances, the Purchase
Agreement and this Agreement will constitute a valid transfer to the
Trust of all right, title, and interest of the Sellers in the
Additional Balances, all monies due or to become due on them, all
proceeds of the Additional Balances, and all other property specified
in
9
Section 2.01(a) relating to the Additional Balances free of all liens
and other encumbrances, or
(B) the Purchase Agreement or this Agreement, as appropriate,
constitutes a Grant of a Security Interest to the Owner Trustee on
behalf of the Trust in the property described in clause (A) above and
the Indenture constitutes a Grant of a Security Interest to the
Indenture Trustee in the Collateral. The Indenture Trustee has a first
priority perfected Security Interest in the Collateral, subject to the
effect of Section 9-315 of the UCC with respect to collections on the
Mortgage Loans that are deposited in the Collection Account in
accordance with the next to last paragraph of Section 3.02(b), and if
this Agreement constitutes the Grant of a Security Interest in the
property described in clause (A) above to the Trust, the Trust has a
first priority perfected Security Interest in the property, subject to
the same limitations. This Security Interest is enforceable as such
against creditors of and purchasers from the Trust, the Depositor, and
each Seller.
(b) If the substance of any representation and warranty in this Section
made to the best of the Sponsor's knowledge or as to which the Sponsor has no
knowledge is inaccurate and the inaccuracy materially and adversely affects the
interest of the Trust, the Noteholders, or the Credit Enhancer in the related
Mortgage Loan then, notwithstanding that the Sponsor did not know the substance
of the representation and warranty was inaccurate at the time the representation
or warranty was made, the inaccuracy shall be a breach of the applicable
representation or warranty.
(c) The representations and warranties in this Section shall survive the
transfer and assignment of the Mortgage Loans to the Issuer and the delivery of
the respective Mortgage Files to the Custodian pursuant to the Custodial
Agreement and the termination of the rights and obligations of the Master
Servicer pursuant to Section 5.04 or 6.02. If the Sponsor, the Depositor, the
Master Servicer, the Credit Enhancer, or a Responsible Officer of the Indenture
Trustee discovers a breach of any of the foregoing representations and
warranties, without regard to any limitation concerning the knowledge of the
Sponsor, that materially and adversely affects the interests of the Trust, the
Indenture Trustee under the Indenture, the Noteholders, or the Credit Enhancer
in the Mortgage Loan, the party discovering the breach shall give prompt notice
to the other parties and the Credit Enhancer.
(d) The Sponsor shall use all reasonable efforts to cure in all material
respects any breach (other than a breach of the representation and warranty in
Section 2.04 by virtue of the repetition of Section 3.02(a)(5) of the Purchase
Agreement) within 90 days of becoming aware of it or, not later than the
Business Day before the Payment Date in the month following the Collection
Period in which the cure period expired (or any later date that the Indenture
Trustee and the Credit Enhancer consent to), all interest of the Trust in the
Defective Mortgage Loan shall, subject to the satisfaction of the requirements
of Section 2.07, automatically be retransferred without recourse,
representation, or warranty to the Sponsor and the Asset Balance of the Mortgage
Loan shall be deducted from the Loan Balance.
10
The cure for any breach of a representation and warranty relating to the
characteristics of the Mortgage Loans in the related Loan Group in the aggregate
shall be a repurchase of or substitution for only the Mortgage Loans necessary
to cause the characteristics to comply with the related representation and
warranty.
Subject to the prior satisfaction of the requirements of Section 2.07, the
Owner Trustee shall execute any documents of transfer presented by the Sponsor,
without recourse, representation, or warranty, and take any other actions
reasonably requested by the Sponsor to effect the transfer by the Trust of the
Defective Mortgage Loan pursuant to this Section as promptly as practical.
Promptly following the transfer of any Defective Mortgage Loan from the
Trust pursuant to this Section, the Master Servicer shall amend the Mortgage
Loan Schedule, deliver the amended Mortgage Loan Schedule to the Indenture
Trustee, and make appropriate entries in its general account records to reflect
the transfer. Following the retransfer, the Master Servicer shall appropriately
▇▇▇▇ its records to indicate that it is no longer servicing the Mortgage Loan on
behalf of the Trust. The Sponsor shall appropriately ▇▇▇▇ its Electronic Ledger
and make appropriate entries in its general account records to reflect the
transfer promptly following the transfer.
(e) The sole remedy of the Noteholders, the Indenture Trustee on behalf of
Noteholders, the Owner Trustee, and the Credit Enhancer against the Sponsor for
the breach of a representation or warranty other than the representation and
warranty in Section 2.04(a) by virtue of the repetition of Section 3.02(a)(5) of
the Purchase Agreement) is the Sponsor's obligation to accept a transfer of a
Mortgage Loan as to which a breach has occurred and is continuing and to make
any required deposit in the Collection Account or to substitute an Eligible
Substitute Mortgage Loan.
(f) If the representation and warranty in Section 2.04(a) by virtue of the
repetition of Section 3.02(a)(5) of the Purchase Agreement is breached, the
transfer of the affected Mortgage Loans to the Trust shall be void and the
Sponsor shall pay to the Trust the sum of (i) the amount of the related Asset
Balances, plus accrued interest on each Asset Balance at the applicable Loan
Rate to the date of payment and (ii) the amount of any loss or expense incurred
by the Transferor, the Noteholders, the Trust, or the Credit Enhancer with
respect to the affected Mortgage Loans. The Indenture Trustee may enforce the
Sponsor's obligations under this Section in its own right or as the owner of the
Trust's right to seek enforcement as the assignee of the Trust's rights under
this Agreement pursuant to the Indenture.
(g) A breach of any one of the representations in Sections 3.02(a)(58) to
(65) of the Purchase Agreement will be considered to materially adversely affect
the interests of the Noteholders.
(h) The Sponsor shall defend and indemnify the Indenture Trustee, the
Owner Trustee, the Credit Enhancer, and the Noteholders against all reasonable
costs and expenses, and all losses, damages, claims, and liabilities, including
reasonable fees and expenses of counsel and the amount of any settlement entered
into with the consent of the Sponsor (this consent not to be unreasonably
withheld), that may be asserted against or incurred by any of
11
them as a result of any third-party action arising out of any breach of a
representation and warranty.
Section 2.05. Covenants of the Depositor.
The Depositor covenants that:
(a) Security Interests. Except for the transfer under this Agreement, the
Depositor will not transfer any Mortgage Loan to any other person, or create or
suffer to exist any Lien on any Mortgage Loan or any interest in one, whether
existing now or in the future; the Depositor will notify the Indenture Trustee
of the existence of any Lien on any Mortgage Loan immediately on its discovery;
and the Depositor will defend the right, title, and interest of the Trust in the
Mortgage Loans, whether existing now or in the future, against all claims of
third parties claiming through the Depositor. Nothing in this Section shall
prohibit the Depositor from suffering to exist on any Mortgage Loan any Liens
for municipal or other local taxes and other governmental charges if the taxes
or governmental charges are not due at the time or if the Depositor is
contesting their validity in good faith by appropriate proceedings and has set
aside on its books adequate reserves with respect to them.
(b) Negative Pledge. The Depositor shall not transfer or grant a Security
Interest in the Transferor Certificates except in accordance with Section 3.10
of the Trust Agreement.
(c) Additional Indebtedness. So long as the Notes are outstanding the
Depositor will not incur any debt other than debt that (i) is non-recourse to
the assets of the Depositor other than the mortgage loans specifically pledged
as security for the debt, (ii) is subordinated in right of payment to the rights
of the Noteholders, or (iii) is assigned a rating by each of the Rating Agencies
that is the same as the then current rating of the Notes.
(d) Downgrading. The Depositor will not engage in any activity that would
result in a downgrading of the Notes without regard to the Policy.
(e) Amendment to Certificate of Incorporation. The Depositor will not
amend its Certificate of Incorporation or state of incorporation without prior
notice to the Rating Agencies, the Indenture Trustee, and the Credit Enhancer.
Section 2.06. Transfers of Mortgage Loans at Election of Transferor.
Subject to the conditions below, the Transferor may require the transfer
of Mortgage Loans in a Loan Group from the Trust to the Transferor as of the
close of business on a Payment Date (the "Transfer Date"). In connection with
any transfer, the related Allocated Transferor Interest shall be reduced by the
aggregate Asset Balances as of their Transfer Date of the Mortgage Loans
transferred. On the fifth Business Day (the "Transfer Notice Date") before the
Transfer Date designated in the notice, the Transferor shall give the Owner
Trustee, the Indenture Trustee, the Master Servicer, and the Credit Enhancer a
notice of the proposed transfer that contains a list of the Mortgage Loans to be
transferred. These transfers of Mortgage Loans shall be permitted if the
following conditions are satisfied:
(i) No Rapid Amortization Event has occurred.
(ii) On the Transfer Date, the excess of that Adjusted Loan Group
Balance of that Loan Group over the Note Principal Balance of the related
Class of Notes (after
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giving effect to the removal of the Mortgage Loans proposed to be
transferred) exceeds the greater of the related Minimum Transferor
Interest and the related Required Transferor Subordinated Amount.
(iii) The transfer of any Mortgage Loans from either Loan Group on
any Transfer Date during the Managed Amortization Period shall not, in the
reasonable belief of the Transferor, cause a Rapid Amortization Event to
occur or an event that with notice or lapse of time or both would
constitute a Rapid Amortization Event.
(iv) By the Transfer Date, the Transferor shall have delivered to the
Indenture Trustee a revised Mortgage Loan Schedule, reflecting the
proposed transfer and the Transfer Date, and the Master Servicer shall
have marked the Electronic Ledger to show that the Mortgage Loans
transferred to the Transferor are no longer owned by the Trust.
(v) The Transferor shall represent and warrant that the Mortgage
Loans to be removed from the Trust were selected randomly.
(vi) In connection with each transfer of Mortgage Loans pursuant to
this Section, each Rating Agency and the Credit Enhancer shall have
received by the related Transfer Notice Date notice of the proposed
transfer of Mortgage Loans and, before the Transfer Date, each Rating
Agency shall have notified in writing the Transferor, the Indenture
Trustee, and the Credit Enhancer that the transfer of Mortgage Loans would
not result in a reduction or withdrawal of its then current rating of the
Notes without regard to the Policy.
(vii) The Transferor shall have delivered to the Owner Trustee, the
Indenture Trustee, and the Credit Enhancer an Officer's Certificate
certifying that the items in subparagraphs (i) through (vi), inclusive,
have been performed or are true, as the case may be. The Owner Trustee and
the Indenture Trustee may conclusively rely on the Officer's Certificate,
shall have no duty to make inquiries with regard to the matters in it, and
shall incur no liability in so relying.
Upon receiving the requisite information from the Transferor, the Master
Servicer shall perform in a timely manner those acts required of it, as
specified above. Upon satisfaction of the above conditions, on the Transfer Date
the Indenture Trustee shall effect delivery to the Transferor the Mortgage File
for each Mortgage Loan being so transferred, and the Indenture Trustee shall
execute and deliver to the Transferor any other documents prepared by the
Transferor reasonably necessary to transfer the Mortgage Loans to the
Transferor. This transfer of the Trust's interest in Mortgage Loans shall be
without recourse, representation, or warranty by the Indenture Trustee or the
Trust to the Transferor.
Section 2.07. Retransfers and Transfer Deficiencies.
(a) The Indenture Trustee shall determine if reducing the relevant Loan
Group Balance by the Asset Balance of any retransferred Mortgage Loan pursuant
to Section 2.02(b) or 2.04(d) would cause a Transfer Deficiency for the related
Loan Group. If so, the Indenture Trustee shall notify the Sponsor of the
deficiency, and the Sponsor shall transfer to the Trust
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within five Business Days Eligible Substitute Mortgage Loans or deposit into the
Collection Account an amount in immediately available funds equal to the amount
of the Transfer Deficiency reduced by the Asset Balance of any Eligible
Substitute Mortgage Loans transferred to the Trust (the "Transfer Deposit
Amount").
(b) The Sponsor shall deliver to the Indenture Trustee any documents
required to be held by the Indenture Trustee in accordance with Section 2.01
with respect to any Eligible Substitute Mortgage Loans.
(c) All amounts received on Eligible Substitute Mortgage Loans during the
Collection Period in which the circumstances giving rise to their transfer to
the Trust occur shall not be a part of the Trust and shall not be deposited by
the Master Servicer in the Collection Account.
All amounts received on a removed Defective Mortgage Loan during the
Collection Period in which the circumstances giving rise to its transfer to the
Trust occur shall be a part of the Trust and shall be deposited by the Master
Servicer in the Collection Account.
(d) An Eligible Substitute Mortgage Loan will be subject to the terms of
this Agreement in all respects when transferred to the Trust, and the Sponsor
hereby makes the representations, warranties, and covenants in Section 2.04 with
respect to the Eligible Substitute Mortgage Loan as of the date of its transfer
to the Trust.
(e) Promptly following the transfer of any Eligible Substitute Mortgage
Loan to the Trust pursuant to this Section, the Master Servicer shall amend the
Mortgage Loan Schedule, deliver the amended Mortgage Loan Schedule to the
Indenture Trustee, and make appropriate entries in its general account records
to reflect the transfer. The Sponsor shall appropriately ▇▇▇▇ its Electronic
Ledger and make appropriate entries in its general account records to reflect
the transfer promptly following the transfer.
Section 2.08. Tax Treatment.
The Depositor and the Transferor intend that the Notes will be
indebtedness of the Transferor for federal, state, and local income and
franchise tax purposes and for purposes of any other tax imposed on or measured
by income. The Transferor and the Depositor agree to treat the Notes for
purposes of federal, state, and local income or franchise taxes and any other
tax imposed on or measured by income, as indebtedness of the Transferor secured
by the assets of the Trust and to report the transactions contemplated by this
Agreement on all applicable tax returns in a manner consistent with this
treatment. The Administrator pursuant to the Administration Agreement will
prepare and file all tax reports required under this Agreement on behalf of the
Trust.
Section 2.09. Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Indenture Trustee on behalf
of the Noteholders and the Credit Enhancer as follows:
(i) This Agreement constitutes a valid and legally binding obligation
of the Depositor, enforceable against the Depositor in accordance with its
terms.
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(ii) Immediately before the sale and assignment by the Depositor to
the Trust of each Mortgage Loan, the Depositor was the sole beneficial
owner of each Mortgage Loan (insofar as the title was conveyed to it by
the Sellers) subject to no prior lien, claim, participation interest,
mortgage, Security Interest, pledge, charge, or other encumbrance or other
interest of any nature.
(iii) As of the Closing Date, the Depositor has transferred all
right, title, and interest in the Mortgage Loans to the Trust and, as of
each applicable date of substitution, the Depositor has transferred all
right, title, and interest in the Eligible Substitute Mortgage Loan to the
Trust.
(iv) The Depositor has not transferred the Mortgage Loans to the
Trust with any intent to hinder, delay, or defraud any of its creditors.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. The Master Servicer.
The Master Servicer shall service and administer the Mortgage Loans in a
manner consistent with the terms of this Agreement and with general industry
practice and shall have full power and authority, acting alone or through a
subservicer, (i) to execute and deliver, on behalf of the Noteholders, the
Trust, and the Indenture Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds, and (iv) to effectuate foreclosure or
other conversion of the ownership of the Mortgaged Property securing any
Mortgage Loan. The Master Servicer shall remain responsible to the parties to
this Agreement and the Credit Enhancer for its obligations under this Agreement.
Any amounts received by any subservicer on a Mortgage Loan shall be considered
to have been received by the Master Servicer whether or not actually received by
it. Without limiting the generality of the foregoing, the Master Servicer may
execute and deliver, on behalf of itself, the Noteholders, and the Indenture
Trustee, or any of them, any instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties, in
each case to the extent not inconsistent with this Agreement.
At the request of a Servicing Officer, the Indenture Trustee shall furnish
the Master Servicer with any powers of attorney and other documents appropriate
to enable the Master Servicer to carry out its servicing and administrative
duties under this Agreement. The Master Servicer in this capacity may also
consent to the placing of a lien senior to that of any mortgage on the related
Mortgaged Property, if
(i) the new senior lien secures a mortgage loan that refinances an
existing first mortgage loan and
(ii) either
15
(a) the Loan-to-Value Ratio of the new mortgage loan (without
taking into account any closing costs that may be financed by the
new mortgage loan) is equal to or less than the Loan-to-Value Ratio
of the first mortgage loan to be replaced (for purposes of
calculating the Loan-to-Value Ratio, the Valuation of the Mortgaged
Property will be measured by the lesser of (A) the Valuation of the
Mortgaged Property as of the Cut-off Date and (B) the Valuation of
the Mortgaged Property as of the date of the refinancing referenced
in clause (i)) or
(b) the Combined Loan-to-Value Ratio of the new mortgage loan
(without taking into account any closing costs that may be financed
by the new mortgage loan) and the existing Mortgage Loan is equal to
less than 70% (for purposes of calculating the Combined
Loan-to-Value Ratio, the Valuation of the Mortgaged Property will be
measured as the lesser of (A) the Valuation of the Mortgage Loan as
of the Cut-off Date and (B) the Valuation of the Mortgage Loan as of
the date of the refinancing referenced in clause (i)).
The aggregate Asset Balance of all the Mortgage Loans with respect to which the
senior lien may be so modified may not exceed 50% of the Original Note Principal
Balance.
The Master Servicer may also, without approval from the Rating Agencies or
the Credit Enhancer, increase the Credit Limits on Mortgage Loans if
(i) new appraisals are obtained and the weighted average Combined
Loan-to-Value Ratios of the Mortgage Loans after giving effect to the
increase are less than or equal to the weighted average Combined
Loan-to-Value Ratios of the Mortgage Loans as of the Cut-off Date and
(ii) the increases are consistent with the Master Servicer's
underwriting policies.
In addition, the Master Servicer may increase the Credit Limits on Mortgage
Loans having aggregate Asset Balances of up to an additional 5.0% of the
Original Note Principal Balance, if
(w) the increase does not cause the Combined Loan-to-Value
Ratio of the Mortgage Loans in the related Loan Group to exceed 80%,
(x) the increase in the Credit Limit of a Mortgage Loan does
not cause the Combined Loan-to-Value Ratio of the Mortgage Loan to
exceed 100%,
(y) the increase in the Credit Limit of a Mortgage Loan does
not cause the Combined Loan-to-Value Ratio of the Mortgage Loan to
increase by more than 25% (for example, a Combined Loan-to-Value
Ratio of 50% can be increased to 75%, a Combined Loan-to-Value Ratio
of 60% can be increased to 85%, and so forth), and
(z) the increase is consistent with the Master Servicer's
underwriting policies.
Furthermore, the Sponsor, without prior approval from the Rating Agencies
or the Credit Enhancer, may solicit mortgagors for a reduction in Loan Rates.
The Loan Rates of Mortgage Loans in a Loan Group having Asset Balances at the
time of the proposed
16
modification that aggregate over time not more than 5.0% of the related Original
Note Principal Balance may be subject to reduction. If a mortgagor notifies the
Sponsor or the Master Servicer that it wants a reduction in Loan Rate, the
Sponsor shall purchase the Mortgage Loan from the Trust as described below.
Effective immediately on the same Business Day on which the Sponsor delivers the
Purchase Price for the relevant Mortgage Loan to the Master Servicer, all
interest of the Trust in the relevant Mortgage Loan shall automatically be
transferred and assigned to the Sponsor and all benefits and burdens of
ownership of the relevant Mortgage Loan, including the right to accrued interest
on it from the date of purchase and the risk of default on the Mortgage Loan,
shall pass to the Sponsor.
The Master Servicer shall promptly deliver to the Indenture Trustee a
certification signed by a Servicing Officer to the effect that all of the
requirements for a purchase of a Mortgage Loan in connection with a request by a
mortgagor for a reduction in Loan Rate have been satisfied with respect to the
relevant Mortgage Loan. The Sponsor shall deliver the Purchase Price for the
relevant Mortgage Loan to the Master Servicer promptly after a mortgagor
notifies the Sponsor or the Master Servicer that it wants a reduction in Loan
Rate, and the Master Servicer shall deposit the Purchase Price for the modified
Mortgage Loan in the Collection Account pursuant to Section 3.02 within one
Business Day after its receipt of the Purchase Price for the modified Mortgage
Loan. Upon receipt by the Indenture Trustee of written notification of the
deposit signed by a Servicing Officer, the Indenture Trustee shall release to
the Sponsor the related Mortgage File and shall execute and deliver any
instruments of transfer or assignment delivered to it for execution and
reasonably acceptable to it, in each case without recourse, representation, or
warranty, necessary to release the Mortgage Loan from the lien of the Indenture
and vest in the Sponsor the Mortgage Loan previously transferred and assigned
pursuant to this provision. The certification and written notification of the
deposit each from a Servicing Officer may be delivered to the Indenture Trustee
electronically, and to the extent the transmission originates on its face from a
Servicing Officer, need not be manually signed.
In addition, the Master Servicer may agree to changes in the terms of a
Mortgage Loan at the request of the mortgagor if the changes (i) do not
materially and adversely affect the interests of Noteholders, the Transferor, or
the Credit Enhancer and (ii) are consistent with prudent and customary business
practice as evidenced by a certificate signed by a Servicing Officer delivered
to the Indenture Trustee and the Credit Enhancer.
In addition, the Master Servicer may solicit mortgagors to change any
other terms of the related Mortgage Loans if the changes (i) do not materially
and adversely affect the interests of the Noteholders, the Transferor, or the
Credit Enhancer and (ii) are consistent with prudent and customary business
practice as evidenced by a certificate signed by a Servicing Officer delivered
to the Indenture Trustee and the Credit Enhancer. Nothing in this Agreement
shall limit the right of the Master Servicer to solicit mortgagors with respect
to new loans (including mortgage loans) that are not Mortgage Loans.
The Master Servicer may register any Mortgage Loan on the MERS(R) System,
or cause the removal from registration of any Mortgage Loan on the MERS(R)
System, and execute and deliver, on behalf of the Owner Trustee, any instruments
of assignment and other comparable
17
instruments with respect to the assignment or re-recording of a mortgage in the
name of MERS, solely as nominee for the Owner Trustee and its successors and
assigns.
For so long as any Mortgage Loan is registered on the MERS(R) System, the
Master Servicer shall maintain in good standing its membership in MERS and shall
comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with
MERS. If any Mortgage Loans are registered on the MERS(R) System, the Master
Servicer may cause MERS to execute and deliver an assignment of mortgage in
recordable form to transfer any of the Mortgage Loans registered on the MERS(R)
System from MERS to the Owner Trustee. The Master Servicer shall promptly notify
MERS of any transfer of beneficial ownership or release of any Security Interest
in any MOM Loan.
The relationship of the Master Servicer to the Trust and the Indenture
Trustee under this Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer, partner, or agent of
the Trust or the Indenture Trustee.
(b) If the rights and obligations of the Master Servicer are terminated
under this Agreement, any successor to the Master Servicer in its sole
discretion may terminate the existing subservicer arrangements with any
subservicer or assume the terminated Master Servicer's rights under those
subservicing arrangements to the extent permitted by applicable law and the
subservicing agreements.
Section 3.02. Collection of Certain Mortgage Loan Payments; Establishment
of Accounts.
(a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the Mortgage Loans, and shall follow the collection
procedures it follows for mortgage loans in its servicing portfolio comparable
to the Mortgage Loans, to the extent consistent with this Agreement. Consistent
with the foregoing, and without limiting the generality of the foregoing, the
Master Servicer may in its discretion (i) waive any late payment charge or any
assumption fees or other fees that may be collected in the ordinary course of
servicing the Mortgage Loans and (ii) arrange with a mortgagor a schedule for
the payment of interest due and unpaid if the arrangement is consistent with the
Master Servicer's policies with respect to the mortgage loans it owns or
services. Notwithstanding any arrangement, the Mortgage Loans will be included
in the information regarding delinquent Mortgage Loans in the Servicing
Certificate and monthly statement to Noteholders pursuant to Section 7.04 of the
Indenture.
(b) The Master Servicer shall establish and maintain a trust account (the
"Collection Account") with the title specified in the Adoption Annex. The
Collection Account shall be an Eligible Account and will initially be
established by the Master Servicer at Treasury Bank, N.A., which is an affiliate
of the Master Servicer. The Master Servicer or the Sponsor, as the case may be,
shall deposit or cause to be deposited in the Collection Account within two
Business Days following its receipt the following payments and collections
received or made by it (without duplication):
(1) all collections on the Mortgage Loans;
18
(2) the amounts deposited to the Collection Account pursuant
to Section 4.03;
(3) Net Liquidation Proceeds net of any related Foreclosure
Profit;
(4) Insurance Proceeds; and
(5) any amounts required to be deposited pursuant to Section
7.01.
No other amounts are to be deposited to the Collection Account, including
amounts representing Foreclosure Profits, fees (including annual fees) or late
charge penalties payable by mortgagors, or amounts received by the Master
Servicer for the accounts of mortgagors for application towards the payment of
taxes, insurance premiums, assessments, excess pay off amounts, and similar
items. The Master Servicer shall remit all Foreclosure Profits to the Sponsor.
The Master Servicer may retain, from payments of interest on the Mortgage Loans
in each Loan Group in each Collection Period, the related Servicing Fee for the
Collection Period and any unreimbursed optional advance with respect to the
related Loan Group made by the Master Servicer pursuant to Section 4.03.
The Master Servicer may make a net deposit in the Collection Account of
the amounts required by this Section.
On the Business Day before each Payment Date to the extent on deposit in
the Collection Account, the Master Servicer shall withdraw from the Collection
Account and remit to the Indenture Trustee, the amount to be applied on that
Payment Date by the Indenture Trustee pursuant to Section 8.03 of the Indenture
with respect to both Loan Groups, and the Indenture Trustee will deposit that
amount in the Payment Account pursuant to the Indenture.
The Indenture Trustee shall hold amounts deposited in the Payment Account
as trustee for the Noteholders, the Transferor, and the Credit Enhancer. In
addition, the Master Servicer shall notify the Indenture Trustee and the Credit
Enhancer on each Determination Date of the amount of collections in the
Collection Account to be transferred to the Payment Account and their allocation
to Interest Collections and Principal Collections for the Mortgage Loans in each
Loan Group for the related Payment Date. Following this notification, the Master
Servicer may withdraw from the Collection Account and retain any amounts that
constitute income realized from the investment of the collections. The Master
Servicer will be entitled to receive, as additional servicing compensation,
income earned on the collections in the Payment Account.
Amounts on deposit in the Collection Account will be invested in Eligible
Investments maturing no later than the day before the next Payment Date at the
direction of the Master Servicer. All income realized from any investment in
Eligible Investments of funds in the Collection Account shall be the property of
the Master Servicer and may be withdrawn from time to time from the Collection
Account. Any losses incurred on these investments that reduce their principal
amount shall be deposited in the Collection Account by the Master Servicer out
of its own funds immediately as realized.
Section 3.03. Deposits to Payment Account.
The Master Servicer shall
19
(i) on the Business Day before each of the first three Payment Dates,
deposit in the Payment Account any shortfall in the amount required to pay
the Note Interest on those Payment Dates for each Class of Notes resulting
solely from the failure of any Mortgage Loans to be fully indexed and
(ii) on the Business Day before the first Payment Date, deposit in
the Payment Account for each Loan Group any amounts representing payments
on, and any collections in respect of, the Mortgage Loans in each Loan
Group received after the Cut-off Date and before the Closing Date
(exclusive of payments of accrued interest due by the Cut-off Date).
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses.
The Master Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance naming the Master Servicer or the related subservicer as loss
payee under it providing extended coverage in an amount that is at least equal
to the lesser of (i) the maximum insurable value of the improvements securing
the Mortgage Loan from time to time or (ii) the combined principal balance owing
on the Mortgage Loan and any mortgage loan senior to the Mortgage Loan from time
to time. The Master Servicer shall also maintain on property acquired through
foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements that are a part of the
property or (ii) the combined principal balance owing on the Mortgage Loan and
any mortgage loan senior to the Mortgage Loan at the time of the foreclosure or
deed in lieu of foreclosure plus accrued interest and the good-faith estimate of
the Master Servicer of related Liquidation Expenses to be incurred.
Amounts collected by the Master Servicer under these policies shall be
deposited in the Collection Account to the extent called for by Section 3.02.
The hazard insurance to be maintained for the related Mortgage Loan shall
include flood insurance when the Mortgaged Property is located in a federally
designated flood area. The flood insurance shall be in the amount required under
applicable guidelines of the Federal Flood Emergency Act. No other insurance
need be carried on any Mortgaged Properties pursuant to this Agreement.
Section 3.05. Assumption and Modification Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
mortgagor, the Master Servicer shall exercise its right to accelerate the
maturity of the Mortgage Loan consistent with the then current practice of the
Master Servicer and without regard to the inclusion of the Mortgage Loan in the
Trust. If it elects not to enforce its right to accelerate or if it is prevented
from doing so by applicable law, the Master Servicer (so long as its action
conforms with the underwriting standards generally acceptable in the industry at
the time for new origination) may enter into an assumption and modification
agreement with the person to whom the Mortgaged Property has been or is about to
be conveyed, pursuant to which that person becomes liable under the Credit Line
Agreement and, to the extent permitted by applicable law, the mortgagor remains
liable on it. The Master Servicer shall notify the Indenture Trustee that any
assumption and modification agreement has been completed by delivering to the
Indenture Trustee an Officer's Certificate certifying that the agreement is in
compliance with this Section and by forwarding the original copy of the
assumption and
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modification agreement to the Indenture Trustee. Any assumption and modification
agreement shall be a part of the related Mortgage File. No change in the terms
of the related Credit Line Agreement may be made by the Master Servicer in
connection with the assumption to the extent that the change would not be
permitted to be made in the original Credit Line Agreement pursuant to Section
3.01(a). Any fee collected by the Master Servicer for entering into the
assumption and modification agreement will be retained by the Master Servicer as
additional servicing compensation.
Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans.
The Master Servicer shall foreclose or otherwise comparably convert to
ownership Mortgaged Properties securing defaulted Mortgage Loans when, in the
opinion of the Master Servicer based on normal and usual practices and
procedures, no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.02. Alternatively, the Master Servicer
may forego foreclosure and charge off a defaulted Mortgage Loan if in the Master
Servicer's opinion the proceeds of foreclosure and liquidation are likely to
produce an amount less than the unpaid principal balance of senior liens on the
Mortgaged Property. If the Master Servicer has actual knowledge or reasonably
believes that any Mortgaged Property is affected by hazardous or toxic wastes or
substances and that the acquisition of the Mortgaged Property would not be
commercially reasonable, then the Master Servicer will not cause the Trust to
acquire title to the Mortgaged Property in a foreclosure or similar proceeding.
In connection with foreclosure or other conversion (or a decision to forego
foreclosure and charge off a defaulted Mortgage Loan), the Master Servicer shall
follow the practices and procedures it deems appropriate and that are normal and
usual in its general mortgage servicing activities, including advancing funds to
correct a default on a related senior mortgage loan. However, the Master
Servicer shall not be required to expend its own funds in connection with any
foreclosure or towards the correction of any default on a related senior
mortgage loan or restoration of any property unless it determines, in its sole
discretion, that the expenditure will increase Net Liquidation Proceeds and the
Master Servicer acts in accordance with the servicing standards in this
Agreement.
If title to any Mortgaged Property is acquired in foreclosure or by deed
in lieu of foreclosure, the deed or certificate of sale shall be issued to the
Indenture Trustee, or to its nominee on behalf of Noteholders. The Master
Servicer shall dispose of the Mortgaged Property as soon as practicable in a
manner that maximizes its Liquidation Proceeds.
The Master Servicer, in its sole discretion, may purchase for its own
account from the Trust any Mortgage Loan that is 151 days or more delinquent.
The price for any Mortgage Loan purchased shall be 100% of its Asset Balance
plus accrued interest on it at the applicable Loan Rate from the date through
which interest was last paid by the related mortgagor to the first day of the
month in which the purchase price is to be distributed to the Noteholders. The
purchase price shall be deposited in the Collection Account. The Master Servicer
may only exercise this right on or before the penultimate day of the calendar
month in which the Mortgage Loan became 151 days delinquent. Any delinquent
Mortgage Loan that becomes current but
21
thereafter again becomes 151 days or more delinquent may be purchased by the
Master Servicer pursuant to this Section.
Upon receipt of a certificate from the Master Servicer in the form of
Exhibit C, the Indenture Trustee shall release to the Master Servicer the
related Mortgage File and shall execute and deliver any instruments of transfer
prepared by the Master Servicer, without recourse, necessary to vest in the
purchaser of the Mortgage Loan any Mortgage Loan released to it and the Master
Servicer shall succeed to all the Trust's interest in the Mortgage Loan and all
related security and documents. This assignment shall be an assignment outright
and not for security. The Master Servicer shall then own the Mortgage Loan, and
all security and documents, free of any further obligation to the Trust, the
Owner Trustee, the Indenture Trustee, the Credit Enhancer, the Transferor, or
the Noteholders with respect to it. The certification by the Master Servicer may
be delivered to the Indenture Trustee electronically, and if it is, its form may
differ from Exhibit C so long as it contains the information required by Exhibit
C (that is, the relevant loan number, at least one of the five reasons for
requesting file as found in Exhibit C, and the acknowledgment that the Mortgage
File will be held in accordance with this Agreement and will promptly be
returned to the Indenture Trustee when the need for it by the Master Servicer no
longer exists unless the Mortgage Loan has been liquidated or retransferred),
and to the extent the transmission originates on its face from a Servicing
Officer, need not be manually signed.
Section 3.07. Indenture Trustee to Cooperate.
By each Payment Date, the Master Servicer will notify the Indenture
Trustee whenever the Asset Balance of any Mortgage Loan has been paid in full
during the preceding Collection Period. A Servicing Officer shall certify that
the Mortgage Loan has been paid in full and that all amounts received in
connection with the payment that are required to be deposited in the Collection
Account pursuant to Section 3.02 have been so deposited or credited. Upon
payment in full pursuant to Section 3.01, the Master Servicer is authorized to
execute an instrument of satisfaction regarding the related mortgage, which
instrument of satisfaction shall be recorded by the Master Servicer if required
by applicable law and be delivered to the person entitled to it.
If the mortgage has been registered on the MERS(R) System, the Master
Servicer shall cause the removal of the mortgage from registration on the
MERS(R) System and execute and deliver, on behalf of the Indenture Trustee and
the Noteholders, any instruments of satisfaction or cancellation or of partial
or full release. No expenses incurred in connection with the instrument of
satisfaction or transfer shall be reimbursed from amounts deposited in the
Collection Account or the Payment Account.
As appropriate for the servicing or foreclosure of any Mortgage Loan, or
in connection with the payment in full of the Asset Balance of any Mortgage
Loan, upon request of the Master Servicer and delivery to the Indenture Trustee
of a Request for Release substantially in the form of Exhibit C signed by a
Servicing Officer, the Indenture Trustee shall release the related Mortgage File
to the Master Servicer and the Indenture Trustee shall execute any documents
provided by the Master Servicer necessary to the prosecution of any proceedings
or the taking of other servicing actions. The Request for Release by a Servicing
Officer may be delivered to the Indenture Trustee electronically, and if it is,
its form may differ from Exhibit C so long as it
22
contains the information required by Exhibit C (that is, the relevant loan
number, at least one of the five reasons for requesting file as found in Exhibit
C, and the acknowledgment that the Mortgage File will be held in accordance with
this Agreement and will promptly be returned to the Indenture Trustee when the
need for it by the Master Servicer no longer exists unless the Mortgage Loan has
been liquidated or retransferred), and to the extent the transmission originates
on its face from a Servicing Officer, need not be manually signed. The Master
Servicer shall return the Mortgage File to the Indenture Trustee when the need
for it by the Master Servicer no longer exists, unless the Mortgage Loan is
liquidated, in which case, upon receipt of a certificate of a Servicing Officer
similar to that specified above, the Request for Release shall be released by
the Indenture Trustee to the Master Servicer.
To facilitate the foreclosure of the mortgage securing any Mortgage Loan
that is in default following recordation of the assignments of mortgage in
accordance with this Agreement, if so requested by the Master Servicer, the
Indenture Trustee shall execute an appropriate assignment in the form provided
to the Indenture Trustee by the Master Servicer to assign the Mortgage Loan for
the purpose of collection to the Master Servicer or a subservicer. The
assignment shall unambiguously indicate that the assignment is for the purpose
of collection only. The Master Servicer will then bring all required actions in
its own name and otherwise enforce the terms of the Mortgage Loan and deposit
the Net Liquidation Proceeds, exclusive of Foreclosure Profits, in the
Collection Account. If all delinquent payments due under the Mortgage Loan are
paid by the mortgagor and any other defaults are cured, then the Master Servicer
shall promptly reassign the Mortgage Loan to the Indenture Trustee and return
the related Mortgage File to the place where it was being maintained.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Master Servicer.
The Master Servicer may retain the Servicing Fee pursuant to Section 3.02
as compensation for its services in servicing the Mortgage Loans. Moreover,
additional servicing compensation in the form of late payment charges or other
receipts not required to be deposited in the Collection Account (other than
Foreclosure Profits) shall be retained by the Master Servicer. The Master
Servicer must pay all expenses incurred by it in connection with its activities
under this Agreement (including payment of all other fees and expenses not
expressly stated under this Agreement to be for the account of another person)
and shall not be entitled to reimbursement under this Agreement except as
specifically provided in this Agreement. Liquidation Expenses are reimbursable
to the Master Servicer
FIRST, from related Liquidation Proceeds and
SECOND, from the Payment Account from funds attributable to the related
Loan Group pursuant to Section 8.03(a)(x) of the Indenture.
Section 3.09. Annual Statement as to Compliance.
(a) The Master Servicer will deliver to the Indenture Trustee, the Credit
Enhancer, and the Rating Agencies, by the date in each year specified in the
Adoption Annex, beginning on the date specified in the Adoption Annex, an
Officer's Certificate stating that (i) a review of the activities of the Master
Servicer during the preceding fiscal year (or the applicable shorter
23
period for the first report) and of its performance under this Agreement has
been made under the officer's supervision and (ii) to the best of the officer's
knowledge, based on the review, the Master Servicer has fulfilled all of its
material obligations under this Agreement throughout the fiscal year, or, if
there has been a default in the fulfillment of those obligations, specifying
each default known to the officer and its nature and status.
(b) Within five Business Days after obtaining knowledge of it, the Master
Servicer shall notify the Indenture Trustee, the Credit Enhancer, and each of
the Rating Agencies of any event that with the giving of notice or the lapse of
time would become an Event of Servicing Termination by delivering an Officer's
Certificate describing the event.
Section 3.10. Annual Servicing Report.
By the date in each year specified in the Adoption Annex, beginning on the
date specified in the Adoption Annex, the Master Servicer, at its expense, shall
cause a firm of nationally recognized independent public accountants (who may
also render other services to the Master Servicer) to furnish a report to the
Indenture Trustee, the Credit Enhancer, and each Rating Agency to the effect
that the firm has examined certain documents and records relating to the
servicing of mortgage loans during the most recent fiscal year then ended under
sale and servicing agreements or pooling and servicing agreements (substantially
similar to this Agreement, including this Agreement), that the examination was
conducted substantially in compliance with the audit guide for audits of
non-supervised mortgagees approved by the Department of Housing and Urban
Development for use by independent public accountants (to the extent that the
procedures in the audit guide are applicable to the servicing obligations in
those agreements), and that the examination has disclosed no items of
noncompliance with this Agreement that, in the opinion of the firm, are
material, except for the items of noncompliance described in the report.
Section 3.11. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
(a) The Master Servicer shall provide to the Indenture Trustee, the Credit
Enhancer, any Noteholders or Note Owners that are federally insured savings and
loan associations, the Office of Thrift Supervision, successor to the Federal
Home Loan Bank Board, the FDIC, and the supervisory agents and examiners of the
Office of Thrift Supervision access to the documentation regarding the Mortgage
Loans required by applicable regulations of the Office of Thrift Supervision and
the FDIC (acting as operator of the Savings Association Insurance Fund or the
Bank Insurance Fund). The Master Servicer will provide access without charge but
only after reasonable notice and during normal business hours at the offices of
the Master Servicer. Nothing in this Section shall derogate from the obligation
of the Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the mortgagors and the failure of the Master Servicer to
provide access as provided in this Section as a result of this obligation shall
not constitute a breach of this Section.
(b) The Master Servicer shall supply the information needed to make
required payments and to furnish required reports to Noteholders and to make any
claim under the Policy, in the form the Indenture Trustee reasonably requests,
to the Indenture Trustee and any Paying Agent by the start of the Determination
Date preceding the related Payment Date.
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Section 3.12. Maintenance of Certain Servicing Insurance Policies.
The Master Servicer shall during the term of its service as master
servicer maintain in force (i) policies of insurance covering errors and
omissions in the performance of its obligations as master servicer under this
Agreement and (ii) a fidelity bond covering its officers, employees, or agents.
Each policy and bond together shall comply with the requirements from time to
time of ▇▇▇▇▇▇ ▇▇▇ for persons performing servicing for mortgage loans purchased
by ▇▇▇▇▇▇ Mae.
Section 3.13. Reports to the Securities and Exchange Commission.
The Administrator shall, on behalf of the Trust, effect filing with the
Securities and Exchange Commission of any periodic reports required to be filed
under the Securities Exchange Act of 1934 and the rules and regulations of the
Securities and Exchange Commission under it. At the request of the
Administrator, each of the Sponsor, the Master Servicer, the Depositor, the
Indenture Trustee, and the Transferor shall cooperate with the Administrator in
the preparation of these reports and shall provide to the Indenture Trustee in a
timely manner all information or documentation the Indenture Trustee reasonably
requests in connection with the performance of its obligations under this
Section. The Master Servicer shall prepare, execute, and deliver all
certificates or other documents required to be delivered by the Trust pursuant
to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.
Section 3.14. Tax Treatment.
The Transferor shall treat the Mortgage Loans as its property for all
federal, state, or local tax purposes and shall report all income earned thereon
(including amounts payable as fees to the Master Servicer) as its income for
income tax purposes. The Master Servicer shall prepare all tax information
required by law to be distributed to Noteholders. The Master Servicer shall not
be liable for any liabilities, costs, or expenses of the Trust, the Noteholders,
the Transferor, or the Note Owners arising under any tax law, including federal,
state, or local income and franchise or excise taxes or any other tax imposed on
or measured by income (or any interest or penalty with respect to any tax or
arising from a failure to comply with any tax requirement).
Section 3.15. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
The Master Servicer shall prepare and deliver all federal and state
information reports when and as required by all applicable state and federal
income tax laws. In particular, with respect to the requirement under Section
6050J of the Code for reports of foreclosures and abandonments of any mortgaged
property, the Master Servicer shall file reports relating to each instance
occurring during the previous calendar year in which the Master Servicer (i) on
behalf of the Indenture Trustee acquires an interest in any Mortgaged Property
through foreclosure or other comparable conversion in full or partial
satisfaction of a Mortgage Loan, or (ii) knows or has reason to know that any
Mortgaged Property has been abandoned. The reports from the Master Servicer
shall be in form, substance, and timing sufficient to meet the reporting
requirements imposed by Section 6050J of the Code.
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ARTICLE IV
SERVICING CERTIFICATE
Section 4.01. Servicing Certificate.
Not later than each Determination Date, the Master Servicer shall deliver
(a) to the Indenture Trustee, the data necessary to prepare the items below and
the statement for Noteholders required to be prepared pursuant to Section 4.04
and (b) to the Indenture Trustee, the Owner Trustee, the Sponsor, the Depositor,
the Paying Agent, the Credit Enhancer, and each Rating Agency a Servicing
Certificate (in written form or the form of computer readable media or such
other form as may be agreed to by the Indenture Trustee and the Master
Servicer), together with an Officer's Certificate to the effect that the
Servicing Certificate is correct in all material respects, stating the related
Collection Period, Payment Date, the series number of the Notes, the date of
this Agreement, and:
(i) the aggregate amount of collections received on the Mortgage
Loans in each Loan Group by the Determination Date for the related
Collection Period;
(ii) the aggregate amount of (a) Interest Collections for each Loan
Group for the related Collection Period and (b) Principal Collections for
each Loan Group for the related Collection Period;
(iii) the Investor Floating Allocation Percentage and the Investor
Fixed Allocation Percentage for each Loan Group for the related Collection
Period;
(iv) the Investor Interest Collections and Investor Principal
Collections for each Loan Group for the related Collection Period; (v) the
Interest Collections that are not Investor Interest Collections and
Transferor Principal Collections for each Loan Group for the related
Collection Period;
(vi) the Note Interest and the applicable Note Rate for each Class of
Notes for the related Interest Period;
(vii) the amount of the Note Interest that is not payable to the
Holders of each Class of Notes because of insufficient Investor Interest
Collections for the related Loan Group;
(viii) the Unpaid Investor Interest Shortfall for each Class of Notes
and the amount of interest on the shortfall at the applicable Note Rate
for each Class of Notes applicable from time to time (separately stated)
to be distributed on the related Payment Date;
(ix) the remaining Unpaid Investor Interest Shortfall for each Class
of Notes after the distribution on the related Payment Date;
(x) the amount of any Basis Risk Carryforward for each Class of Notes
in the distribution;
(xi) the amount of the remaining Basis Risk Carryforward for each
Class of Notes after giving effect to the related distribution;
26
(xii) the Accelerated Principal Payment Amount and the portion of it
that will be distributed pursuant to Section 8.03(a)(vii) of the Indenture
for each Loan Group;
(xiii) the Scheduled Principal Collections Payment Amount for each
Loan Group, separately stating its components;
(xiv) the amount of any Transfer Deposit Amount for each Loan Group
paid by the Sponsor or the Depositor pursuant to Section 2.07;
(xv) any accrued Servicing Fees for the Mortgage Loans in each Loan
Group for previous Collection Periods and the Servicing Fee for the
related Collection Period;
(xvi) the Investor Loss Amount for each Loan Group for the related
Collection Period;
(xvii) the aggregate amount of Investor Loss Reduction Amounts for
previous Payment Dates that have not been previously reimbursed to the
Holders of each Class of Notes pursuant to Section 8.03(a)(iv), Section
8.03(a)(viii), or Section 8.03(c) of the Indenture;
(xviii) the aggregate Asset Balance of the Mortgage Loans in each
Loan Group as of the end of the preceding Collection Period and as of the
end of the second preceding Collection Period;
(xix) [Deleted];
(xx) the Note Principal Balance for each Class of Notes and loan
factor after giving effect to the payment on each Class of Notes on the
related Payment Date and to any reduction because of the related Investor
Loss Amount;
(xxi) the Transferor Interest and the Available Transferor
Subordinated Amount for each Loan Group after giving effect to the
distribution on the Payment Date;
(xxii) the aggregate amount of Additional Balances created on the
Mortgage Loans in each Loan Group during the previous Collection Period;
(xxiii) for each Loan Group, the number and aggregate Asset Balances
of Mortgage Loans (x) as to which the Minimum Monthly Payment is
delinquent for 30-59 days, 60-89 days, and 90 or more days, respectively
and (y) that have become REO, in each case as of the end of the preceding
Collection Period;
(xxiv) whether a Rapid Amortization Event has occurred since the
prior Determination Date, specifying the Rapid Amortization Event if one
has occurred;
(xxv) whether an Event of Servicing Termination has occurred since
the prior Determination Date, specifying the Event of Servicing
Termination if one has occurred;
(xxvi) the amount to be distributed to the Credit Enhancer pursuant
to Section 8.03(a)(vi), Section 8.03(a)(ix), and Section 8.03(a)(xi) of
the Indenture, stated separately;
27
(xxvii) the Guaranteed Principal Payment Amount for each Class of
Notes for the Payment Date;
(xxviii) the Credit Enhancement Draw Amount for each Class of Notes
for the related Payment Date;
(xxix) the amount to be distributed on the Mortgage Loans in each
Loan Group to the Transferor pursuant to Section 8.03(a)(xiii) of the
Indenture;
(xxx) the amount to be paid to the Master Servicer pursuant to
Section 8.03(a)(x) of the Indenture;
(xxxi) the Maximum Rate for the related Collection Period and the
Weighted Average Net Loan Rate for the Mortgage Loans in each Loan Group;
(xxxii) the expected amount of any optional advances pursuant to
Section 4.03 by the Master Servicer on the Mortgage Loans in each Loan
Group included in the distribution on the related Payment Date and the
aggregate expected amount of optional advances pursuant to Section 4.03 by
the Master Servicer outstanding on the Mortgage Loans in each Loan Group
as of the close of business on the related Payment Date;
(xxxiii) the number and principal balances of any Mortgage Loans in
each Loan Group transferred to the Transferor pursuant to Section 2.06;
and
(xxxiv) in the Servicing Certificates for the first and second
Payment Dates, the number and Cut-off Date Asset Balance of Mortgage Loans
for each Loan Group for which the Mortgage Loan File was not delivered to
the Indenture Trustee within 30 days of the Closing Date.
The Indenture Trustee and the Owner Trustee shall conclusively rely on the
information in a Servicing Certificate for purposes of making distributions
pursuant to Section 8.03 of the Indenture or distributions on the Transferor
Certificates, shall have no duty to inquire into this information and shall have
no liability in so relying. The format and content of the Servicing Certificate
may be modified by the mutual agreement of the Master Servicer, the Indenture
Trustee, and the Credit Enhancer. The Master Servicer shall give notice of any
changes to the Rating Agencies.
Section 4.02. Acknowledgement and Cooperation.
The Depositor, the Master Servicer, and the Indenture Trustee acknowledge
that without the need for any further action on the part of the Credit Enhancer,
the Depositor, the Master Servicer, the Indenture Trustee, or the Note Registrar
(a) to the extent the Credit Enhancer makes payments, directly or indirectly, on
account of principal of or interest or other amounts on any Notes to the Holders
of the Notes, the Credit Enhancer will be fully subrogated to the rights of
these Holders to receive the principal and interest from the Trust and (b) the
Credit Enhancer shall be paid the principal and interest or other amounts but
only from the sources and in the manner provided in this Agreement for the
payment of the principal and interest or other amounts. The Indenture Trustee
and the Master Servicer shall cooperate in all respects with any reasonable
request by the Credit Enhancer for action to preserve or enforce the Credit
Enhancer's rights or interests under this Agreement and the Indenture without
28
limiting the rights or affecting the interests of the Holders as otherwise
stated in this Agreement and the Indenture.
Section 4.03. Optional Advances of the Master Servicer.
The Master Servicer, in its sole discretion, may advance the interest
component of any delinquent Minimum Monthly Payment (or any portion of it) by
depositing the amount into the Collection Account by the related Determination
Date.
Section 4.04. Statements to Noteholders.
Concurrently with each payment to Noteholders, the Master Servicer shall
deliver to the Indenture Trustee the data necessary to prepare a statement (the
"Monthly Statement") for each Payment Date with the following information with
respect to each Loan Group:
(i) the related Investor Floating Allocation Percentage for the
preceding Collection Period;
(ii) the aggregate amount to be paid to the related Class of
Noteholders;
(iii) the amount of Note Interest in the payment related to each
Class of Notes and the applicable Note Rate;
(iv) the amount of any related Unpaid Investor Interest Shortfall in
the payment;
(v) the amount of the remaining related Unpaid Investor Interest
Shortfall after giving effect to the payment;
(vi) the amount of principal in the payment, separately stating its
components;
(vii) the amount of the reimbursement of previous related Investor
Loss Amounts in the payment;
(viii) the amount of the aggregate of unreimbursed related Investor
Loss Reduction Amounts after giving effect to the payment;
(ix) the amount of any related Basis Risk Carryforward in the
payment;
(x) the amount of the remaining related Basis Risk Carryforward after
giving effect to the payment;
(xi) the Servicing Fee for the Payment Date;
(xii) the Note Principal Balance of the related Class of Notes and
the factor to seven decimal places obtained by dividing the Note Principal
Balance of the related Class of Notes for the Payment Date by the Original
Note Principal Balance of the related Class of Notes after giving effect
to the payment;
(xiii) the Loan Group Balance as of the end of the preceding
Collection Period;
(xiv) any Credit Enhancement Draw Amount for the related Class of
Notes;
29
(xv) the number and aggregate Asset Balances of Mortgage Loans in the
related Loan Group as to which the Minimum Monthly Payment is delinquent
for 30-59 days, 60-89 days, and 90 or more days, respectively, as of the
end of the preceding Collection Period;
(xvi) the book value (within the meaning of 12 C.F.R. ss. 571.13 or
comparable provision) of any real estate acquired through foreclosure or
grant of a deed in lieu of foreclosure for the related Loan Group;
(xvii) the amount of any optional advances on the Mortgage Loans in
the related Loan Group pursuant to Section 4.03 by the Master Servicer
included in the payment on the Payment Date and the aggregate amount of
optional advances pursuant to Section 4.03 on Mortgage Loans in the
related Loan Group by the Master Servicer outstanding as of the close of
business on the Payment Date;
(xviii) the Note Rate for the related Class of Notes for the Payment
Date;
(xix) the number and principal balances of any Mortgage Loans in that
Loan Group retransferred to the Transferor pursuant to each of Section
2.04 and Section 2.06;
(xx) the amount of Subordinated Transferor Collections for the
Mortgage Loans in that Loan Group included in the payment;
(xxi) the amount of Overcollateralization Step-Down Amount for that
Loan Group included in the payment;
(xxii) the Available Transferor Subordinated Amount for that Loan
Group and the Payment Date;
(xxiii) for the first Payment Date, the number and Cut-off Date Asset
Balance of Mortgage Loans in that Loan Group for which the Mortgage Loan
File was not delivered to the Indenture Trustee within 30 days of the
Closing Date;
(xxiv) the Adjusted Loan Group Balance of each Loan Group; and
(xxv) the OC Deficiency Amount for each Loan Group.
The amounts furnished pursuant to clauses (ii), (iii) (for Note Interest),
(iv), (v), (vi), (vii), and (viii) above shall be expressed as a dollar amount
per $1,000 increment of Notes.
If the Monthly Statement is not accessible to any of the Noteholders, the
Master Servicer, the Credit Enhancer, or either Rating Agency on the Indenture
Trustee's internet website, the Indenture Trustee shall forward a hard copy of
it to each Noteholder, the Master Servicer, the Credit Enhancer, and each Rating
Agency immediately after the Indenture Trustee becomes aware that the Monthly
Statement is not accessible to any of them via the Indenture Trustee's internet
website. The address of the Indenture Trustee's internet website where the
Monthly Statement will be accessible is ▇▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇. Assistance
in using the Indenture Trustee's internet website may be obtained by calling the
Indenture Trustee's customer service desk at (▇▇▇) ▇▇▇-▇▇▇▇. The Indenture
Trustee shall notify each Noteholder, the Master Servicer, the Credit Enhancer,
and each Rating Agency in writing of any change in
30
the address or means of access to the internet website where the Monthly
Statement is accessible.
Within 60 days after the end of each calendar year, the Master Servicer
shall prepare and forward to the Indenture Trustee the information in clauses
(iii) and (vi) above aggregated for the calendar year. This requirement of the
Master Servicer shall be satisfied if substantially comparable information is
provided by the Master Servicer or a Paying Agent pursuant to any requirements
of the Code.
The Indenture Trustee shall prepare (in a manner consistent with the
treatment of the Notes as indebtedness of the Transferor, or as may be otherwise
required by Section 3.14) Internal Revenue Service Form 1099 (or any successor
form) and any other tax forms required to be filed or furnished to Noteholders
for payments by the Indenture Trustee (or the Paying Agent) on the Notes and
shall file and distribute such forms as required by law.
ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01. Liability of the Sponsor, the Master Servicer, and the
Depositor.
The Sponsor, the Depositor, and the Master Servicer shall be liable only
for their express agreements under this Agreement.
Section 5.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Master Servicer or the Depositor.
Any corporation into which the Master Servicer or the Depositor may be
merged or consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Master Servicer or the Depositor is a
party, or any corporation succeeding to the business of the Master Servicer or
the Depositor, shall be the successor of the Master Servicer or the Depositor,
as the case may be, under this Agreement, without the execution or filing of any
paper or any further act on the part of any of the parties to this Agreement,
notwithstanding anything in this Agreement to the contrary.
Section 5.03. Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of its directors, officers, employees,
or agents is liable to the Trust, the Owner Trustee, the Transferor, or the
Noteholders for the Master Servicer's taking any action or refraining from
taking any action in good faith pursuant to this Agreement, or for errors in
judgment. This provision shall not protect the Master Servicer or any of its
directors, officers, employees, or agents against any liability that would
otherwise be imposed for misfeasance, bad faith, or gross negligence in the
performance of the duties of the Master Servicer or for reckless disregard of
the obligations of the Master Servicer. The Master Servicer and any of its
directors, officers, employees, or agents may rely in good faith on any document
of any kind prima facie properly executed and submitted by any person about
anything arising under this Agreement.
The Master Servicer and each of its directors, officers, employees, and
agents shall be indemnified by the Trust (but only from funds available from the
applicable Loan Group) and
31
held harmless against any loss, liability, or expense incurred in connection
with any legal action relating to this Agreement, the Transferor Certificates,
or the Notes, other than any loss, liability, or expense related to any specific
Mortgage Loan that is otherwise not reimbursable pursuant to this Agreement and
any loss, liability, or expense incurred due to its willful misfeasance, bad
faith, or gross negligence in the performance of duties under this Agreement or
due to its reckless disregard of its obligations under this Agreement.
The Master Servicer need not appear in, prosecute, or defend any legal
action that is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement, and that in its opinion may involve it in any
expense or liability. The Master Servicer may in its sole discretion undertake
any action that it deems appropriate with respect to this Agreement and the
interests of the Noteholders. If so, the reasonable legal expenses and costs of
the action and any resulting liability shall be expenses, costs, and liabilities
of the Trust, and the Master Servicer shall only be entitled to be reimbursed
pursuant to Section 8.03(a)(x) of the Indenture (but only from funds available
from the applicable Loan Group). The Master Servicer's right to indemnity or
reimbursement pursuant to this Section shall survive any resignation or
termination of the Master Servicer pursuant to Section 5.04 or 6.01 with respect
to any losses, expenses, costs, or liabilities arising before its resignation or
termination (or arising from events that occurred before its resignation or
termination).
Section 5.04. Master Servicer Not to Resign.
Subject to Section 5.02, the Master Servicer shall not resign as Master
Servicer under this Agreement except
(i) if the performance of its obligations under this Agreement are no
longer permissible under applicable law or due to applicable law are in
material conflict with any other activities carried on by it or its
subsidiaries or Affiliates that are of a type and nature carried on by the
Master Servicer or its subsidiaries or Affiliates at the date of this
Agreement or
(ii) if
(a) the Master Servicer has proposed a successor Master
Servicer to the Indenture Trustee and the proposed successor Master
Servicer is reasonably acceptable to the Indenture Trustee;
(b) each Rating Agency has delivered a letter to the Indenture
Trustee before the appointment of the successor Master Servicer
stating that the proposed appointment of the successor Master
Servicer as Master Servicer under this Agreement will not result in
the reduction or withdrawal of the then current rating of the Notes
without regard to the Policy; and
(c) the proposed successor Master Servicer is reasonably
acceptable to the Credit Enhancer in its sole discretion, as
evidenced by a letter to the Indenture Trustee.
No resignation by the Master Servicer shall become effective until the
Indenture Trustee or successor Master Servicer designated by the Master Servicer
has assumed the Master Servicer's obligations under this Agreement or the
Indenture Trustee has designated a successor
32
Master Servicer in accordance with Section 6.02. Any resignation shall not
relieve the Master Servicer of responsibility for any of the obligations
specified in Sections 6.01 and 6.02 as obligations that survive the resignation
or termination of the Master Servicer. Any determination permitting the
resignation of the Master Servicer pursuant to clause (i) above shall be
evidenced by an Opinion of Counsel to that effect delivered to the Indenture
Trustee and the Credit Enhancer. The Master Servicer shall have no claim
(whether by subrogation or otherwise) or other action against the Transferor,
any Noteholder, or the Credit Enhancer for any amounts paid by the Master
Servicer pursuant to any provision of this Agreement.
Section 5.05. Delegation of Duties.
In the ordinary course of business, the Master Servicer may delegate any
of its duties under this Agreement at any time to any person who agrees to act
in accordance with standards comparable to those with which the Master Servicer
complies pursuant to Section 3.01, including any of its Affiliates or any
subservicer referred to in Section 3.01. This delegation shall not relieve the
Master Servicer of its obligations under this Agreement and shall not constitute
a resignation within the meaning of Section 5.04.
Section 5.06. Indemnification by the Master Servicer.
The Master Servicer shall indemnify the Trust, the Owner Trustee, and the
Indenture Trustee against any loss, liability, expense, damage, or injury
suffered or sustained due to the Master Servicer's actions or omissions in
servicing or administering the Mortgage Loans that are not in accordance with
this Agreement, including any judgment, award, settlement, reasonable attorneys'
fees, and other costs or expenses incurred in connection with the defense of any
actual or threatened action, proceeding, or claim. This indemnification is not
payable from the assets of the Trust. This indemnity shall run directly to and
be enforceable by an injured party subject to any applicable limitations.
The Indenture Trustee and any director, officer, employee, or agent of the
Indenture Trustee shall be indemnified by the Master Servicer and held harmless
against any loss, liability or expense incurred in connection with any legal
action relating to this Agreement, the Indenture, the Custodial Agreement, the
Administration Agreement, the Notes, or the Transferor Certificates, or in
connection with the performance of any of the Indenture Trustee's duties
thereunder, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of any of the
Indenture Trustee's duties under this Agreement, the Indenture, or the Custodial
Agreement or by reason of reckless disregard of the Indenture Trustee's
obligations and duties under this Agreement.
The indemnity provisions of this Section shall survive the termination of
this Agreement or the resignation or removal of the Indenture Trustee under the
Indenture.
33
ARTICLE VI
SERVICING TERMINATION
Section 6.01. Events of Servicing Termination.
If any one of the following events ("Events of Servicing Termination")
shall occur and be continuing:
(i) any failure by the Master Servicer to deposit in the Collection
Account any deposit required to be made under this Agreement or to remit
to the Indenture Trustee amounts required to be deposited to the Payment
Account that continues unremedied either beyond the relevant Payment Date
or for five Business Days after the date when notice of the failure has
been given to the Master Servicer by the Indenture Trustee or to the
Master Servicer and the Indenture Trustee by the Credit Enhancer or
Holders of Notes representing not less than 25% of the Outstanding Amount
of both Classes of Notes; or
(ii) failure by the Master Servicer duly to observe or perform in any
material respect any other covenants or agreements of the Master Servicer
in the Notes or in this Agreement that materially and adversely affects
the interests of the Noteholders or the Credit Enhancer and continues
unremedied for 60 days after the date on which notice of the failure,
requiring it to be remedied, and stating that the notice is a "Notice of
Default" under this Agreement, has been given to the Master Servicer by
the Indenture Trustee or to the Master Servicer and the Indenture Trustee
by the Credit Enhancer or the Holders of Notes representing not less than
25% of the Outstanding Amount of both Classes of Notes; or
(iii) an Insolvency Event occurs with respect to the Master Servicer;
then, until the Event of Servicing Termination has been remedied by the Master
Servicer, either the Indenture Trustee (with the consent of the Credit
Enhancer), the Credit Enhancer, or the Holders of Notes representing not less
than 51% of the Outstanding Amount of both Classes of Notes with the consent of
the Credit Enhancer by notice then given to the Master Servicer (and to the
Indenture Trustee if given by the Credit Enhancer or the Holders of Notes) may
terminate all of the rights and obligations of the Master Servicer as servicer
under this Agreement. This notice to the Master Servicer shall also be given to
each Rating Agency and the Credit Enhancer.
From the receipt by the Master Servicer of the notice, all the rights and
obligations of the Master Servicer under this Agreement, whether with respect to
the Notes or the Mortgage Loans or otherwise, shall pass to and be vested in the
Indenture Trustee pursuant to this Section; and the Indenture Trustee is
authorized to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any documents, and to do anything else
appropriate to effect the purposes of the notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan and related
documents, or otherwise. The Master Servicer agrees to cooperate with the
Indenture Trustee in effecting the termination of the rights and obligations of
the Master Servicer under this Agreement, including the transfer to the
Indenture Trustee for the
34
administration by it of all cash amounts that are held by the Master Servicer
and are to be deposited by it in the Collection Account, or that have been
deposited by the Master Servicer in the Collection Account or are subsequently
received by the Master Servicer with respect to the Mortgage Loans. All
reasonable costs and expenses (including attorneys' fees) incurred in connection
with transferring the Mortgage Files to the successor Master Servicer and
amending this Agreement to reflect the succession as Master Servicer pursuant to
this Section shall be paid by the predecessor Master Servicer (or if the
predecessor Master Servicer is the Indenture Trustee, the initial Master
Servicer) on presentation of reasonable documentation of the costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance under
Section 6.01(i) for five or more Business Days or under Section 6.01(ii) for 60
or more days, shall not constitute an Event of Servicing Termination if the
delay or failure could not be prevented by the exercise of reasonable diligence
by the Master Servicer and the delay or failure was caused by an act of God or
the public enemy, acts of declared or undeclared war, public disorder, rebellion
or sabotage, epidemics, landslides, lightning, fire, hurricanes, earthquakes,
floods, or similar causes. The preceding sentence shall not relieve the Master
Servicer from using its best efforts to perform its obligations in a timely
manner in accordance with the terms of this Agreement, and the Master Servicer
shall provide the Indenture Trustee, the Depositor, the Transferor, the Credit
Enhancer, and the Noteholders with an Officers' Certificate giving prompt notice
of its failure or delay, together with a description of its efforts to perform
its obligations. The Master Servicer shall immediately notify the Indenture
Trustee of any Events of Servicing Termination.
In connection with the termination of the Master Servicer if any mortgage
is registered on the MERS(R) System, then, either (i) the successor Master
Servicer, including the Indenture Trustee if the Indenture Trustee is acting as
successor Master Servicer, shall represent and warrant that it is a member of
MERS in good standing and shall agree to comply in all material respects with
the rules and procedures of MERS in connection with the servicing of the
Mortgage Loans that are registered with MERS, or (ii) the predecessor Master
Servicer shall cooperate with the successor Master Servicer in causing MERS to
execute and deliver an assignment of mortgage in recordable form to transfer all
the mortgages registered on the MERS(R) System from MERS to the Indenture
Trustee and to execute and deliver any other notices and documents appropriate
to effect a transfer of those mortgages or the servicing of the Mortgage Loan on
the MERS(R) System to the successor Master Servicer. The predecessor Master
Servicer shall file the assignment in the appropriate recording office. The
successor Master Servicer shall deliver the assignment to the Indenture Trustee
promptly upon receipt of the original with evidence of recording on it or a copy
certified by the public recording office in which the assignment was recorded.
Section 6.02. Indenture Trustee to Act; Appointment of Successor.
(a) From the time the Master Servicer receives a notice of termination
pursuant to Section 6.01 or resigns pursuant to Section 5.04, the Indenture
Trustee shall be the successor in all respects to the Master Servicer in its
capacity as Master Servicer under this Agreement and the transactions
contemplated by this Agreement and shall be subject to all the obligations of
35
the Master Servicer under this Agreement except (i) the obligation to repurchase
or substitute for any Mortgage Loan, (ii) with respect to any representation or
warranty of the Master Servicer, or (iii) for any act or omission of either a
predecessor or successor Master Servicer other than the Indenture Trustee. As
its compensation under this Agreement, the Indenture Trustee shall be entitled
to the compensation the Master Servicer would have been entitled to under this
Agreement if no notice of termination had been given. In addition, the Indenture
Trustee will be entitled to compensation with respect to its expenses in
connection with conversion of certain information, documents, and record
keeping, as provided in Section 6.01.
Notwithstanding the above, (i) if the Indenture Trustee is unwilling to
act as successor Master Servicer, or (ii) if the Indenture Trustee is legally
unable to so act, the Indenture Trustee may (in the situation described in
clause (i)) or shall (in the situation described in clause (ii)) appoint, or
petition a court of competent jurisdiction to appoint, any established housing
and home finance institution, bank, or other mortgage loan or home equity loan
servicer having a net worth of not less than $15,000,000 as the successor to the
Master Servicer under this Agreement to assume of any obligations of the Master
Servicer under this Agreement. The successor Master Servicer must be acceptable
to the Credit Enhancer in its sole discretion, as evidenced by the Credit
Enhancer's prior consent, as applicable, which consent shall not be unreasonably
withheld. The appointment of the successor Master Servicer must not result in
the qualification, reduction, or withdrawal of the ratings assigned to the Notes
by the Rating Agencies without regard to the Policy.
Pending appointment of a successor to the Master Servicer, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act as Master Servicer. In connection with this appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation that the
Master Servicer would otherwise have received pursuant to Section 3.08 (or any
lesser compensation the Indenture Trustee and the successor agree to). The
Indenture Trustee and the successor shall take any action, consistent with this
Agreement, necessary to effectuate the succession.
(b) The appointment of a successor Master Servicer shall not affect any
liability of the predecessor Master Servicer that may have arisen under this
Agreement before its termination as Master Servicer (including any deductible
under an insurance policy pursuant to Section 3.04), nor shall any successor
Master Servicer be liable for any acts or omissions of the predecessor Master
Servicer or for any breach by the predecessor Master Servicer of any of its
representations or warranties in this Agreement. Except for any compensation
agreement with the Indenture Trustee, any successor Master Servicer shall be
subject to all the terms of this Agreement from the time that it accepts its
appointment to the same extent as if it were originally named as Master
Servicer.
Section 6.03. Notification to Noteholders and the Transferor.
Upon any termination or appointment of a successor to the Master Servicer
pursuant to this Article or Section 5.04, the Indenture Trustee shall give
prompt notice of it to the Noteholders at their respective addresses appearing
in the Note Register, the Transferor, the Credit Enhancer, and each Rating
Agency.
36
ARTICLE VII
TERMINATION
Section 7.01. Termination.
(a) The respective obligations and responsibilities of the Sponsor, the
Master Servicer, the Depositor, the Trust, and the Indenture Trustee created by
this Agreement (other than the obligation of the Master Servicer to send certain
notices) shall terminate on the earlier of
(i) the transfer of all the Mortgage Loans pursuant to Section
7.01(b),
(ii) the termination of the Trust Agreement or the Indenture, and
(iii) the final payment or other liquidation of the last Mortgage
Loan remaining in the Trust or the disposition of all property acquired in
foreclosure or by deed in lieu of foreclosure of any Mortgage Loan.
Upon termination in accordance with this Section, the Indenture Trustee
shall execute any documents and instruments of transfer presented by the
Transferor, in each case without recourse, representation, or warranty, and take
any other actions the Transferor reasonably requests to effect the transfer of
the Mortgage Loans to the Transferor. Notwithstanding the termination of this
Agreement, the Master Servicer shall comply with this Agreement in winding up
activities under this Agreement after termination if necessary.
(b) With the consent of the Credit Enhancer and the Master Servicer, the
Transferor may effect the transfer of all the Mortgage Loans at their
termination purchase price on any Payment Date from the Payment Date immediately
before which the aggregate Note Principal Balance of both Classes of Notes is
less than or equal to 10% of the aggregate Original Note Principal Balance of
both Classes of Notes and require the Trust to redeem the Notes pursuant to
Section 10.01 of the Indenture with the proceeds. The termination purchase price
is the sum of:
(i) the aggregate Note Principal Balance for both Classes of Notes,
(ii) accrued aggregate Note Interest through the day preceding the
final Payment Date, and
(iii) interest accrued on any aggregate Unpaid Investor Interest
Shortfall, to the extent legally permissible.
(c) The Transferor must notify the Credit Enhancer, the Trust, and the
Indenture Trustee of any election to effect the transfer of the Mortgage Loans
pursuant to Section 7.01(b) no later than the first day of the month before the
month in which the transfer is to occur. The proceeds from the purchase of the
Mortgage Loans, for purposes of payments on the Notes, shall be considered to
have been received in the Collection Period before the Collection Period in
which the Payment Date on which the purchase takes place occurs.
37
ARTICLE VIII.
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment.
This Agreement may be amended from time to time by the Sponsor, the Master
Servicer, the Depositor, the Owner Trustee, and the Indenture Trustee, if the
Rating Agency Condition is satisfied (in connection with which the consent of
the Credit Enhancer shall not be unreasonably withheld). However, no amendment
that significantly changes the permitted activities of the Trust may be
promulgated without the consent of a majority of the aggregate Outstanding
Amount of both Classes of Notes. For this purpose no Notes owned by the Sponsor
or any of its affiliates may vote, nor shall their Notes be considered
outstanding. This Agreement may also be amended from time to time by the
Sponsor, the Master Servicer, the Depositor, the Owner Trustee, and the
Indenture Trustee, with the consent of the Credit Enhancer (which consent shall
not be unreasonably withheld) and Holders of not less than 66(2)/3% of the
aggregate Outstanding Amount of both Classes of Notes.
The Indenture Trustee may enter into any amendment of this Agreement as to
which the Rating Agency Condition is satisfied, and when so requested by an
Issuer Request, the Indenture Trustee shall enter into any amendment of this
Agreement
(i) that does not impose further obligations or liabilities on the
Indenture Trustee, and
(ii) as to which either the Rating Agency Condition is satisfied or
Holders of not less than 66(2)/3% of the aggregate Outstanding Amount of
both Classes of Notes and the Credit Enhancer have consented.
Following the execution and delivery of any amendment to this Agreement or
to the Policy to which the Credit Enhancer was required to consent, either the
Transferor, if the Transferor requested the amendment, or the Master Servicer,
if the Master Servicer requested the amendment, shall reimburse the Credit
Enhancer for the reasonable out-of-pocket costs and expenses incurred by them in
connection with the amendment.
Before the execution of the amendment, the party to this Agreement
requesting the amendment shall notify each Rating Agency of the substance of the
amendment. The Indenture Trustee shall deliver fully executed original
counterparts of the instruments effecting the amendment to the Credit Enhancer.
Section 8.02. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Section 8.03. Notices.
All notices, demands, instructions, consents, and other communications
required or permitted under this Agreement shall be in writing and signed by the
party giving the same and shall be personally delivered or sent by first class
or express mail (postage prepaid), national
38
overnight courier service, or by facsimile transmission or other electronic
communication device capable of transmitting or creating a written record
(confirmed by first class mail) and shall be considered to be given for purposes
of this Agreement on the day that the writing is delivered when personally
delivered or sent by facsimile or overnight courier or three Business Days after
it was sent to its intended recipient if sent by first class mail. A facsimile
has been delivered when the sending machine issues an electronic confirmation of
transmission. Unless otherwise specified in a notice sent or delivered in
accordance with the provisions of this Section, notices, demands, instructions,
consents, and other communications in writing shall be given to or made on the
respective parties at their respective addresses indicated below:
if to the Trust at:
CWHEQ Revolving Home Equity Loan Trust, Series
▇▇▇▇-▇
▇▇▇▇▇▇▇▇▇▇ Trust Company, as Owner Trustee
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Depositor at:
CWHEQ, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Master Servicer at:
Countrywide Home Loans, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department,
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Indenture Trustee at:
the Corporate Trust Office
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
39
if to the Credit Enhancer at:
Financial Security Assurance Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Managing Director - Transaction Oversight
Re: Revolving Home Equity Loan Asset-Backed Notes,
Series 2005-C
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇▇▇'▇ at:
Residential Loan Monitoring Group, 4th Floor
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and if to Standard & Poor's at:
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Whenever a notice or other communication to the Credit Enhancer refers to
an Event of Servicing Termination or with respect to which failure on the part
of the Credit Enhancer to respond would constitute consent or acceptance, then a
copy of the notice or other communication shall also be sent to the attention of
the General Counsel of the Credit Enhancer and shall be marked to indicate
"URGENT MATERIAL ENCLOSED."
Section 8.04. Severability of Provisions.
Any provisions of this Agreement that are held invalid for any reason or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of the invalidity or unenforceability without invalidating the
remaining provisions of this Agreement, and the prohibition or unenforceability
in a jurisdiction shall not invalidate or render unenforceable that provision in
any other jurisdiction.
Section 8.05. Assignment.
Except as provided in Sections 5.02 and 5.04, this Agreement may not be
assigned by the Depositor or the Master Servicer without the prior consent of
the Credit Enhancer.
Section 8.06. Third-Party Beneficiaries.
This Agreement will be binding on the parties to this Agreement, and inure
to the benefit of the parties to this Agreement, the Noteholders, the
Transferor, the Note Owners, the Owner Trustee, and the Credit Enhancer and
their respective successors and permitted assigns. The Credit Enhancer is a
third party beneficiary of this Agreement. No other person will have any rights
under this Agreement.
Section 8.07. Counterparts; Electronic Delivery.
This Agreement may be executed in any number of copies, and by the
different parties on the same or separate counterparts, each of which shall be
considered to be an original instrument. Any signature page to this Agreement
containing a manual signature may be
40
delivered by facsimile transmission or other electronic communication device
capable of transmitting or creating a printable written record, and when so
delivered shall have the effect of delivery of an original manually signed
signature page.
Section 8.08. Effect of Headings and Table of Contents.
The Article and Section headings in this Agreement and the Table of
Contents are for convenience only and shall not affect the construction of this
Agreement.
41
IN WITNESS WHEREOF, the Depositor, the Sponsor and Master Servicer, the
Trust, and the Indenture Trustee have caused this Agreement to be duly executed
by their respective officers all as of the day and year first above written.
CWHEQ, Inc.
Depositor
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
Title: Senior Vice President
JPMORGAN CHASE BANK, N.A.
Indenture Trustee
By: /s/ ▇▇▇▇▇ ▇. Richardson_
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Attorney-In-Fact
CWHEQ REVOLVING HOME EQUITY LOAN
TRUST, SERIES 2005-C
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Owner Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Financial Services
Officer
42
State of CALIFORNIA )
) ss.:
County of LOS ANGELES )
On the 30th day of June, 2005 before me, a notary public in and for the
State of California, personally appeared ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇., known to me who,
being by me duly sworn, did depose and say that he resides at Calabasas,
California; that he is the Vice President of CWHEQ, Inc. a Delaware corporation,
one of the parties that executed the foregoing instrument; that he signed his
name thereto by order of the Board of Directors of said corporation.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Notary Public
My Commission Expires: 10/15/05
43
State of CALIFORNIA )
) ss.:
County of LOS ANGELES )
On the 30th day of June, 2005 before me, a notary public in and for the
State of California, personally appeared ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇., known to me who,
being by me duly sworn, did depose and say that he resides at Calabasas,
California; that he is the Senior Vice President of Countrywide Home Loans,
Inc., a New York corporation, one of the parties that executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Notary Public
My Commission Expires: 10/15/05
44
State of ILLINOIS )
) ss.:
County of ▇▇▇▇ )
On the 30th day of June, 2005 before me, a notary public in and for the
State of Illinois, personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, known to me who,
being by me duly sworn, did depose and say that he resides at ▇▇▇▇ County,
Illinois; that he is the Attorney-In-Fact of JPMorgan Chase Bank, N.A., a
national banking association, one of the parties that executed the foregoing
instrument; that he signed his name thereto by order of the Board of Directors
of said corporation.
/s/ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Notary Public
My Commission Expires: 2/03/06
45
State of DELAWARE )
) ss.:
County of NEW CASTLE )
On the 30th day of June, 2005 before me, a notary public in and for the
State of Delaware, personally appeared ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, known to me who, being by
me duly sworn, did depose and say that she resides at Wilmington, Delaware; that
she is the Financial Services Officer of Wilmington Trust Company, not in its
individual capacity but in its capacity as Owner Trustee of CWHEQ REVOLVING HOME
EQUITY LOAN TRUST, SERIES 2005-C, one of the parties that executed the foregoing
instrument; that she signed her name thereto by order of the Board of Directors
of said corporation.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Notary Public
My Commission Expires: 5/17/06
46
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[Delivered to Indenture Trustee Only]
A-1
EXHIBIT B
FORM OF LETTER OF REPRESENTATIONS
B-1
EXHIBIT C
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
JPMorgan Chase Bank, N.A.
as Indenture Trustee
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Institutional Trust Services, Countrywide HEL CWHEQ 2005-C
Attn: Corporate Trust Services Division
Re: CWHEQ, Inc. Revolving Home Equity Loan
Asset Backed Notes, Series 2005-C
---------------------------------------
Gentlemen:
In connection with the administration of the Mortgage Loans held by you as
Indenture Trustee under the Sale and Servicing Agreement, dated as of June 30,
2005, among CWHEQ, Inc. as Depositor, Countrywide Home Loans, Inc., as Sponsor
and Master Servicer, CWHEQ Revolving Home Equity Loan Trust, Series 2005-C and
you, as Indenture Trustee (the "Agreement"), we hereby request a release of the
Mortgage File held by you as Indenture Trustee with respect to the following
described Mortgage Loan for the reason indicated below.
Loan No.:
---------
[MIN No.]
---------
Reason for requesting file:
--------------------------
________________ 1. Mortgage Loan paid in full. (The Master Servicer hereby
certifies that all amounts received in connection with
the payment in full of the Mortgage Loan which are
required to be deposited in the Collection Account
pursuant to Section 3.02 of the Agreement have been so
deposited).
________________ 2. Retransfer of Mortgage Loan. (The Master Servicer hereby
certifies that the Transfer Deposit Amount has been
deposited in the Collection Account pursuant to the
Agreement).
________________ 3. The Mortgage Loan is being foreclosed.
________________ 4. The Mortgage Loan is being re-financed by another
depository institution. (The Master Servicer hereby
certifies that all amounts received in connection with
the payment in full of the Mortgage Loan which are
required to be deposited in the Collection Account
pursuant to Section 3.02 of the Agreement have been so
deposited).
________________ 5. Other (Describe).
The undersigned acknowledges that the above Mortgage File will be held by
the undersigned in accordance with the provisions of the Agreement and will
promptly be returned
C-1
to the Indenture Trustee when the need therefor by the Master Servicer no longer
exists unless the Mortgage Loan has been liquidated or retransferred.
Capitalized terms used herein shall have the meanings ascribed to them in
the Agreement.
COUNTRYWIDE HOME LOANS, INC.
By:_______________________________
Name:
Title: Servicing Officer
C-2
ANNEX 1
DEFINITIONS
"Adoption Annex" means Annex 2 to this Agreement.
"Affiliate" of any person means any other person controlling, controlled
by or under common control with the person. For purposes of this definition,
"control" means the power to direct the management and policies of a person,
directly or indirectly, whether through ownership of voting securities, by
contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Agreement" means this Sale and Servicing Agreement.
"Appraised Value" for any Mortgaged Property means the value established
by any of the following: (i) with respect to Credit Line Agreements with Credit
Limits greater than $100,000, by a full appraisal, (ii) with respect to Credit
Line Agreements with Credit Limits equal to or less than $100,000, by either a
drive by inspection or electronic appraisal of the Mortgaged Property made to
establish compliance with the underwriting criteria then in effect in connection
with the application for the Mortgage Loan secured by the Mortgaged Property,
and (iii) with respect to any Mortgage Loan as to which the Servicer consents to
a new senior lien pursuant to Section 3.01(a), in compliance with the
underwriting criteria then in effect in connection with the application for the
related senior mortgage loan.
"Collection Account" means the Eligible Account or Eligible Accounts
created and maintained for the benefit of the Noteholders, the Transferor, and
the Credit Enhancer pursuant to Section 3.02(b).
"Combined Loan-to-Value Ratio" for any Mortgage Loan as of any date means
a fraction
o whose numerator is the sum of (i) the Credit Limit and (ii) the
outstanding principal balance as of the date of execution of the related
original Credit Line Agreement (or any subsequent date as of which the
outstanding principal balance may be determined in connection with an
increase in the Credit Limit for the Mortgage Loan) of any mortgage loans
that are senior or equal in priority to the Mortgage Loan and that are
secured by the same Mortgaged Property and
o whose denominator is the Valuation of the related Mortgaged
Property.
"Credit Limit Utilization Rate" for any Mortgage Loan means a fraction
whose numerator is the Cut-off Date Asset Balance for the Mortgage Loan and
whose denominator is the related Credit Limit.
"Cut-off Date Loan Balance" means the Loan Balance calculated as of the
Cut-off Date.
"Defective Mortgage Loan" means a Mortgage Loan subject to retransfer
pursuant to Section 2.02(b) or 2.04(d).
"Delay Delivery Certification" has the meaning given to it in the
Custodial Agreement.
▇▇▇-1-1
"Depositor" means CWHEQ, Inc., a Delaware corporation, or its successor in
interest.
"Due Date" for any Mortgage Loan means the fifteenth day of the month.
"Electronic Ledger" means the electronic master record of home equity
credit line mortgage loans maintained by the Master Servicer or by the Sponsor,
as appropriate.
"Eligible Substitute Mortgage Loan" means a Mortgage Loan transferred to
the Trust by the Sponsor in connection with the retransfer of a Defective
Mortgage Loan that must, on the date of its transfer to the Trust,
(i) have an outstanding Asset Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage Loan,
an aggregate Asset Balance), not 10% more than the Transfer Deficiency
relating to the Defective Mortgage Loan;
(ii) have a Loan Rate not less than the Loan Rate of the Defective
Mortgage Loan and not more than 1.000% in excess of the Loan Rate of the
Defective Mortgage Loan;
(iii) have a Loan Rate based on the same Index with adjustments to
the Loan Rate made on the same Interest Rate Adjustment Date as that of
the Defective Mortgage Loan;
(iv) have a FICO score not less than the FICO score of the Defective
Mortgage Loan and not more than 50 points higher than the Defective
Mortgage Loan;
(v) have a Gross Margin that is not less than the Gross Margin of the
Defective Mortgage Loan and not more than 100 basis points higher than the
Gross Margin for the Defective Mortgage Loan;
(vi) if the Mortgage Loan is being transferred to the Trust in
connection with the retransfer a Defective Mortgage Loan in Loan Group 1,
the Mortgage Loan's original principal balance (by credit limit) conforms
to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac guidelines;
(vii) have a mortgage of the same or higher level of priority as the
mortgage relating to the Defective Mortgage Loan at the time the mortgage
was transferred to the Trust;
(viii) have a remaining term to maturity not more than six months
earlier than the remaining term to maturity of the Defective Mortgage
Loan, not later than the maturity date of the related Notes, and not more
than 60 months later than the remaining term to maturity of the Defective
Mortgage Loan;
(ix) comply with each representation and warranty in Section 2.04 (to
be made as of the date of transfer to the Trust); and
(x) have an original Combined Loan-to-Value Ratio not greater than
that of the Defective Mortgage Loan.
▇▇▇-1-2
More than one Eligible Substitute Mortgage Loan may be substituted for a
Defective Mortgage Loan if the Eligible Substitute Mortgage Loans meet the
foregoing attributes in the aggregate and the substitution is approved in
advance by the Credit Enhancer. The procedures applied by the Sponsor in
selecting each Eligible Substitute Mortgage Loan shall not be materially adverse
to the interests of the Indenture Trustee, the Transferor, the Noteholders, or
the Credit Enhancer.
"Event of Servicing Termination" has the meaning given to it in Section
6.01.
"FDIC" means the Federal Deposit Insurance Corporation or any successor to
it.
"Foreclosure Profit" on a Liquidated Mortgage Loan means the amount by
which (i) the aggregate of its Net Liquidation Proceeds exceeds (ii) the related
Asset Balance (plus accrued and unpaid interest on it at the applicable Loan
Rate from the date interest was last paid to the end of the Collection Period
during which the Mortgage Loan became a Liquidated Mortgage Loan) of the
Liquidated Mortgage Loan immediately before the final recovery of its
Liquidation Proceeds.
"Gross Margin" for any Mortgage Loan means the percentage shown as the
"Gross Margin" for the Mortgage Loan on Exhibit A.
"Indenture" means the indenture of even date with this Agreement between
the Trust and the Indenture Trustee.
"Indenture Trustee Fee" means a fee that is separately agreed to between
the Master Servicer and the Indenture Trustee.
"Indenture Trustee Fee Rate" means the per annum rate at which the
Indenture Trustee Fee is calculated.
"Index" for each Interest Rate Adjustment Date for a Mortgage Loan means
the highest "prime rate" as published in the "Money Rates" table of The Wall
Street Journal as of the first business day of the calendar month.
"Insurance Proceeds" means proceeds paid by any insurer (other than the
Credit Enhancer under the Policy) pursuant to any insurance policy covering a
Mortgage Loan net of any amount (i) covering any expenses of the Master Servicer
in connection with obtaining the proceeds, (ii) applied to the restoration or
repair of the related Mortgaged Property, (iii) released to the mortgagor in
accordance with the Master Servicer's normal servicing procedures, or (iv)
required to be paid to any holder of a mortgage senior to the Mortgage Loan.
"Interest Rate Adjustment Date" for each Mortgage Loan means any date on
which the Loan Rate is adjusted in accordance with the related Credit Line
Agreement.
"Lien" means any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority right, or interest or other Security
Agreement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of any Financing Statement under the UCC (other than any Financing
Statement filed
▇▇▇-1-3
for informational purposes only) or comparable law of any jurisdiction to
evidence any of the foregoing except that any assignment pursuant to Section
5.02 is not a Lien.
"Lifetime Rate Cap" for each Mortgage Loan whose related Mortgage Note
provides for a lifetime rate cap means the maximum Loan Rate permitted over the
life of the Mortgage Loan under the terms of the related Credit Line Agreement,
as shown on the Mortgage Loan Schedule.
"Liquidated Mortgage Loan" for any Payment Date means any Mortgage Loan in
respect of which the Master Servicer has determined, in accordance with the
servicing procedures specified in this Agreement, as of the end of the related
Collection Period, that all Liquidation Proceeds which it expects to recover
with respect to the disposition of the Mortgage Loan or the related REO have
been recovered.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of
overhead) that are incurred by the Master Servicer in connection with the
liquidation of any Mortgage Loan and not recovered under any insurance policy,
including legal fees and expenses, any unreimbursed amount expended pursuant to
Section 3.06 (including amounts advanced to correct defaults on any mortgage
loan which is senior to the Mortgage Loan and amounts advanced to keep current
or pay off a mortgage loan that is senior to the Mortgage Loan) respecting the
related Mortgage Loan and any related and unreimbursed expenditures with respect
to real estate property taxes, water or sewer taxes, condominium association
dues, property restoration or preservation or insurance against casualty, loss
or damage.
"Liquidation Proceeds" means proceeds (including Insurance Proceeds but
not including amounts drawn under the Policy) received in connection with the
liquidation of any Mortgage Loan or related REO, whether through trustee's sale,
foreclosure sale or otherwise.
"Loan Rate Cap" for each Mortgage Loan means the lesser of (i) the
Lifetime Rate Cap or (ii) the applicable state usury ceiling.
"Loan-to-Value Ratio" for any date of determination for any mortgage loan
means a fraction whose numerator is the outstanding principal balance of the
mortgage loan as of the date of determination and whose denominator is the
Valuation of the related Mortgaged Property.
"Master Servicer" means Countrywide Home Loans, Inc., a New
York corporation and any successor to it and any successor under this Agreement.
"Minimum Monthly Payment" for any Mortgage Loan and any month means the
minimum amount required to be paid by the related mortgagor in that month.
"Net Liquidation Proceeds" for any Liquidated Mortgage Loan means
Liquidation Proceeds net of Liquidation Expenses.
"Officer's Certificate" means a certificate (i) signed by the Chairman of
the Board, the Vice Chairman of the Board, the President, a Managing Director, a
Vice President (however denominated), an Assistant Vice President, the
Treasurer, the Secretary, or one of the Assistant
▇▇▇-1-4
Treasurers or Assistant Secretaries of the Depositor, the Sponsor, the
Transferor, or the Master Servicer, or (ii) if provided for in this Agreement,
signed by a Servicing Officer.
"Opinion of Counsel" means a written opinion of counsel acceptable to the
Indenture Trustee, who may be in-house counsel for the Depositor, the Sponsor,
the Master Servicer, or the Transferor (except that any opinion pursuant to
Section 5.04 or relating to taxation must be an opinion of independent outside
counsel) and who, in the case of opinions delivered to the Credit Enhancer or
the Rating Agency, is reasonably acceptable to it.
"Purchase Price" with respect to any Mortgage Loan required to be
purchased by the Sponsor pursuant to Section 2.03 or 2.04 or purchased at the
option of the Master Servicer pursuant to Section 3.01 or 3.06 means an amount
equal to the sum of
(i) 100% of the unpaid principal balance of the Mortgage Loan on the
date of such purchase,
(ii) accrued interest on the Mortgage Loan at the applicable Mortgage
Rate (or at the applicable Adjusted Mortgage Rate if (x) the purchaser is
the Master Servicer or (y) if the purchaser is Countrywide and Countrywide
is an affiliate of the Master Servicer) from the date through which
interest was last paid by the Mortgagor to the Due Date in the month in
which the Purchase Price is to be distributed to Noteholders, and
(iii) in the case of any Mortgage Loan required to be purchased by
the Sponsor because of, or that arises out of, a violation of any
predatory or abusive lending law with respect to the related Mortgage
Loan, any costs and damages incurred by the Trust relating to such
violation of any predatory or abusive lending law with respect to the
related Mortgage Loan.
"REO" means a Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
"Seller" means any Seller of Mortgage Loans pursuant to the Purchase
Agreement.
"Servicing Certificate" means a certificate completed and executed by a
Servicing Officer in accordance with Section 4.01.
"Servicing Officer" means any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Indenture Trustee (with a copy to the Credit Enhancer) by the Master
Servicer on the Closing Date, as the list may be amended from time to time.
"Sponsor" means Countrywide Home Loans, Inc., a New York
corporation and any successor to it.
"Transfer Date" has the meaning given to it in Section 2.06.
"Transfer Deficiency" with respect to a Loan Group means that the excess
of the Adjusted Loan Group Balance of that Loan Group over the Note Principal
Balance of the
▇▇▇-1-5
related Class of Notes after a retransfer of a Mortgage Loan in the related Loan
Group pursuant to Section 2.02(b) or 2.04(d) would be less than the greater of
the related Minimum Transferor Interest and the related Required Transferor
Subordinated Amount.
The amount of any Transfer Deficiency with respect to a Loan Group is the
lesser of
o the Asset Balance of the Defective Mortgage Loan and
o the excess of
o the greater of the related Minimum Transferor Interest and
the related Required Transferor Subordinated Amount over
o the excess of the Adjusted Loan Group Balance of that Loan
Group over the Note Principal Balance of the related Class of Notes
after a retransfer of a Mortgage Loan pursuant to Section 2.02(b) or
2.04(d), without taking into account the Asset Balance of any
Eligible Substitute Mortgage Loans transferred to the Trust in
connection with the Transfer Deficiency.
In any computation involving a Mortgage Loan required to be purchased by
the Sponsor because of, or arising out of, a violation of any predatory or
abusive lending law with respect to the Mortgage Loan, the Transferor Interest
shall be reduced for any costs and damages incurred by the Trust relating to the
violation of any predatory or abusive lending law with respect to the Mortgage
Loan.
"Transfer Deposit Amount" has the meaning given to it in Section 2.07.
"Transfer Notice Date" has the meaning given to it in Section 2.06.
"Valuation" of any Mortgaged Property means the lesser of (i) the
Appraised Value of the Mortgaged Property and (ii) in the case of a Mortgaged
Property purchased within one year of the origination of the related Mortgage
Loan, the purchase price of the Mortgaged Property.
▇▇▇-1-6
The following have the meanings given to them in the Indenture:
Accelerated Principal Payment Amount Managed Amortization Period
Additional Balance Maximum Rate
Additional Home Equity Loans MERS
Additional Loan Account MERS(R) System
Adjusted Loan Group Balance MIN
Allocated Transferor Interest Minimum Transferor Interest
Asset Balance MOM Loan
Assignment of Mortgage ▇▇▇▇▇'▇
Available Transferor Subordinated Amount Mortgage File
Basis Risk Carryforward Mortgage Loan
Business Day Mortgage Loan Schedule
Closing Date Mortgage Note
Code Mortgaged Property
Collection Period Note
Corporate Trust Office Note Rate
Credit Enhancement Draw Amount Note Interest
Credit Enhancer Note Principal Balance
Credit Enhancer Default Noteholder or Holder
Credit Limit Note Owner
Credit Line Agreement Note Register and Note Registrar
Custodial Agreement Original Note Principal Balance
Cut-off Date Outstanding Amount
Cut-off Date Asset Balance Paying Agent
Determination Date Payment Date
Eligible Account Policy
Eligible Investments Principal Collections
Guaranteed Principal Payment Amount Purchase Agreement
Indenture Trustee Rapid Amortization Event
Insolvency Event Rating Agency
Insurance Agreement Rating Agency Condition
Interest Collections Required Transferor Subordinated Amount
Interest Formula Rate Responsible Officer
Interest Period Scheduled Principal Collections Payment Amount
Investor Fixed Allocation Percentage Servicing Fee
Investor Floating Allocation Percentage Standard & Poor's
Investor Interest Collections Transferor
Investor Loss Amount Transferor Certificates
Investor Loss Reduction Amount Transferor Interest
Investor Principal Collections Transferor Principal Collections
Issuer Request Trust
Loan Group Trust Agreement
Loan Group Balance
Loan Rate
▇▇▇-1-7
UCC
Unpaid Investor Interest Shortfall
Weighted Average Net Loan Rate
▇▇▇-1-8
ANNEX 2
ADOPTION ANNEX
The initial aggregate principal amount of the Notes is $1,015,000,000, the
initial aggregate principal amount of the Class 1-A Notes is $200,000,000, and
the initial aggregate principal amount of the Class 2-A Notes is $815,000,000.
The title of the Collection Account is "JPMorgan Chase Bank, N.A., as
Indenture Trustee, Collection Account in trust for the registered holders of
Revolving Home Equity Loan Asset Backed Notes, Series 2005-C and Financial
Security Assurance Inc."
The date on which the Master Servicer delivers the Officer's Certificate
in each year is March 31, and the first Officer's Certificate pursuant to
Section 3.09 is March 31, 2006.
The date on which the Master Servicer delivers the annual servicing report
in each year is March 15, and the first annual servicing report pursuant to
Section 3.10 is March 15, 2006.
▇▇▇-2-1