Exhibit 99.8
EXECUTION COPY
MORTGAGE LOAN SERVICING AGREEMENT
dated as of October 1, 2005
between
TABERNA REALTY HOLDINGS TRUST,
Owner
and
PHH MORTGAGE CORPORATION,
Servicer
TABLE OF CONTENTS
PAGE
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ARTICLE I: DEFINITIONS..................................................................... 1
Section 1.01 Defined Terms........................................................... 1
ARTICLE II: REPRESENTATIONS AND WARRANTIES OF THE SERVICER................................. 12
Section 2.01 Representations and Warranties.......................................... 12
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF THE OWNER................................... 14
Section 3.01 Representations and Warranties.......................................... 14
ARTICLE IV: ADMINISTRATION AND SERVICING OF MORTGAGE LOANS................................. 16
Section 4.01 Servicing Standards; Additional Documents; Consent of the Owner......... 16
Section 4.02 Collection of Mortgage Loan Payments.................................... 18
Section 4.03 Notice of Foreclosure Sale.............................................. 18
Section 4.04 Establishment of Collection Account; Deposits in Collection Account..... 19
Section 4.05 Permitted Withdrawals from the Collection Account....................... 20
Section 4.06 Establishment of Escrow Accounts; Deposits in Escrow.................... 21
Section 4.07 Permitted Withdrawals From Escrow Accounts.............................. 21
Section 4.08 Payment of Taxes, Insurance and Other Charges; Maintenance of Primary
Insurance Policies; Collections Thereunder.............................. 21
Section 4.09 Transfer of Accounts.................................................... 23
Section 4.10 Maintenance of Hazard Insurance......................................... 23
Section 4.11 Fidelity Bond; Errors and Omissions Insurance........................... 24
Section 4.12 Realization Upon Specially Serviced Mortgage Loans and REO Properties... 25
Section 4.13 Management of REO Properties............................................ 27
Section 4.14 Sale of REO Properties.................................................. 28
Section 4.15 Investment of Funds in the Collection Account........................... 28
Section 4.16 MERS.................................................................... 29
ARTICLE V: REPORTS; REMITTANCES; ADVANCES.................................................. 30
Section 5.01 Remittances............................................................. 30
Section 5.02 Reporting............................................................... 30
Section 5.03 Monthly Advances by the Servicer........................................ 31
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Section 5.04 Non-recoverable Advances................................................ 32
Section 5.05 Officer's Certificate................................................... 32
ARTICLE VI: GENERAL SERVICING PROCEDURE.................................................... 32
Section 6.01 Enforcement of Due-on-Sale Clauses, Assumption Agreements............... 32
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files................. 33
Section 6.03 Servicing Compensation.................................................. 34
Section 6.04 Annual Statement as to Compliance....................................... 34
Section 6.05 Annual Independent Certified Public Accountants' Servicing Report....... 34
Section 6.06 Owner's Right to Examine Servicer Records............................... 34
ARTICLE VII: REPORTS TO BE PREPARED BY THE SERVICER........................................ 35
Section 7.01 Financial Statements.................................................... 35
ARTICLE VIII: THE SERVICER................................................................. 35
Section 8.01 Indemnification; Third Party Claims..................................... 35
Section 8.02 Merger or Consolidation of the Servicer................................. 36
Section 8.03 Limitation on Liability of the Servicer and Others...................... 37
Section 8.04 Servicer Not to Resign.................................................. 37
ARTICLE IX: DEFAULT........................................................................ 38
Section 9.01 Events of Default....................................................... 38
ARTICLE X: TERMINATION AND TRANSFER OF MORTGAGE LOANS...................................... 39
Section 10.01 Term and Termination.................................................... 39
Section 10.02 Removal of Mortgage Loans from Inclusion under this Agreement Upon a
Whole Loan Transfer or a Pass-Through Transfer on One or More
Reconstitution Dates.................................................... 39
Section 10.03 Transfer of Mortgage Loans.............................................. 41
Section 10.04 Survival................................................................ 41
ARTICLE XI: GENERAL PROVISIONS............................................................. 42
Section 11.01 Successor to the Servicer............................................... 42
Section 11.02 Governing Law........................................................... 43
Section 11.03 Notices................................................................. 43
Section 11.04 Severability of Provisions.............................................. 43
Section 11.05 Schedules and Exhibits.................................................. 43
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Section 11.06 General Interpretive Principles......................................... 43
Section 11.07 Waivers and Amendments, Noncontractual Remedies; Preservation
of Remedies............................................................. 44
Section 11.08 Captions................................................................ 44
Section 11.09 Counterparts; Effectiveness............................................. 44
Section 11.10 Entire Agreement; Amendment............................................. 45
Section 11.11 Further Assurances...................................................... 45
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Schedules
A. Mortgage Loan Schedule
B. Contents of Mortgage File
B-1 Collateral File
Exhibits
Exhibit 2.05 Form of Assignment, Assumption and Recognition Agreement
Exhibit 4.01(a) Limited Power of Attorney
Exhibit 4.01(e) Workout compensation
Exhibit 4.03 Form of Notice of Foreclosure
Exhibit 4.04 Form of Collection Account Letter Agreement
Exhibit 4.06 Form of Escrow Account Letter Agreement
Exhibit 5.02(a) Report P-139 -- Monthly Statement of Mortgage Accounts
Exhibit 5.02(b) Report S-50Y -- Private Pool Detail Report
Exhibit 5.02(c) Report S-213 -- Summary of Curtailments Made Remittance Report
Exhibit 5.02(d) Report S-214 -- Summary of Paid in Full Remittance Report
Exhibit 5.02(e) Report S-215 -- Consolidation of Remittance Report
Exhibit 5.02(f) Report T-62C -- Monthly Accounting Report
Exhibit 5.02(g) Report T-62E -- Liquidation Report
Exhibit 5.02(h) Report P-4DL -- Delinquency Report
Exhibit 5.02(i) Report P-195 -- Delinquency Report
Exhibit 9 Form of Officer's Certificate
Exhibit 10 Form of Terms Letter
Exhibit 11 Form of ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification
MORTGAGE LOAN SERVICING AGREEMENT
This Mortgage Loan Servicing Agreement, dated as of October 1, 2005, is
entered into between Taberna Realty Holdings Trust, as the Owner ("Owner"), and
PHH Mortgage Corporation, as the Servicer ("Servicer").
PRELIMINARY STATEMENT
1. The Owner is engaged in the business, inter alia, of purchasing for its own
account loans to individuals, the repayment of which is secured by a first lien
mortgage on such individuals' residences, as more fully defined below ("Mortgage
Loans").
2. The Servicer is in the business, inter alia, of management and servicing for
others of Mortgage Loans.
3. The Owner and the Servicer wish to prescribe in this Agreement the terms and
manner of the management and servicing by Servicer for the Owner of the Owner's
Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth,
the Owner and the Servicer agree as follows:
ARTICLE I:
DEFINITIONS
Section 1.01 Defined Terms Whenever used in this Agreement, the following
words and phrases shall have the following meaning specified in this Article:
"Accounting Cut-off Date": The first Business Day of each month during the
term hereof.
"Affiliate": When used with reference to a specified Person, any Person
that (i) directly or indirectly controls or is controlled by or is under common
control with the specified Person, (ii) is an officer of, partner in or trustee
of, or serves in a similar capacity with respect to, the specified person or of
which the specified Person is an officer, partner or trustee, or with respect to
which the specified Person serves in a similar capacity, or (iii) directly or
indirectly is the beneficial owner of 10% or more of any class of equity
securities of the specified Person or of which the specified person is directly
or indirectly the owner of 10% or more of any class of equity securities.
"Agreement": This Mortgage Loan Servicing Agreement between the Owner and
the Servicer including all exhibits, amendments and supplements hereto and
hereof.
"Appraised Value": With respect to any Mortgaged Property, : (i) the value
thereof as determined by an appraisal made for the originator of the Mortgage
Loan at the time of origination of the Mortgage Loan.
"ARM Loan": An "adjustable rate" Mortgage Loan, the Note Rate of which is
subject to periodic adjustment in accordance with the terms of the Mortgage
Note.
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"Assignment": An individual assignment of a Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale or transfer of the Mortgage Loan to the Owner or, in the case of
a MERS Mortgage Loan, an electronic transmission to MERS, identifying a transfer
of ownership of the related Mortgage to the Owner or its designee.
"Assignment of Proprietary Lease": With respect to a Cooperative Loan, an
assignment of the Proprietary Lease sufficient under the laws of the
jurisdiction wherein the related Cooperative Unit is located to reflect the
assignment of such Proprietary Lease.
"Assignment of Recognition Agreement": With respect to a Cooperative Loan,
an assignment of the Recognition Agreement sufficient under the laws of the
jurisdiction wherein the related Cooperative Unit is located to reflect the
assignment of such Recognition Agreement.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (11 U.S.C. Sections
101-1330), as amended, modified, or supplemented from time to time, and any
successor statute, and all rules and regulations issued or promulgated in
connection therewith.
"Business Day": Any day other than (i) a Saturday or Sunday or (iii) a day
on which the Federal Reserve is closed.
"Code": The Internal Revenue Code of 1986, as amended, or any successor
statue thereto, and applicable U.S. Department of the Treasury regulations
issued pursuant thereto.
"Collection Account": The separate Eligible Account or accounts created and
maintained pursuant to Section 4.04 which shall be entitled "PHH Mortgage
Corporation, as servicer and custodian for the Owner of Mortgage Loans under the
Mortgage Loan Servicing Agreement, dated as of October 1, 2005."
"Condemnation Proceeds": All awards or settlements in respect of a taking
of an entire Mortgaged Property or a part thereof by exercise of the power of
eminent domain or condemnation.
"Consent": A document executed by the Cooperative Corporation (i)
consenting to the sale of the Cooperative Unit to the Mortgagor and (ii)
certifying that all maintenance charges relating to the Cooperative Unit have
been paid.
"Cooperative Corporation": With respect to any Cooperative Loan, the
cooperative apartment corporation that holds legal title to the related
Cooperative Project and grants occupancy rights to units therein to stockholders
through Proprietary Leases or similar arrangements.
"Cooperative Lien Search": A search for (a) federal tax liens, mechanics'
liens, lis pendens, judgments of record or otherwise against (i) the Cooperative
Corporation and (ii) the seller of the Cooperative Unit, (b) filings of
Financing Statements and (c) the deed of the Cooperative Project into the
Cooperative Corporation.
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"Cooperative Loan": A Mortgage Loan that is secured by a first lien on and
a perfected security interest in Cooperative Shares and the related Proprietary
Lease granting exclusive rights to occupy the related Cooperative Unit in the
building owned by the related Cooperative Corporation.
"Cooperative Pledge Agreement": The specific agreement creating a first
lien on and pledge of the Cooperative Shares and the appurtenant Proprietary
Lease securing a Cooperative Loan.
"Cooperative Project": With respect to any Cooperative Loan, all real
property and improvements thereto and rights therein and thereto owned by a
Cooperative Corporation including without limitation the land, separate dwelling
units and all common elements.
"Cooperative Shares": With respect to any Cooperative Loan, the shares of
stock issued by a Cooperative Corporation and allocated to a Cooperative Unit
and represented by a stock certificates.
"Cooperative Unit": With respect to any Cooperative Loan, a specific unit
in a Cooperative Project.
"Cut-off Date" : The first day of the month in which the respective
Effective Date occurs.
"Determination Date": The 16th day of each calendar month, commencing on
the 15th day of the month following the Effective Date, or, if such 16th day is
not a Business Day, the Business Day immediately preceding such 16th day.
"Due Date": With respect to any Mortgage Loan, the day of the month on
which each Monthly Payment is due thereon, exclusive of any days of grace.
"Due Period": With respect to each Remittance Date, the period commencing
on the second day of the month immediately preceding the month of such
Remittance Date and ending on the first day of the month of such Remittance
Date.
"Effective Date": The date on which the Servicer becomes obligated to
service any of the Mortgage Loans, which dated shall be identified on the
Mortgage Loan Schedule attached to the related Terms Letter.
"Eligible Account": One or more accounts (i) that are maintained with a
depository institution that has assets of $20 billion or more and must be rated
by either Standard and Poor's Inc. or ▇▇▇▇▇'▇ Investors Service. If the
institution is rated by Standard and Poor's Inc., it must have both an "A2" (or
better) short-term financial rating and a "BBB" (or better) long-term "senior
unsecured" financial rating. If the institution is rated by ▇▇▇▇▇'▇ Investors
Service, it must have both a "P-2" (or better) short-term rating and a "Baa3"
(or better) long term "senior unsecured" financial rating. Or, a depository
institution that has assets of less than $20 billion does not have to be rated
by either Standard or Poor's Inc. or ▇▇▇▇▇'▇ Investor Services--but, if it is,
it must satisfy the financial rating criteria mentioned above. If the depository
institution is
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not rated by either of these agencies, it must have a financial rating of "75"
(or better) from IDC Financial Publishing, Inc.
"Environmental Assessment": A "Phase I" environmental assessment of a
Mortgaged Property prepared by an Independent Person who regularly conducts
environmental assessments and who has any necessary license(s) required by
applicable law and has five years experience in conducting environmental
assessments.
"Environmental Conditions Precedent to Foreclosure": As defined in Section
4.13.
"Environmental Laws": All federal, state, and local statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees or other governmental
restrictions relating to the environment or to emissions, discharges or releases
of pollutants, contaminants or industrial, toxic or hazardous substances or
wastes into the environment, including ambient air, surface water, ground water,
or land, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants or industrial, toxic or hazardous substances or wastes or the
cleanup or other remediation thereof.
"Escrow Account": The separate Eligible Account or accounts created and
maintained pursuant to Section 4.06 which shall be entitled "PHH Mortgage
Corporation, as servicer and custodian for the Owner under the Mortgage Loan
Servicing Agreement, dated as of October 1, 2005 (as amended), and various
mortgagors."
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, mortgage insurance premiums, fire and hazard insurance premiums and
other payments required to be escrowed by the Mortgagor with the mortgagee
pursuant to any Mortgage Loan.
"Estoppel Letter": A document executed by the Cooperative Corporation
certifying, with respect to a Cooperative Unit, (i) the appurtenant Proprietary
Lease will be in full force and effect as of the date of issuance thereof, (ii)
the related Stock Certificate was registered in the Mortgagor's name and the
Cooperative Corporation has not been notified of any lien upon, pledge of, levy
of execution on or disposition of such Stock Certificate, and (iii) the
Mortgagor is not in default under the appurtenant Proprietary Lease and all
charges due the Cooperative Corporation have been paid.
"Event of Default": Any one of the conditions or circumstances enumerated
in Section 9.01.
"▇▇▇▇▇▇ ▇▇▇": The Federal National Mortgage Association or any successor
organization.
"▇▇▇▇▇▇ Mae Guide": The ▇▇▇▇▇▇ ▇▇▇ Selling Guide and Servicing Guide,
collectively, in effect on and after the Effective Date.
"FDIC": The Federal Deposit Insurance Corporation or any successor
organization.
"Fidelity Bond": A fidelity bond to be maintained by the Servicer pursuant
to Section 4.11.
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"Financing Statement": A financing statement in the form of a UCC-1 filed
pursuant to the Uniform Commercial Code to perfect a security interest in the
Cooperative Shares.
"Financing Statement Change": A financing statement in the form of a UCC-3
filed to continue, terminate, release, assign or amend an existing Financing
Statement.
"Foreclosure Profits": As to any Mortgage Loan, the excess, if any, of
Liquidation Proceeds, Insurance Proceeds and proceeds from any REO Disposition
(net of all amounts reimbursable therefrom pursuant to Section 4.12 and Section
4.13) in respect of each Mortgage Loan or REO Property for which a Cash
Liquidation or REO Disposition occurred in the related prepayment period over
the sum of the Unpaid Principal Balance of such Mortgage Loan or REO Property
(determined, in the case of an REO Disposition, in accordance with Section 4.12
and Section 4.13) plus accrued and unpaid interest at the Mortgage Rate on such
Unpaid Principal Balance from the Due Date to which interest was last paid by
the Mortgagor to the first day of the month following the month in which such
Cash Liquidation or REO Disposition occurred.
"▇▇▇▇▇▇▇ Mac": The Federal Home Loan Mortgage Corporation or any successor
organization.
"▇▇▇▇▇▇▇ Mac Servicing Guide": The ▇▇▇▇▇▇▇ Mac Servicers' Guide in effect
on and after the Effective Date.
"HUD": The United States Department of Housing and Urban Development, or
any successor thereto and including the Federal Housing Commissioner and the
Secretary of Housing and Urban Development where appropriate under the FHA
Regulations.
"Independent": With respect to any specified Person, such Person who: (i)
does not have any direct financial interest or any material indirect financial
interest in the applicable Mortgagor, the Servicer, the Owner, or their
Affiliates; and (b) is not connected with the applicable Mortgagor, the
Servicer, the Owner, or their respective Affiliates as an officer, employee,
promoter, underwriter, trustee, member, partner, shareholder, director, or
Person performing similar functions.
"Insolvency Proceeding": With respect to any Person: (i) any case, action,
or proceeding with respect to such Person before any court or other governmental
authority relating to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up, or relief of debtors; or (ii) any general
assignment for the benefit of creditors, composition, marshaling of assets for
creditors, or other, similar arrangement in respect of the creditors generally
of such Person or any substantial portion of such Person's creditors; in any
case undertaken under federal, state or foreign law, including the Bankruptcy
Code.
"Insurance Proceeds": Proceeds of any Primary Insurance Policy, title
policy, hazard policy or other insurance policy covering a Mortgage Loan, if
any, to the extent such proceeds are not to be applied to the restoration of the
related Mortgaged Property or released to the Mortgagor in accordance with the
Servicing Standard.
"Liquidation Proceeds": Amounts, other than Insurance Proceeds and
Condemnation Proceeds, received by the Servicer in connection with the
liquidation of a defaulted Mortgage
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Loan through trustee's sale, foreclosure sale or otherwise, other than amounts
received following the acquisition of an REO Property in accordance with the
provisions hereof.
"Loan-to-Value Ratio": With respect to any Mortgage Loan, the original
principal balance of such Mortgage Loan divided by the Appraised Value of the
related Mortgaged Property, subject to any applicable law for calculating the
Loan-to-Value Ratio.
"MERS": Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
"MERS Eligible Mortgage Loan": Any Mortgage Loan that under applicable law
and investor requirements is recordable in the name of MERS in the jurisdiction
in which the related Mortgaged Property is located.
"MERS Mortgage Loan": Any Mortgage Loan as to which the related Mortgage,
or an Assignment, has been recorded in the name of MERS, as agent for the holder
from time to time of the Mortgage Note.
"Monthly Advance": The aggregate amount of the advances made by the
Servicer on any Remittance Date pursuant to and as more fully described in
Section 5.03.
"Monthly Payment": The scheduled monthly payment of principal and interest
on a Mortgage Loan which is payable by a Mortgagor under the related Mortgage
Note.
"Monthly Period": Initially, the period from the Effective Date through to
and including the first Record Date during the term hereof, and, thereafter, the
period commencing on the day after each Record Date during the term hereof and
ending on the next succeeding Record Date during the term hereof (or, if
earlier, the date on which this Agreement terminates).
"Mortgage": The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on either (i) with respect to a
Mortgage Loan other than a Cooperative Loan, an unsubordinated estate in fee
simple in real property or (ii) with respect to a Cooperative Loan, the
Proprietary Lease and related Cooperative Shares, which in either case secures
the Mortgage Note.
"Mortgaged Property": With respect to a Mortgage Loan, the underlying real
property securing repayment of a Mortgage Note, consisting of a fee simple
estate.
"Mortgage File": With respect to a particular Mortgage Loan, those
origination and servicing documents, escrow documents, and other documents as
are specified on Schedule B-1 to this Agreement. These documents shall be stored
in a secure manner using paper or electronic storage.
"Mortgage Loan": Each individual mortgage loan or Cooperative Loan
(including all documents included in the Mortgage File evidencing the same, all
Monthly Payments, Principal Prepayments, Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds, and other proceeds relating thereto, and any and
all rights, benefits, proceeds and obligations arising therefrom or in
connection therewith) which is the subject of this Agreement and the related
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Terms Letter. The Mortgage Loans subject to this Agreement shall be identified
on Mortgage Loan Schedules prepared in connection with each Effective Date.
"Mortgage Loan Schedule": The list of Mortgage Loans identified on each
Effective Date that sets forth the information with respect to each Mortgage
Loan that is specified on Schedule A hereto. A Mortgage Loan Schedule will be
prepared for each Effective Date.
"Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
"Mortgagor": The obligor on a Mortgage Note.
"Negative Amortization": That portion of interest accrued at the Note Rate
in any month which exceeds the Monthly Payment on the related Mortgage Loan for
such month and which, pursuant to the terms of the Mortgage Note, is added to
the principal balance of the Mortgage Loan.
"Non-recoverable Advance": As of any date of determination, any Monthly
Advance or Servicing Advance previously made or any Monthly Advance or Servicing
Advance proposed to be made in respect of a Mortgage Loan which, in the good
faith judgment of the Servicer and in accordance with the Servicing Standard,
will not or, in the case of a proposed advance, would not be ultimately
recoverable pursuant to Section 4.05(3) or (4) hereof. The determination by the
Servicer that it has made a Non-recoverable Advance or that any proposed advance
would constitute a Non-recoverable Advance shall be evidenced by an Officer's
Certificate satisfying the requirements of Section 5.04 hereof and delivered to
the Owner on or before the Determination Date in any month.
"Note Rate": With respect to any Mortgage Loan at any time any
determination thereof is to be made, the annual rate at which interest accrues
thereon.
"Officers' Certificate": A certificate signed by (i) the President or a
Vice President and (ii) the Treasurer or the Secretary or one of the Assistant
Treasurers or Assistant Secretaries of the Servicer, and delivered by the
Servicer to the Owner as required by this Agreement.
"Owner": Taberna Realty Holdings Trust, a Maryland business trust, or its
successor in interest or any successor under this Agreement appointed as herein
provided.
"Owner's Account": The account of the Owner at a bank or other entity most
recently designated in a written notice by the Owner to the Servicer as the
"Owner's Account."
"Pass-Through Transfer": The sale or transfer of some or all of the
Mortgage Loans by the Owner to a trust or other entity as part of a publicly
issued or privately placed mortgage-backed securities transaction.
"Payoff": With respect to any Mortgage Loan, any payment or recovery
received in advance of the last scheduled Due Date of such Mortgage Loan, which
payment or recovery consists of principal in an amount equal to the outstanding
principal balance of such Mortgage
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Loan, all accrued and unpaid prepayment penalties, premiums, and/or interest
with respect thereto, and all other unpaid sums due with respect to such
Mortgage Loan.
"Permitted Investments": Investments that mature, unless payable on demand,
not later than the Business Day preceding the related Remittance Date; provided
that such investments shall only consist of the following:
(i) direct obligations of, or obligations fully guaranteed as to
principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by the
full faith and credit of the United States;
(ii) repurchase obligations (the collateral for which is held by
a third party) with respect to any security described in clause (i)
above, provided that the long-term unsecured obligations of the party
agreeing to repurchase such obligations are at the time rated by each
Rating Agency in one of its two highest rating categories;
(iii) certificates of deposit, time deposits and bankers'
acceptances of any bank or trust company incorporated under the laws
of the United States or any state, provided that the long-term
unsecured debt obligations of such bank or trust company (or, in the
case of the principal depository institution of a depository
institution holding company, the long-term unsecured debt obligations
of the depository institution holding company) at the date of
acquisition thereof have been rated by each Rating Agency in one of
its two highest rating categories;
(iv) commercial paper (having original maturities of not more
than 365 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition
has been rated by each Rating Agency in its highest rating category;
and
(v) any other demand, money market or time deposit account or
obligation, or interest-bearing or other security or investment,
acceptable to the Owner (such acceptance evidenced in writing);
provided further that "Permitted Investments" shall not include any instrument
described hereunder which evidences either the right to receive (a) only
interest with respect to the obligations underlying such instrument or (b) both
principal and interest payments derived from obligations underlying such
instrument and the interest and principal payments with respect to such
instrument provide a yield to maturity at par greater than 120% of the yield to
maturity at par of the underlying obligations.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pledge Instruments": With respect to each Cooperative Loan, the Stock
Power, the Assignment of the Proprietary Lease, the Assignment of the Mortgage
Note and the Cooperative Pledge Agreement.
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"Prepaid Monthly Payment": Any Monthly Payment received prior to its
scheduled Due Date and which is intended to be applied to a Mortgage Loan on its
scheduled Due Date.
"Prepayment Interest Shortfall Amount": With respect to any Mortgage Loan
that was subject to a voluntary (not including discounted payoffs and short
sales) Principal Prepayment in full or in part during any Due Period, which
Principal Prepayment was applied to such Mortgage Loan prior to such Mortgage
Loan's Due Date in such Due Period, the amount of interest (net of the related
Servicing Fee for Principal Prepayments in full only) that would have accrued on
the amount of such Principal Prepayment during the period commencing on the date
as of which such Principal Prepayment was applied to such Mortgage Loan and
ending on the day immediately preceding such Due Date, inclusive.
"Primary Insurance Policy": Each primary policy of mortgage insurance in
effect with respect to a Mortgage Loan and as so indicated on the Mortgage Loan
Schedule, or any replacement policy therefor obtained by the Servicer pursuant
to Section 4.08.
"Principal Prepayment": Any payment or other recovery of principal on a
Mortgage Loan (including a Payoff), other than a Monthly Payment or a Prepaid
Monthly Payment which is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon, which is not accompanied by
an amount of interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment and which is
intended to reduce the principal balance of the Mortgage Loan.
"Principal Prepayment Period": The Due Period preceding the related
Remittance Date.
"Proprietary Lease": The lease on a Cooperative Unit evidencing the
possessory interest of the owner of the Cooperative Shares in such Cooperative
Unit.
"Qualified Mortgage Insurer": A mortgage guaranty insurance company duly
qualified as such under the laws of the states in which the Mortgaged Properties
are located if such qualification is necessary to issue the applicable insurance
policy or bond, duly authorized and licensed in such states to transact the
applicable insurance business and to write the insurance provided, and approved
as an insurer by ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac (or with a different rating as may be
required by a Rating Agency in connection with a Pass-Through Transfer in order
to achieve the desired ratings for the securities to be issued).
"Rating Agency": Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, ▇▇▇▇▇'▇ Investors Service, Inc., and Fitch Ratings.
"Recognition Agreement": An agreement among a Cooperative Corporation, a
lender and a Mortgagor with respect to a Cooperative Loan whereby such parties
(i) acknowledge that such lender may make, or intends to make, such Cooperative
Loan, and (ii) make certain agreements with respect to such Cooperative Loan.
"Reconstitution Agreements": The agreement or agreements entered into by
the Servicer and the Owner and/or certain third parties on the Reconstitution
Date or Dates with respect to any or all of the Mortgage Loans serviced
hereunder, in connection with a Whole Loan Transfer or a Pass-Through Transfer
as provided in Section 10.02.
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"Reconstitution Date": The date or dates on which any or all of the
Mortgage Loans serviced under this Agreement shall be removed from this
Agreement and included as part of a Whole Loan Transfer or Pass-Through Transfer
pursuant to Section 10.02.
"Record Date": The close of business of the first Business Day of the month
of the related Remittance Date.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Internal Revenue Code or any similar tax vehicle providing
for the pooling of assets (such as a Financial Asset Security Investment Trust).
"Remittance Date": The 18th day of each calendar month, commencing on the
18th day of the month following the Effective Date, or, if such 18th day is not
a Business Day, then the next Business Day immediately following such 18th day.
"Remittance Rate": With respect to each Mortgage Loan, the related Note
Rate minus the Servicing Fee Rate.
"REO Disposition": The final sale by the Servicer of any REO Property.
"REO Disposition Proceeds": All amounts received with respect to any REO
Disposition.
"REO Property": A Mortgaged Property acquired by the Servicer on behalf of
the Owner as described in Section 4.13.
"Repurchase Price": As to any Mortgage Loan required to be repurchased
pursuant to Section 6.02, an amount equal to the Unpaid Principal Balance of
such Mortgage Loan at the time of repurchase; plus (2) interest on such Mortgage
Loan at the applicable Note Rate from the last date through which interest has
been paid and distributed to the Owner hereunder to the date of repurchase.
"Scheduled Principal Balance": With respect to any Mortgage Loan, (i) the
outstanding principal balance as of the Effective Date after application of
principal payments due on or before such date whether or not received, minus
(ii) all amounts previously remitted to the Owner with respect to such Mortgage
Loan representing (a) payments or other recoveries of principal, or (b) advances
of principal made pursuant to Section 5.03.
"Servicer": PHH Mortgage Corporation, a New Jersey corporation.
"Servicing Advances": All "out of pocket" costs and expenses that are
customary, reasonable and necessary which are incurred by the Servicer in the
performance of its servicing obligations hereunder, including (without
duplication) (i) reasonable attorneys' fees and (ii) the cost of (a) the
preservation, restoration and protection of a Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the servicing,
management and liquidation of any Specially Serviced Mortgaged Loans and/or any
REO Property, and (d) compliance with the Servicer 's obligations under Section
4.08.
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"Servicing Event": Any of the following events with respect to any Mortgage
Loan: (i) any Monthly Payment being more than 60 days delinquent; (ii) any
filing of an Insolvency Proceeding by or on behalf of the related Mortgagor, any
consent by or on behalf of the related Mortgagor to the filing of an Insolvency
Proceeding against such Mortgagor, or any admission by or on behalf of such
Mortgagor of its inability to pay such Person's debts generally as the same
become due; (iii) any filing of an Insolvency Proceeding against the related
Mortgagor that remains undismissed or unstayed for a period of 60 days after the
filing thereof; (iv) any issuance of any attachment or execution against, or any
appointment of a conservator, receiver or liquidator with respect to, all or
substantially all of the assets of the related Mortgagor or with respect to any
Mortgaged Property; (v) any receipt by the Servicer of notice of the foreclosure
or proposed foreclosure of any other lien on the related Mortgaged Property;
(vi) any proposal of a material modification (as reasonably determined by the
Servicer) to such Mortgage Loan due to a default or imminent default under such
Mortgage Loan; or (vii) in the reasonable judgment of the Servicer, the
occurrence, or likely occurrence within 60 days, of a payment default with
respect to such Mortgage Loan that is likely to remain uncured by the related
Mortgagor within 60 days thereafter.
"Servicing Fee": The annual fee, payable monthly to the Servicer out of the
interest portion of the Monthly Payment and or Payoff actually received on each
Mortgage Loan. The Servicing Fee with respect to each Mortgage Loan for any
calendar month (or a portion thereof) shall be 1/12 of the product of (i) the
Unpaid Principal Balance of the Mortgage Loan and (ii) the Servicing Fee Rate
applicable to such Mortgage Loan.
"Servicing Fee Rate": Unless otherwise specified on the Mortgage Loan
Schedule, (i) with respect to any ARM Loan, 0.375% per annum; and (ii) with
respect to any Mortgage Loan other than an ARM Loan, 0.25% per annum.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a written list of servicing officers furnished by the Servicer
to the Owner upon request therefor by the Owner, as such list may from time to
time be amended.
"Servicing Standard": The servicing practices and standards set forth in
Section 4.01.
"Specially Serviced Mortgage Loan": A Mortgage Loan as to which a Servicing
Event has occurred and is continuing.
"Stock Certificate": With respect to a Cooperative Loan, the certificates
evidencing ownership of the Cooperative Shares issued by the Cooperative
Corporation.
"Stock Power": With respect to a Cooperative Loan, an assignment of the
Stock Certificate or an assignment of the Cooperative Shares issued by the
Cooperative Corporation.
"Terms Letter": The letter agreement between the Owner and the Servicer, in
the form attached hereto as Exhibit 10, dated as of the related Effective Date,
that identifies a final pool of Mortgage Loans to be serviced pursuant to this
Agreement.
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"Uniform Commercial Code": The Uniform Commercial Code as in effect on the
date hereof in the State of New York; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the security interest in any collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than New York, "Uniform Commercial
Code" shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection.
"Unpaid Principal Balance": With respect to any Mortgage Loan, at any time,
the actual outstanding principal balance then payable by the Mortgagor under the
terms of the related Mortgage Note including any cumulative Negative
Amortization.
"VA": The United States Department of Veterans Affairs.
"Whole Loan Transfer": Any sale or transfer of some or all of the Mortgage
Loans by the Owner to a third party, which sale or transfer is not a
Pass-Through Transfer.
ARTICLE II: REPRESENTATIONS AND WARRANTIES OF THE SERVICER
Section 2.01 Representations and Warranties
The Servicer represents warrants and covenants to the Owner that as of each
Effective Date or as of such date specifically provided herein:
(1) Due Organization. The Servicer is an entity duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization, and has
all licenses necessary to carry on its business now being conducted and is
licensed, qualified and in good standing under the laws of each state where a
Mortgaged Property is located or is otherwise exempt under applicable law from
such qualification or is otherwise not required under applicable law to effect
such qualification; no demand for such qualification has been made upon the
Servicer by any state having jurisdiction; and in any event the Servicer is or
will be in compliance with the laws of any such state to the extent necessary to
enforce and service each Mortgage Loan in accordance with the terms of this
Agreement.
(2) Due Authority. The Servicer has the full power and authority to execute,
deliver and perform, and to enter into and consummate, all transactions
contemplated by this Agreement. The Servicer has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Owner, constitutes a legal, valid and binding obligation of the
Servicer, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, receivership, conservatorship,
insolvency, moratorium and other laws relating to or affecting creditors' rights
generally or the rights of creditors of banks and to the general principles of
equity (whether such enforceability is considered in a proceeding in equity or
at law).
(3) No Conflict. The execution and delivery of this Agreement, the consummation
of the transactions contemplated hereby, and the fulfillment of or compliance
with the terms and conditions of this Agreement, will not conflict with or
result in a breach of any of the terms,
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conditions or provisions of the Servicer 's organizational documents and bylaws
or any legal restriction or any agreement or instrument to which the Servicer is
now a party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the Servicer or its
property is subject, or impair the ability of the Owner to realize on the
Mortgage Loans;
(4) Ability to Perform. The Servicer does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(5) No Material Default. The Servicer is not in material default under any
agreement, contract, instrument or indenture of any nature whatsoever to which
the Servicer is a party or by which it (or any of its assets) is bound, which
default would have a material adverse effect on the ability of the Servicer to
perform under this Agreement, nor, to the best of the Servicer 's knowledge, has
any event occurred which, with notice, lapse of time or both, would constitute a
default under any such agreement, contract, instrument or indenture and have a
material adverse effect on the ability of the Servicer to perform its
obligations under this Agreement;
(6) No Litigation Pending. There is no action, suit, proceeding or investigation
pending or, to the best of the Servicer 's knowledge, threatened, against the
Servicer, which, either in any one instance or in the aggregate, if determined
adversely to the Servicer would adversely affect the execution, delivery or
enforceability of this Agreement or result in any material liability of the
Servicer, or draw into question the validity of this Agreement, or have a
material adverse effect on the financial condition of the Servicer;
(7) Non-solicitation. In the event the Servicer chooses to solicit any
Mortgagors (in writing or otherwise) to refinance any of the Mortgage Loans
during the term of this Agreement, such solicitations shall be directed at all
of Servicer's customers and will not be exclusively directed towards the
Mortgagors relating to the Mortgage Loans serviced hereunder;
(8) Privacy. The Servicer agrees and acknowledges that as to all nonpublic
personal information received or obtained by it with respect to any Mortgagor:
(a) such information is and shall be held by Servicer in accordance with all
applicable law, including but not limited to the privacy provisions of the
▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Act; (b) such information is in connection with a proposed or
actual secondary market sale related to a transaction of the Mortgagor for
purposes of 16 C.F.R. Section 313.14(a)(3); and (c) the Servicer is hereby
prohibited from disclosing or using any such information other than to carry out
the express provisions of this Agreement, or as otherwise permitted by
applicable law;
(9) Ability to Service. The Servicer is an approved seller/servicer for ▇▇▇▇▇▇
Mae and ▇▇▇▇▇▇▇ Mac and is a mortgagee approved by the Secretary of Housing and
Urban Development pursuant to Section 203 of the National Housing Act, with
facilities, procedures and experienced personnel necessary for the servicing of
mortgage loans of the same type as the Mortgage Loans. No event has occurred
that would make the Servicer unable to comply with ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac
eligibility requirements or that would require notification to either ▇▇▇▇▇▇ Mae
or ▇▇▇▇▇▇▇ Mac;
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(10) Collection Practices. The collection practices used by the Servicer with
respect to each Mortgage Note and Mortgage have been in all respects in
compliance with the Servicing Standard and applicable law.
(11) MERS. The Servicer is a member of MERS in good standing, and will comply in
all material respects with the rules and procedures of MERS in connection with
the servicing of the MERS Mortgage Loans for as long as such Mortgage Loans are
registered with MERS.
ARTICLE III:
REPRESENTATIONS AND WARRANTIES OF THE OWNER
Section 3.01 Representations and Warranties
The Owner represents, warrants and covenants to the Servicer that as of
each Effective Date or as of such date specifically provided herein:
(1) Due Organization. The Owner is an entity duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization, and has
all licenses necessary to carry on its business now being conducted and is
licensed, qualified and in good standing under the laws of each state where a
Mortgaged Property is located or is otherwise exempt under applicable law from
such qualification or is otherwise not required under applicable law to effect
such qualification; no demand for such qualification has been made upon the
Owner by any state having jurisdiction and in any event the Owner is or will be
in compliance with the laws of any such state to the extent necessary to enforce
each Mortgage Loan.
(2) Due Authority. The Owner had the full power and authority and legal right to
acquire the Mortgage Loans that it acquired. The Owner has the full power and
authority to hold each Mortgage Loan and to execute, deliver and perform, and to
enter into and consummate, all transactions contemplated by this Agreement. The
Owner has duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this Agreement,
assuming due authorization, execution and delivery by the Servicer, constitutes
a legal, valid and binding obligation of the Owner, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
receivership, conservatorship, insolvency, moratorium and other laws relating to
or affecting creditors' rights generally or the rights of creditors of banks and
to the general principles of equity (whether such enforceability is considered
in a proceeding in equity or at law);
(3) No Conflict. None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, or the fulfillment of or
compliance with the terms and conditions of this Agreement, will conflict with
or result in a breach of any of the terms, conditions or provisions of the
Owner's organizational documents and bylaws or any legal restriction or any
agreement or instrument to which the Owner is now a party or by which it is
bound, or constitute a default or result in an acceleration under any of the
foregoing, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Owner or its property is subject, or impair the
ability of the Owner to realize on the Mortgage Loans, or impair the value of
the Mortgage Loans;
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(4) Ability to Perform. The Owner does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant contained in
this Agreement;
(5) No Material Default. The Owner is not in material default under any
agreement, contract, instrument or indenture of any nature whatsoever to which
the Owner is a party or by which it (or any of its assets) is bound, which
default would have a material adverse effect on the ability of the Owner to
perform under this Agreement, nor, to the best of the Owner's knowledge, has any
event occurred which, with notice, lapse of time or both would constitute a
default under any such agreement, contract, instrument or indenture and have a
material adverse effect on the ability of the Owner to perform its obligations
under this Agreement;
(6) Litigation Pending. There is no action, suit, proceeding or investigation
pending or, to the best of the Owner's knowledge, threatened, against the Owner,
which, either in any one instance or in the aggregate, if determined adversely
to the Owner would adversely affect the Owner's execution, delivery or
enforceability of this Agreement or result in any material liability of the
Owner or draw into question the validity of this Agreement or the Mortgage Loans
or have a material adverse effect on the financial condition of the Owner;
(7) Broker. The Owner has not dealt with any broker or agent or anyone else who
might be entitled to a fee or commission in connection with this transaction.
(8) No Consent Required. No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery and
performance by the Owner of or compliance by the Owner with this Agreement, the
purchase of the Mortgage Loans from the Servicer or the consummation of the
transactions contemplated by this Agreement or, if required, such approval has
been obtained prior to such Effective Date;
(9) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement is in the ordinary course of business of the
Owner;
(10) No Untrue Information. Neither this Agreement nor any statement, report or
other agreement, document or instrument furnished or to be furnished pursuant to
this Agreement contains or will contain any materially untrue statement of fact
or omits or will omit to state a fact necessary to make the statements contained
therein not misleading;
(11) Non-solicitation. In the event the Owner chooses to solicit any Mortgagors
(in writing or otherwise) to refinance any of the Mortgage Loans during the term
of this Agreement, such solicitations shall be directed at all of Owner's
customers and will not be exclusively directed towards the Mortgagors relating
to the Mortgage Loans serviced hereunder; and
(12) Privacy. Owner agrees and acknowledges that as to all nonpublic personal
information received or obtained by it with respect to any Mortgagor: (a) such
information is and shall be held by Owner in accordance with all applicable law,
including but not limited to the privacy provisions of the ▇▇▇▇▇-▇▇▇▇▇ Bliley
Act; (b) such information is in connection with a proposed or actual secondary
market sale related to a transaction of the Mortgagor for purposes of 16 C.F.R.
Section 313.14(a)(3); and (c) Owner is hereby prohibited from disclosing or
using any such information other than to carry out the express provisions of
this Agreement, or as otherwise permitted by applicable law.
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(13) MERS. The Owner is a member of MERS in good standing, and will comply in
all material respects with the rules and procedures of MERS in connection with
the Owner's performance of its obligations under this Agreement with respect to
the Mortgage Loans, for as long as such Mortgage Loans are registered with MERS.
ARTICLE IV:
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Servicing Standards; Additional Documents; Consent of the
Owner
(1) The Servicer, as independent contract servicer, shall service and administer
the Mortgage Loans and REO Property from and after each Effective Date in
accordance with the terms and provisions of the Mortgage Loans, applicable law
and the terms and provisions of this Agreement for and on behalf of, and in the
best interests of, the Owner (without taking into account any relationship the
Servicer may have with any Mortgagor or other Person, the participation, if any,
of the Servicer in any financing provided in connection with the sale of any
Mortgaged Property, or the Servicer 's obligation to advance any expenses or
incur any costs in the performance of its duties hereunder) in accordance with a
standard that is not less than the higher of (a) the same care, skill, prudence
and diligence with which it services similar assets held for its own or its
Affiliates' account and (b) the same care, skill, prudence and diligence with
which it services similar assets for third party institutional investors, in
each case giving due consideration to customary and usual standards of practice
of prudent institutional mortgage loan servicers utilized with respect to
mortgage loans comparable to the Mortgage Loans. Subject to the foregoing
standards, in connection with such servicing and administration, the Servicer
shall seek to maximize the timely recovery of principal and interest on the
Mortgage Notes; provided that nothing contained herein shall be construed as an
express or implied guarantee by the Servicer of the collectibility of payments
on the Mortgage Loans or shall be construed as impairing or adversely affecting
any rights or benefits specifically provided by this Agreement to the Servicer,
including with respect to Servicing Fees.
(2) To the extent consistent with Section 4.01(1) and further subject to any
express limitations set forth in this Agreement, the Servicer (acting alone or,
solely in the circumstances permitted hereunder, acting through a subservicer)
shall have full power and authority to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including the power and authority (a) to execute and deliver, on
behalf of the Owner, customary consents or waivers and other instruments and
documents (including estoppel certificates), (b) to consent to transfers of any
Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages,
(c) to submit claims to collect any Insurance Proceeds and Liquidation Proceeds,
(d) to consent to the application of any Insurance Proceeds or Condemnation
Proceeds to the restoration of the applicable Mortgaged Property or otherwise,
(e) to bring an action in a court of law, including an unlawful detainer action,
to enforce rights of the Owner with respect to any Mortgaged Property, (f) to
execute and deliver, on behalf of the Owner, documents relating to the
management, operation, maintenance, repair, leasing, marketing and sale of any
Mortgaged Property or any REO Property, and (g) to effectuate foreclosure or
other conversion of the ownership of the Mortgaged Property securing any
Mortgage Loan; provided that the Servicer shall not take any action not provided
for in this Agreement that is materially inconsistent with or materially
prejudices the interest of the Owner
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in any Mortgage Loan or under this Agreement. The Owner shall furnish the
Servicer with a power of attorney in the form of Exhibit 4.01(a) and other
documents reasonably necessary or appropriate to enable the Servicer to service
and administer the Mortgage Loans and the REO Properties, including documents
relating to the foreclosure, receivership, management, operation, maintenance,
repair, leasing, marketing and sale (in foreclosure or otherwise) of any
Mortgaged Property or any REO Property. Nothing contained in this Agreement
shall limit the ability of the Servicer to lend money to (whether on a secured
or unsecured basis), and otherwise generally engage in any kind of business or
dealings with, any Mortgagor as though the Servicer were not a party to this
Agreement or to the transactions contemplated hereby.
(3) Notwithstanding anything to the contrary contained herein:
(a) the Servicer acknowledges that the Owner will retain title to,
and ownership of, the Mortgage Loans and the REO Properties and
that the Servicer does not hereby acquire any title to, security
interest in, or other rights of any kind in or to any Mortgage
Loan or REO Property or any portion thereof;
(b) the Servicer shall not file any lien or any other encumbrance on,
exercise any right of setoff against, or attach or assert any
claim in or on any Mortgage Loan or REO Property, unless
authorized pursuant to a judicial or administrative proceeding or
a court order;
(c) the Servicer shall, in servicing the Mortgage Loans, follow and
comply with the servicing guidelines established by ▇▇▇▇▇▇ ▇▇▇,
provided that the Servicer shall specifically notify the Owner in
writing and obtain the Owner's written consent prior to the
Servicer taking any of the following actions: (1) modifying,
amending or waiving any of the financial terms of, or making any
other material modifications to, a Mortgage Loan, except the
Servicer may be permitted to do so in the event of a Specially
Serviced Mortgage Loan or with respect to a Mortgage Loan insured
by HUD, the VA or a Primary Insurance Policy, upon the
Mortgagor's request, accept a principal prepayment and
re-amortize the then remaining principal balance over the then
remaining term of the loan (resulting in a lower scheduled
monthly payment but no change in the maturity date); (2) selling
any Specially Serviced Mortgage Loan; (3) forgiving principal or
interest on, or permitting to be satisfied at a discount, any
Mortgage Loan except in the event of a Specially Serviced
Mortgage Loan; or (4) accepting substitute or additional
collateral, or releasing any collateral, for a Mortgage Loan. If
the Owner has not approved or rejected in writing any proposed
action(s) recommended by the Servicer to be taken hereunder
within 5 Business Days of the date such recommendation is made in
writing, then the Owner shall be deemed to have accepted such
recommended action(s) and the Servicer shall take any such
action(s);
(d) the Servicer shall notify the Owner of any modification, waiver
or amendment of any term of any Mortgage Loan and the date
thereof and
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shall deliver to the Owner, for deposit in the related Mortgage
File, an original counterpart of the agreement relating to such
modification, waiver or amendment promptly following the
execution thereof;
(e) in accordance with the ▇▇▇▇▇▇ Mae Guide, the Servicer shall be
entitled to workout compensation as it relates to repayment
plans, loan modifications, short-sales, deed-in lieu of
foreclosure, and hardship assumptions as evidenced in Exhibit
4.01(e);
(f) the Servicer shall remain primarily liable for the full
performance of its obligations hereunder notwithstanding any
appointment by the Servicer of a subservicer or subservicers
hereunder; and
(g) the Owner may at any time and from time to time, in its sole
discretion, upon 30 Business Days' written notice to the
Servicer, terminate the Servicer 's servicing obligations
hereunder with respect to (1) any REO Property or (2) any
Mortgage Loan that, in accordance with the Owner's internal
credit classification criteria, has been classified as "doubtful"
or a "loss" and Owner shall reimburse Servicer all Monthly
Advances and Servicing Advances, take all necessary steps and
absorb all associated costs to assume such servicing. Upon the
effectiveness of any such termination of the Servicer's servicing
obligations with respect to any such REO Property or Mortgage
Loan, the Servicer shall deliver all agreements, documents, and
instruments related thereto to the Owner.
Section 4.02 Collection of Mortgage Loan Payments
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Servicer will proceed diligently to collect
all payments due under each Mortgage Loan when the same shall become due and
payable and shall, to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any related Primary Insurance Policy,
follow such collection procedures as it follows with respect to mortgage loans
comparable to the Mortgage Loans, which procedures shall in any event comply
with the Servicing Standard. Furthermore, the Servicer shall ascertain and
estimate annual ground rents, taxes, assessments, fire and hazard insurance
premiums, mortgage insurance premiums, and all other charges that, as provided
in the Mortgages, will become due and payable to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
Section 4.03 Notice of Foreclosure Sale
The Servicer shall, within two (2) Business Days following the occurrence
of any foreclosure sale with respect to any Mortgaged Property, deliver to the
Owner a notice of foreclosure sale substantially in the form of Exhibit 4.03.
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Section 4.04 Establishment of Collection Account; Deposits in Collection
Account
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Collection Accounts
which shall be an Eligible Account. The creation of any Collection Account shall
be evidenced by a letter agreement in the form of Exhibit 4.04 attached hereto.
A copy of such letter agreement shall be furnished to the Owner upon Owner's
request.
The Servicer shall deposit in the Collection Account, within two Business
Days after receipt (or as otherwise required pursuant to this Agreement in the
case of clauses (8), (9) and (10) of this Section 4.04) and retain therein the
following payments and collections received or made by it subsequent to each
Effective Date, or received by it prior to the Effective Date but allocable to a
period subsequent thereto, other than in respect of principal and interest on
the Mortgage Loans due on or before the Effective Date:
(1) all payments on account of principal, including Principal Prepayments, on
the Mortgage Loans;
(2) all payments on account of interest less the Servicing Fee on the Mortgage
Loans;
(3) all Liquidation Proceeds;
(4) all REO Disposition Proceeds;
(5) all Insurance Proceeds, including amounts required to be deposited pursuant
to Sections 6.10 and 6.11, other than proceeds to be held in the Escrow Account
and applied to the restoration or repair of the Mortgaged Properties or released
to the applicable Mortgagors in accordance with the Servicer 's normal servicing
procedures, the related Mortgages or applicable law;
(6) all Condemnation Proceeds affecting any Mortgaged Property which are not
released to a Mortgagor in accordance with the Servicer 's normal servicing
procedures, the related Mortgage or applicable law;
(7) any Monthly Advances in accordance with Section 5.03;
(8) any amounts required to be deposited by the Servicer pursuant to Section
4.15 in connection with any losses on Permitted Investments;
(9) any amounts required to be deposited in the Collection Account pursuant to
Sections 6.01 or 6.02 or otherwise pursuant to the terms hereof; and
(10) Foreclosure Profits.
The foregoing requirements for deposit in the Collection Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees, to the extent permitted by Section 6.01, and
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any prepayment penalties on the Mortgage Loans need not be deposited by the
Servicer in the Collection Account and shall be retained by the Servicer as
additional compensation.
Section 4.05 Permitted Withdrawals from the Collection Account
The Servicer may, from time to time in accordance with the provisions hereof,
withdraw amounts from the Collection Account for the following purposes (without
duplication):
(1) to reimburse itself for unreimbursed Monthly Advances and Servicing Advances
that the Servicer has determined to be Non-Recoverable Advances as provided in
Section 5.04;
(2) to make payments to the Owner in the amounts, at the times and in the manner
provided for in Section 5.01;
(3) to reimburse itself for unreimbursed Servicing Advances and for unreimbursed
Monthly Advances, the Servicer 's right to reimburse itself pursuant to this
Subsection (3) with respect to any Mortgage Loan being limited to related
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds and such other
amounts as may be collected by the Servicer from the Mortgagor or otherwise
relating to the Mortgage Loan, it being understood that, in the case of such
reimbursement, the Servicer 's right thereto shall be prior to the rights of the
Owner;
(4) to pay to itself as additional servicing compensation any interest earned on
funds in the Collection Account (all such interest to be withdrawn monthly not
later than each Remittance Date), any Foreclosure Profits and any prepayment
penalties or premiums relating to any Principal Prepayments; provided that no
such amounts shall be payable as servicing compensation to the extent they
relate to a Mortgage Loan with respect to which a default, breach, violation, or
event of acceleration exists or would exist but for the lapse of time, the
giving of notice, or both;
(5) to pay to itself with respect to each Mortgage Loan that has been
repurchased pursuant to Section 6.02 all amounts received thereon and not
distributed as of the date on which the related Repurchase Price is determined
(except to the extent that such amounts constitute part of the Repurchase Price
to be remitted to the Owner);
(6) to remove any amounts deposited into the Collection Account in error;
(7) to clear and terminate the Collection Account in the event a new Collection
Account has been established, or upon the termination of this Agreement, with
any funds contained therein to be distributed in accordance with the terms of
this Agreement; and
(8) to reimburse itself for Monthly Advances.
The Servicer shall keep and maintain a separate, detailed accounting, on a
Mortgage Loan-by-Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account pursuant to this Section.
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Section 4.06 Establishment of Escrow Accounts; Deposits in Escrow
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts which shall be an Eligible Account. The
creation of any Escrow Account shall be evidenced by a letter agreement in the
form shown on Exhibit 4.06 attached hereto. A copy of such letter agreement
shall be furnished to the Owner upon Owner's request.
The Servicer shall deposit in each Escrow Account within two Business Days
after receipt, and retain therein, (i) all Escrow Payments collected on account
of the related Mortgage Loans for the purpose of effecting timely payment of any
such items as required under the terms of this Agreement, and (ii) all Insurance
Proceeds which are to be applied to the restoration or repair of any Mortgaged
Property. The Servicer shall make withdrawals therefrom only to effect such
payments as are required under Sections 4.07 and/or 4.08. The Servicer shall be
entitled to retain any interest paid on funds deposited in the Escrow Account by
the depository institution other than interest on escrowed funds required by law
to be paid to the Mortgagor and, to the extent required by law, the Servicer
shall pay interest on escrowed funds to the Mortgagor notwithstanding that the
Escrow Account is non-interest bearing or that interest paid thereon is
insufficient for such purposes, without any right of reimbursement therefor.
Section 4.07 Permitted Withdrawals From Escrow Accounts
Withdrawals from any Escrow Account may be made by the Servicer only (i) to
effect timely payments of ground rents, taxes, assessments, hazard insurance
premiums, Primary Insurance Policy premiums, if applicable, and comparable items
constituting Escrow Payments for the related Mortgage, (ii) to reimburse the
Servicer for any Servicing Advance made by the Servicer with respect to a
related Mortgage Loan but only from amounts received on the related Mortgage
Loan that represent late payments or collections of Escrow Payments thereunder,
(iii) to refund to the Mortgagor any funds as may be determined to be overages,
(iv) if permitted by applicable law, for transfer to the Collection Account in
accordance with the terms of this Agreement, (v) for application to the
restoration or repair of the Mortgaged Property in accordance with the terms of
the related Mortgage Loan, (vi) to pay to the Servicer, or to the Mortgagor to
the extent required by law, any interest paid on the funds deposited in the
Escrow Account, (vii) to reimburse a Mortgagor in connection with the making of
the Payoff of the related Mortgage Loan or the termination of all or part of the
escrow requirement in connection with the Mortgage Loan, (viii) to remove any
amounts deposited into the Escrow Account in error; or (ix) to clear and
terminate the Escrow Account in the event a new Escrow Account has been
established or upon the termination of this Agreement.
Section 4.08 Payment of Taxes, Insurance and Other Charges; Maintenance of
Primary Insurance Policies; Collections Thereunder
With respect to each Mortgage Loan, the Servicer shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, and other
charges which are or may become a lien upon the Mortgaged Property and the
status of Primary Insurance Policy premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for
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the payment of such charges, including renewal premiums, and shall effect
payment thereof prior to the applicable penalty or termination date and at a
time appropriate for securing maximum discounts allowable, employing for such
purpose deposits of the Mortgagor in the Escrow Account which shall have been
estimated and accumulated by the Servicer in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage and applicable law. If a
Mortgage does not provide for Escrow Payments, then the Servicer shall require
that any such payments be made by the Mortgagor at the time they first become
due. The Servicer assumes full responsibility for the timely payment of all such
bills and shall effect timely payments of all such bills irrespective of the
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments but shall be entitled to reimbursement thereof in accordance with the
terms of this Agreement.
The Servicer shall maintain in full force and effect a Primary Insurance
Policy, issued by a Qualified Mortgage Insurer, with respect to each Mortgage
Loan for which such coverage is required. Such coverage shall be maintained
until the Loan-to-Value Ratio of the related Mortgage Loan is reduced to 75% or
less in the case of a Mortgage Loan having a Loan-to-Value Ratio at origination
in excess of 80% or until such time, if any, as such insurance is required to be
released in accordance with the provisions of applicable law including, but not
limited to, the Homeowners Protection Act of 1998. The Servicer shall assure
that all premiums due under any Primary Insurance Policy are paid in a timely
manner, but shall be entitled to reimbursement pursuant to the terms of this
Agreement for premiums paid by the Servicer on behalf of any Mortgagor who is
obligated to pay such premiums but fails to do so. The Servicer shall not cancel
or refuse to renew any Primary Insurance Policy in effect on the Effective Date
that is required to be kept in force under this Agreement unless a replacement
Primary Insurance Policy for such canceled or nonrenewed policy is obtained from
and maintained with an insurer The Servicer shall not take any action which
would result in noncoverage under any applicable Primary Insurance Policy of any
loss which, but for the actions of the Servicer, would have been covered
thereunder. In connection with any assumption or substitution agreement entered
into or to be entered into pursuant to Section 6.01, the Servicer shall promptly
notify the insurer under the related Primary Insurance Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such
policy and shall take all actions which may be required by such insurer as a
condition to the continuation of coverage under the Primary Insurance Policy. If
such Primary Insurance Policy is terminated as a result of such assumption or
substitution of liability, then the Servicer shall obtain, and, except as
otherwise provided above, maintain, a replacement Primary Insurance Policy as
provided above.
In connection with its activities as servicer, the Servicer agrees to
prepare and present, on behalf of itself and the Owner, claims to the insurer
under any Primary Insurance Policy in a timely fashion in accordance with the
terms of such policies and, in this regard, to take such action as shall be
necessary to permit recovery under any Primary Insurance Policy respecting a
defaulted Mortgage Loan. Pursuant to Section 4.04, any amounts collected by the
Servicer under any Primary Insurance Policy shall be deposited in the Collection
Account, subject to withdrawal in accordance with Section 4.05.
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Section 4.09 Transfer of Accounts
The Servicer may transfer the Collection Account or any Escrow Account to a
different depository institution from time to time; provided that (i) no such
transfer shall be made unless all certifications or letter agreements required
under Section 4.04 have been executed and delivered by the parties thereto; and
(ii) concurrently upon any such transfer, the Servicer shall give written notice
thereof to the Owner. Notwithstanding anything to the contrary contained herein,
the Collection Account and each Escrow Account shall at all times constitute
Eligible Accounts.
Section 4.10 Maintenance of Hazard Insurance
The Servicer shall cause to be maintained for each Mortgage Loan fire and
hazard insurance with extended coverage as is customary in the area where the
Mortgaged Property is located in an amount that is at least equal to the lesser
of (a) the maximum insurable value of the improvements securing such Mortgage
Loan and (b) the greater of (1) the Unpaid Principal Balance of such Mortgage
Loan or (2) an amount such that the proceeds thereof shall be sufficient to
prevent the Mortgagor and/or the loss payee from becoming a co-insurer.
If any Mortgaged Property is in an area identified by the Federal Emergency
Management Agency as having special flood hazards and such flood insurance has
been made available, then the Servicer will cause to be maintained a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration with a generally acceptable insurance carrier,
in an amount representing coverage not less than the lesser of (a) the minimum
amount required, under the terms of coverage, to compensate for any damage or
loss on a replacement cost basis (or the outstanding principal balance of the
related Mortgage Loan if replacement cost coverage is not available for the type
of building insured) or (b) the maximum amount of insurance which is available
under the Flood Disaster Protection Act of 1973, as amended (assuming that the
area in which such Mortgaged Property is located is participating in such
program).
The Servicer shall also maintain on each REO Property fire, hazard and
liability insurance, and to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance with extended
coverage in an amount which is at least equal to the lesser of (a) the maximum
insurable value of the improvements which are a part of such property and (b)
the outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property plus accrued interest at the Note Rate and related
Servicing Advances.
All such policies shall be endorsed with standard mortgagee clauses with
loss payable to the Servicer, or upon request to the Owner, and shall provide
for at least 30 days' prior written notice of any cancellation, reduction in the
amount of, or material change in, coverage to the Servicer. The Servicer shall
not interfere with the Mortgagor's freedom of choice in selecting either his
insurance carrier or agent, provided that the Servicer shall not accept any such
insurance policies from insurance companies unless such companies (a) currently
reflect (1) a general policyholder's rating of B+ or better and a financial size
category of III or better in Best's Key Rating Guide, or (2) a general
policyholder's rating of "A" or "A-" or better in Best's Key Rating Guide, and
(b) are licensed to do business in the state wherein the related Mortgaged
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Property is located. Notwithstanding the foregoing, the Servicer may accept a
policy underwritten by Lloyd's of London or, if it is the only coverage
available, coverage under a state's Fair Access to Insurance Requirement (FAIR)
Plan. If a hazard policy becomes in danger of being terminated, or the insurer
ceases to have the ratings noted above, the Servicer shall notify the related
Mortgagor, and shall use its best efforts, as permitted by applicable law, to
obtain from another qualified insurer a replacement hazard insurance policy
substantially and materially similar in all respects to the original policy. In
no event, however, shall a Mortgage Loan be without a hazard insurance policy at
any time.
Pursuant to Section 4.04, any amounts collected by the Servicer under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the Mortgaged Property or REO Property,
or released to the Mortgagor in accordance with the Servicer 's normal servicing
procedures) shall be deposited in the Collection Account within two Business
Days after receipt, subject to withdrawal in accordance with Section 4.05. Any
cost incurred by the Servicer in maintaining any such insurance shall not, for
the purpose of calculating remittances to the Owner, be added to the Unpaid
Principal Balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional
insurance need be required by the Servicer of the Mortgagor or maintained on
property acquired in respect of the Mortgage Loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance.
Section 4.11 Fidelity Bond; Errors and Omissions Insurance
The Servicer shall maintain, at its own expense, a blanket fidelity bond
and an errors and omissions insurance policy, with broad coverage with
responsible companies that would meet the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇
Mac on all officers, employees or other Persons acting in any capacity with
regard to the Mortgage Loans to handle funds, money, documents and papers
relating to the Mortgage Loans. The Fidelity Bond and errors and omissions
insurance shall be in the form of the "Mortgage Banker's Blanket Bond" and shall
protect and insure the Servicer against losses, including losses arising by
virtue of any Mortgage Loan not being satisfied in accordance with the
procedures set forth in Section 6.02 and/or losses resulting from or arising in
connection with forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of or by such Persons. Such Fidelity Bond shall also protect and
insure the Servicer against losses in connection with the failure to maintain
any insurance policies required pursuant to this Agreement and the release or
satisfaction of a Mortgage Loan without having obtained payment in full of the
indebtedness secured thereby. No provision of this Section 4.11 requiring the
Fidelity Bond and errors and omissions insurance shall diminish or relieve the
Servicer from its duties and obligations as set forth in this Agreement. The
minimum coverage under any such bond and insurance policy shall be at least
equal to the corresponding amounts required by ▇▇▇▇▇▇ Mae in the ▇▇▇▇▇▇ ▇▇▇
Guide or by ▇▇▇▇▇▇▇ Mac in the ▇▇▇▇▇▇▇ Mac Servicing Guide. The Servicer shall
cause to be delivered to the Owner upon request: (i) a certified true copy of
the Fidelity Bond and insurance policy; and (ii) a written statement from the
surety and the insurer that such Fidelity Bond or insurance policy shall in no
event be terminated or materially modified without 30 days' prior written notice
to the Owner.
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Section 4.12 Realization Upon Specially Serviced Mortgage Loans and REO
Properties
With respect to any Specially Serviced Mortgage Loan, the Owner shall have
the right to direct the Servicer, and the Servicer shall otherwise be obligated,
to foreclose upon or otherwise comparably convert the ownership of properties
securing such of the Specially Serviced Mortgage Loans as come into and continue
in default and as to which (a) in the reasonable judgment of the Servicer, no
satisfactory arrangements can, in accordance with prudent lending practices, be
made for collection of delinquent payments pursuant to Section 4.01 and (b) such
foreclosure or other conversion is otherwise in accordance with Section 4.01.
The Servicer shall not be required to expend its own funds in connection with
any foreclosure or towards the restoration, repair, protection or maintenance of
any property unless it shall determine that such expenses will be recoverable to
it as Servicing Advances either through Liquidation Proceeds or through
Insurance Proceeds (in accordance with Section 4.05) or from any other source
relating to the Specially Serviced Mortgage Loan. The Servicer shall be required
to advance funds for all other costs and expenses incurred by it in any such
foreclosure proceedings; provided that it shall be entitled to reimbursement
thereof from the proceeds of liquidation of the related Mortgaged Property, as
contemplated by Section 4.05.
Upon any Mortgaged Property becoming an REO Property, the Servicer shall
promptly notify the Owner thereof, specifying the date on which such Mortgaged
Property became an REO Property. Pursuant to its efforts to sell such REO
Property, the Servicer shall, either itself or through an agent selected by it,
protect and conserve such REO Property in accordance with the Servicing Standard
and may, subject to Section 4.01(3)(c) and incident to its conservation and
protection of the interests of the Owner, rent the same, or any part thereof,
for the period to the sale of such REO Property.
Notwithstanding anything to the contrary contained herein, the Owner shall
not, and the Servicer shall not on the Owner's behalf, acquire any real property
(or personal property incident to such real property) except in connection with
a default or a default that is imminent on a Mortgage Loan. If the Owner
acquires any real property (or personal property incident to such real property)
in connection with such a default, then such property shall be disposed of by
the Servicer in accordance with this Section and Section 4.13 as soon as
possible but in no event later than 3 years after its acquisition by the
Servicer on behalf of the Owner, unless the Servicer obtains, at the expense of
the Owner, in a timely fashion an extension from the Internal Revenue Service
for an additional specified period.
If, in the exercise of its servicing obligations with respect to any
Mortgaged Property hereunder, the Servicer deems it is necessary or advisable to
obtain an Environmental Assessment, then the Servicer shall so obtain an
Environmental Assessment, it being understood that all reasonable costs and
expenses incurred by the Servicer in connection with any such Environmental
Assessment (including the cost thereof) shall be deemed to be Servicing Advances
recoverable by the Servicer pursuant to Section 4.13(3). Such Environmental
Assessment shall (a) assess whether (1) such Mortgaged Property is in material
violation of applicable Environmental Laws or (2) after consultation with an
environmental expert, taking the actions necessary to comply with applicable
Environmental Laws is reasonably likely to produce a greater recovery on a net
present value basis than not taking such actions, and (b) identify whether (1)
any circumstances are present at such Mortgaged Property relating to the use,
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management or disposal of any hazardous materials for which investigation,
testing, monitoring, containment, clean-up or re mediation could be required
under any federal, state or local law or regulation, or (2) if such
circumstances exist, after consultation with an environmental expert, taking
such actions is reasonably likely to produce a greater recovery on a present
value basis than not taking such actions. (The conditions described in the
immediately preceding clauses (a) and (b) shall be referred to herein as
"Environmental Conditions Precedent to Foreclosure.") If any such Environmental
Assessment so warrants, the Servicer is hereby authorized to and shall perform
such additional environmental testing as it deems necessary and prudent to
establish the satisfaction of the foregoing Environmental Conditions Precedent
to Foreclosure or to proceed as set forth below (such additional testing
thereafter being included in the term "Environmental Assessment ").
If an Environmental Assessment deemed necessary or advisable by the
Servicer in accordance with this Section 4.12 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with respect
to any Mortgaged Property, but the Servicer in good faith reasonably believes
that it is in the best economic interest of the Owner to proceed against such
Mortgaged Property and, if title thereto is acquired, to take such remedial,
corrective or other action with respect to the unsatisfied condition or
conditions as may be prescribed by applicable law to satisfy such condition or
conditions, then the Servicer shall so notify the Owner. If, pursuant to Section
4.01(3)(c), the Owner is deemed to have accepted Servicer's recommendation to
proceed against such Mortgaged Property, then the Servicer shall so proceed. The
cost of any remedial, corrective or other action contemplated by the preceding
sentence in respect of any of the Environmental Conditions Precedent to
Foreclosure that is not satisfied shall not be an expense of the Servicer and
the Servicer shall not be required to expend or risk its own funds or otherwise
incur any financial liability in connection with any such action.
If an Environmental Assessment deemed necessary or advisable by the
Servicer in accordance with this Section 4.12 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with respect
to any Mortgaged Property and, in accordance with Section 4.01(3)(c), the Owner
elects or is deemed to have elected not to proceed against such Mortgaged
Property, then the Servicer shall, subject to Section 4.01(3)(c), take such
action as it deems to be in the best economic interest of the Owner (other than
proceeding against the Mortgaged Property or directly or indirectly becoming the
owner or operator thereof) as determined in accordance with the Servicing
Standard and is hereby authorized at such time as it deems appropriate to
release such Mortgaged Property from the lien of the related Mortgage.
Prior to the Servicer taking any action with respect to the use, management
or disposal of any hazardous materials for which investigation, testing,
monitoring, containment, clean-up or re mediation could be required under any
federal, state or local law or regulation on any Mortgaged Property, the
Servicer shall request the approval of the Owner in accordance with Section
4.01(3)(c) and, if such action is deemed approved by the Owner, (a) keep the
Owner apprised of the progress of such action; and (b) take such action in
compliance with all applicable Environmental Laws.
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Section 4.13 Management of REO Properties
If title to any Mortgaged Property is acquired in foreclosure or by deed in
lieu of foreclosure (each, an "REO Property"), the deed or certificate of sale
shall be taken in the name of the Owner or the Person designated by the Owner.
The Servicer (acting alone or through a subservicer or managing agent
specializing in the disposition of REO Properties), on behalf of the Owner,
shall, subject to Section 4.01(3)(c), dispose of any REO Property pursuant to
Section 4.12. Promptly following any acquisition by the Owner (through the
Servicer ) of an REO Property, the Servicer shall obtain a narrative appraisal
thereof (at the expense of the Owner) in order to determine the fair market
value of such REO Property. The Servicer shall also cause each REO Property to
be inspected promptly upon the acquisition of title thereto and shall cause each
REO Property to be inspected at least annually thereafter, and Servicer shall be
entitled to be reimbursed for expenses in connection therewith in accordance
with this Agreement. The Servicer shall make or cause to be made a written
report of each such inspection. Such reports shall be retained in the Mortgage
File and copies thereof shall be forwarded by the Servicer to the Owner.
Notwithstanding anything to the contrary contained herein, if a REMIC election
has been or is to be made with respect to the arrangement under which the
Mortgage Loans and the REO Properties are held, then the Servicer shall manage,
conserve, protect and operate each REO Property in a manner that does not cause
such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 86OG(a)(8) of the Code or result in the receipt by such REMIC
of any "income from non-permitted assets" within the meaning of Section
86OF(a)(2)(B) or any "net income from foreclosure property" within the meaning
of Section 86OG(c)(2) of the Code (or comparable provisions of any successor or
similar legislation).
The Servicer shall deposit and hold all revenues and funds collected and
received in connection with the operation of each REO Property in the Collection
Account, and the Servicer shall account separately for revenues and funds
received or expended with respect to each REO Property.
The Servicer shall have full power and authority, subject only to the
specific requirements and prohibitions of this Agreement (and, in particular,
Section 4.01(3)(c)), to do any and all things in connection with any REO
Property as are consistent with the Servicing Standard. In connection therewith,
the Servicer shall deposit or cause to be deposited within two (2) Business Day
of receipt in the Collection Account all revenues and collections received or
collected by it with respect to each REO Property, including all proceeds of any
REO Disposition. Subject to Sections 4.05 and 4.07, the Servicer shall withdraw
(without duplication) from the Collection Account and or Escrow Account, but
solely from the revenues and collections received or collected by it with
respect to a specific REO Property, such funds necessary for the proper
operation, management and maintenance of such REO Property, including the
following:
(1) all insurance premiums due and payable in respect of such REO Property;
(2) all real estate taxes and assessments in respect of such REO Property that
may result in the imposition of a lien thereon;
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(3) all customary and reasonable costs and expenses necessary to maintain,
repair, appraise, evaluate, manage or operate such REO Property (including the
customary and reasonable costs incurred or assessed by any "managing agent"
retained by the Servicer in connection with the maintenance, management or
operation of such REO Property);
(4) all reasonable costs and expenses of restoration improvements, deferred
maintenance and tenant improvements; and
(5) all other reasonable costs and expenses, including reasonable attorneys'
fees, that the Servicer may suffer or incur in connection with its performance
of its obligations under this Section (other than costs and expenses that the
Servicer is expressly obligated to bear pursuant to this Agreement).
To the extent that amounts on deposit in the Collection Account are
insufficient for the purposes set forth in clauses (1) through (5) above, the
Servicer shall, subject to Section 5.04, advance the amount of funds required to
cover the shortfall with respect thereto. The Servicer shall promptly notify the
Owner in writing of any failure by the Servicer to make a Servicing Advance of
the type specified in clauses (1) or (2) above (irrespective of whether such
Servicing Advance is claimed to be non-recoverable by the Servicer pursuant to
Section 5.04).
Following the consummation of an REO Disposition, the Servicer shall remit
to the Owner, in accordance with Section 5.01, any proceeds from such REO
Disposition in the Collection Account following the payment of all expenses and
Servicing Advances relating to the subject REO Property.
Section 4.14 Sale of REO Properties
The Servicer shall offer to sell any REO Property in the manner that is in
the best interests of the Owner or other owner of the REO, but no later than the
time determined by the Servicer to be sufficient to result in the sale of such
REO Property on or prior to the time specified in Section 4.12. In accordance
with the Servicing Standard, the Servicer or designated agent of the Servicer
shall solicit bids and offers from Persons for the purchase of any Specially
Serviced Mortgage Loan or REO Property.
The Servicer shall act on behalf of the Owner in negotiating and taking any
other action necessary or appropriate in connection with the sale of any
Specially Serviced Mortgage Loan or REO Property, including the collection of
all amounts payable in connection therewith. The Servicer shall manage and
negotiate terms of sale on Specially Serviced Mortgage Loans or REO Properties
with the same care, skill, prudence and diligence with which Servicer manages
its own REO Properties. The proceeds of any sale after deduction of the expenses
of such sale incurred in connection therewith shall be promptly deposited in the
Collection Account in accordance with Section 4.04.
Section 4.15 Investment of Funds in the Collection Account
The Servicer may direct any depository institution which holds the
Collection Account to invest the funds in the Collection Account in one or more
Permitted Investments bearing interest. All such Permitted Investments shall be
held to maturity, unless payable on demand. In the
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event amounts on deposit in the Collection Account are at any time invested in a
Permitted Investment payable on demand, the Servicer shall:
(a) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an amount
equal to the lesser of (1) all amounts then payable thereunder
and (2) the amount required to be withdrawn on such date; and
(b) demand payment of all amounts due thereunder promptly upon
determination by the Servicer or notice from the Owner that such
Permitted Investment would not constitute a Permitted Investment
in respect of funds thereafter on deposit in the Collection
Account.
All income and gain realized from investment of funds deposited in the
Collection Account shall be for the benefit of the Servicer and shall be subject
to its withdrawal in accordance with Section 4.05. The Servicer shall deposit in
the Collection Account the amount of any loss incurred in respect of any
Permitted Investment immediately upon realization of such loss.
Except as otherwise expressly provided in this Agreement, if any default
occurs in the making of a payment due under any Permitted Investment, or if a
default occurs in any other performance required under any Permitted Investment,
the Owner may elect to take such action, or instruct the Servicer to take such
action, as may be appropriate to enforce such payment or performance, including
the institution and prosecution of appropriate proceedings, at the expense of
the Servicer.
Section 4.16 MERS
In the case of each MERS Mortgage Loan, the Servicer shall, as soon as
practicable after the Owner's request (but in no event more than 30 days
thereafter with respect to each Mortgage Loan that was a MERS Mortgage Loan as
of the Effective Date, or 90 days thereafter with respect to each Mortgage Loan
that was a MERS Eligible Mortgage Loan as of the Effective Date and subsequent
to the Effective Date becomes a MERS Mortgage Loan), take such actions as are
necessary to cause the Owner to be clearly identified as the owner of each MERS
Mortgage Loan on the records of MERS for purposes of the system of recording
transfers of beneficial ownership of mortgages maintained by MERS. Each of the
Owner and the Servicer shall maintain in good standing its membership in MERS.
In addition, Each of the Owner and the Servicer shall comply with all rules,
policies and procedures of MERS, including the Rules of Membership, as amended,
and the MERS Procedures Manual, as amended. With respect to all MERS Mortgage
Loans serviced hereunder, the Servicer shall promptly notify MERS as to any
transfer of beneficial ownership or release of any security interest in such
Mortgage Loans. The Servicer shall cooperate with the Owner and any successor
owner or successor servicer to the extent necessary to ensure that any transfer
of ownership or servicing is appropriately reflected on the MERS system.
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ARTICLE V:
REPORTS; REMITTANCES; ADVANCES
Section 5.01 Remittances
(1) On each Remittance Date, the Servicer shall remit to the Owner (a) all
amounts credited to the Collection Account as of the close of business on the
last day of the related Due Period (including (i) the amount of any Principal
Prepayment, together with interest thereon at the related Remittance Rate to the
end of the month in which prepayment of the related Mortgage Loan occurs except
when such Principal Prepayment is received on the last day of the related Due
Period in which case interest calculated at the related Remittance Rate to the
end of the month in which prepayment of the related Mortgage Loan occurs shall
not be remitted and (ii) all proceeds of any REO Disposition net of amounts
payable to the Servicer pursuant to Section 4.13), net of charges against or
withdrawals from the Collection Account in accordance with Section 4.05, which
charges against or withdrawals from the Collection Account the Servicer shall
make solely on such Remittance Date, plus (b) all Monthly Advances, if any,
which the Servicer is obligated to remit pursuant to Section 5.03; provided that
the Servicer shall not be required to remit, until the next following Remittance
Date, any amounts attributable to Monthly Payments collected but due on a Due
Date or Dates subsequent to the related Due Period.
(2) All remittances made to the Owner on each Remittance Date will be made to
the Owner by wire transfer of immediately available funds according to the
instructions that will be provided by Owner to the Servicer.
(3) With respect to any remittance received by the Owner after the Business Day
on which such payment was due, the Servicer shall pay to the Owner interest on
any such late payment at an annual rate equal to One-month LIBOR (as published
in the Wall Street Journal) plus 200 basis points, but in no event greater than
the maximum amount permitted by applicable law. Such interest shall be paid by
the Servicer to the Owner on the date such late payment is made and shall cover
the period commencing with the Business Day on which such payment was due and
ending with the Business Day on which such payment is made, both inclusive. Such
interest shall be remitted along with such late payment. Neither the payment by
the Servicer nor the acceptance by the Owner of any such interest shall be
deemed an extension of time for payment or a waiver by the Owner of any Event of
Default.
Section 5.02 Reporting
On or before the 5th Business Day following the Accounting Cut-off Date of
each month during the term hereof, the Servicer shall deliver to the Owner
monthly accounting reports in the form of Exhibits 5.02(a) through 5.02(i)
attached hereto with respect to the most recently ended Due Period. Such monthly
accounting reports shall include information as to the aggregate Unpaid
Principal Balance of all Mortgage Loans, the scheduled amortization of all
Mortgage Loans and the amount of any Principal Prepayments as of the most recent
Accounting Cut-off Date. Such monthly reports shall be available by the Servicer
for the Owner on Servicer's secured web-site. The Servicer shall provide
training, secured access and password(s) to the Owner on the operation of the
website.
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Utilizing resources reasonably available to the Servicer and to the extent
the requested data is contained within the Servicer 's electronic systems
without incurring any cost except the Servicer 's overhead and employees'
salaries, the Servicer shall furnish to the Owner during the term of this
Agreement such periodic, special or other reports, information or documentation,
whether or not provided for herein, as shall be reasonably requested by the
Owner with respect to Mortgage Loans or REO Properties (provided the Owner shall
have given the Servicer reasonable notice and opportunity to prepare such
reports, information or documentation), including any reports, information or
documentation reasonably required to comply with any regulations of any
governmental agency or body having jurisdiction over the Owner, all such reports
or information to be as provided by and in accordance with such applicable
instructions and directions as the Owner may reasonably request. If any of such
reports, periodic, special or other reports, information or documentation are
not customarily prepared by the Servicer or require that the Servicer program
data processing systems to create the reports, information or documentation,
then the Owner shall pay to the Servicer a fee mutually agreed to by the Owner
and the Servicer taking into account the Servicer 's actual time and cost in
preparing such reports, information or documentation. The Servicer agrees to
execute and deliver all such instruments and take all such action as the Owner,
from time to time, may reasonably request in order to effectuate the purposes
and to carry out the terms of this Agreement.
Section 5.03 Monthly Advances by the Servicer
(1) Not later than the close of business on the Business Day immediately
preceding each Remittance Date, the Servicer shall deposit in the Collection
Account an amount equal to all Monthly Payments not previously advanced by the
Servicer (with interest adjusted to the Remittance Rate) that were due on a
Mortgage Loan and delinquent at the close of business on the related
Determination Date. The Servicer may reduce the total amount to be deposited in
the Collection Account as required by the foregoing sentence by the amount of
funds in the Collection Account which are to be remitted to Owner on a
Remittance Date or Dates subsequent to the related Due Period.
(2) The Servicer's obligations to make Monthly Advances as to any Mortgage Loan
will continue through the last Monthly Payment due prior to the payment in full
of the Mortgage Loan, or through the Remittance Date prior to the Remittance
Date for the remittance of all Liquidation Proceeds and other payments or
recoveries (including Insurance Proceeds or Condemnation Proceeds) with respect
to the Mortgage Loan; provided that such obligation shall cease if the Servicer
furnishes to the Owner an Officers' Certificate evidencing the determination by
the Servicer in accordance with Section 5.04 that an advance with respect to
such Mortgage Loan would constitute a Non-recoverable Advance.
(3) On the Business Day prior to the Remittance Date, the Servicer shall deposit
into the Collection Account payments on account of Prepayment Interest Shortfall
Amounts in an aggregate amount equal to the lesser of (i) the aggregate amount
of Prepayment Interest Shortfall Amount for the related Remittance Date
resulting solely from Principal Prepayments during the related Due Period, and
(ii) the total amount of the servicing compensation that would be payable to the
Servicer if no Principal Prepayment was made during the Due Period related to
such Remittance Date. Such payments shall be deposited into the Collection
Account.
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Section 5.04 Non-recoverable Advances
The determination by the Servicer that it has made a Non-recoverable
Advance or that any Monthly Advance or Servicing Advance, if made, would
constitute a Non-recoverable Advance shall be evidenced by an Officers'
Certificate delivered to the Owner detailing the reasons for such determination.
Section 5.05 Officer's Certificate
The Servicer shall deliver to the Owner an Officer's Certificate in the
form attached hereto as Exhibit 9 on the Initial Effective Date and upon Owner's
reasonable request thereafter.
ARTICLE VI:
GENERAL SERVICING PROCEDURE
Section 6.01 Enforcement of Due-on-Sale Clauses, Assumption Agreements
(1) The Servicer will, to the extent it has knowledge of any conveyance or
prospective conveyance by any Mortgagor of the Mortgaged Property (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under any "
due-on-sale" clause applicable thereto; provided that the Servicer shall not
exercise any such rights if prohibited by law from doing so or if the exercise
of such rights would impair or threaten to impair any recovery under the related
Primary Insurance Policy, if any.
(2) If the Servicer is prohibited from enforcing such "due-on-sale" clause, then
the Servicer will attempt to enter into an assumption agreement with the Person
to whom the Mortgaged Property has been conveyed or is proposed to be conveyed,
pursuant to which such Person becomes liable under the Mortgage Note and, to the
extent permitted by applicable state law, the Mortgagor remains liable thereon.
(For purposes of this Section 6.01, the term "assumption" is deemed to also
include a sale of the Mortgaged Property subject to the Mortgage that is not
accompanied by an assumption or substitution of liability agreement.)
(3) If the Servicer receives a request for any Mortgage Loan to be assumed, then
the Servicer shall inquire into the creditworthiness of the proposed transferee
and shall use the same underwriting criteria for approving the credit of the
proposed transferee that are used with respect to underwriting mortgage loans of
the same type as the Mortgage Loans. Where an assumption is allowed, the
Servicer, with the prior written consent of the primary mortgage insurer, if
any, and subject to the conditions of this Section 6.01(3), shall, and is hereby
authorized to, enter into a substitution of liability agreement with the Person
to whom the Mortgaged Property is proposed to be conveyed pursuant to which the
original mortgagor is released from liability and such Person is substituted as
mortgagor and becomes liable under the related Mortgage Note. Any such
substitution of liability agreement shall be in lieu of an assumption agreement.
In no event shall the Note Rate, the amount of the Monthly Payment or the final
maturity date be changed. The Servicer shall notify the Owner that any such
substitution of liability or assumption agreement has been completed by
forwarding to the Owner the original of any such substitution of liability or
assumption agreement, which document shall
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be added to the related Owner's Mortgage File and shall, for all purposes, be
considered a part of such Owner's Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. Any fee collected by the
Servicer for entering into an assumption or substitution of liability agreement
shall be retained by the Servicer as additional compensation for servicing the
Mortgage Loans.
If the credit of the proposed transferee does not meet such underwriting
criteria, then the Servicer shall, to the extent permitted by the Mortgage or
the Mortgage Note and by applicable law, accelerate the maturity of the Mortgage
Loan.
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files
Upon the payment in full of any Mortgage Loan, the Servicer will
immediately notify the Owner by a certification of a Servicing Officer, which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Collection Account pursuant to Section 4.04 have been or will
be so deposited and shall request delivery to it of the Owner's Mortgage File
held by the Owner. Upon receipt of such certification and request, the Owner
shall promptly release the related mortgage documents to the Servicer and the
Servicer shall promptly prepare and process any satisfaction or release. No
expense incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account.
With the exception of short sales, if the Servicer satisfies or releases a
Mortgage without having obtained payment in full of the indebtedness secured by
the Mortgage, or should it otherwise take such action which results in a
reduction of the coverage under the Primary Insurance Policy, if any, then the
Servicer shall promptly give written notice thereof to the Owner, and, within 10
Business Days following written demand therefor from the Owner to the Servicer,
the Servicer shall repurchase the related Mortgage Loan by paying to the Owner
the Repurchase Price therefor by wire transfer of immediately available funds
directly to the Owner's Account.
From time to time and as appropriate for the servicing or foreclosure of
the Mortgage Loan, including for this purpose collection under any Primary
Insurance Policy, the Owner shall, upon request of the Servicer and delivery to
the Owner of a servicing receipt signed by a Servicing Officer, release the
Owner's Mortgage File held by the Owner to the Servicer. Such servicing receipt
shall obligate the Servicer to return the related mortgage documents to the
Owner when the need therefor by the Servicer no longer exists, unless the
Mortgage Loan has been liquidated and the Liquidation Proceeds relating to the
Mortgage Loan have been deposited in the Collection Account or the Owner's
Mortgage File or such document has been delivered to an attorney, or to a public
trustee or other public official as required by law, for purposes of initiating
or pursuing legal action or other proceedings for the foreclosure of the
Mortgaged Property either judicially or nonjudicially, and the Servicer has
delivered to the Owner a certificate of a Servicing Officer certifying as to the
name and address of the Person to which such Owner's Mortgage File or such
document was delivered and the purpose or purposes of such delivery. Upon
receipt of a certificate of a Servicing Officer stating that such Mortgage Loan
was liquidated and the Liquidation Proceeds were deposited in the Collection
Account, the servicing receipt shall be released by the Owner to the Servicer.
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Section 6.03 Servicing Compensation
As compensation for its services hereunder, the Servicer shall be entitled
to retain from interest payments on the Mortgage Loans the amounts provided for
as the Servicing Fee. The Servicing Fee in respect of a Mortgage Loan for a
particular month shall become payable only upon the receipt by the Servicer from
the Mortgagor of the full Monthly Payment in respect of such Mortgage Loan.
Additional servicing compensation in the form of assumption fees, as provided in
Section 6.01, late payment charges, prepayment penalties and other servicer
compensation for modifications, short sales as provided in Section 4.01(e), and
other shall be retained by the Servicer to the extent not required to be
deposited in the Collection Account. In the event that Liquidation Proceeds,
Insurance Proceeds and proceeds from any REO Disposition exceed the Unpaid
Principal Balance of such Mortgage Loan plus unpaid interest accrued thereon at
a per annum rate equal to the related Remittance Rate, the Servicer shall be
entitled to retain therefrom and pay to itself any Foreclosure Profits and any
Servicing Fee considered to be accrued but unpaid. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided for herein.
Section 6.04 Annual Statement as to Compliance
The Servicer will deliver to the Owner or the Owner's designee on or before
March 15 of each year, beginning with March 15, 2006, an Officers' Certificate
in the form of Exhibit 11 and an Officer's Certificate stating that (i) a review
of the activities of the Servicer during the preceding calendar year and of
performance under this Agreement has been made under such officers' supervision,
(ii) the Servicer has fully complied with the provisions of this Agreement and
(iii) to the best of such officers' knowledge, based on such review, the
Servicer has fulfilled all of its obligations under this Agreement throughout
such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
Section 6.05 Annual Independent Certified Public Accountants' Servicing
Report
On or before February 28 of each year beginning February 28, 2006 the
Servicer at its expense shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Owner to the effect that such firm has examined
certain documents and records relating to the servicing of mortgage loans by the
Servicer generally that include a sampling of the Mortgage Loans, the provisions
of Article VI have been complied with and, on the basis of such an examination
conducted substantially in accordance with the Uniform Single Attestation
Program for Mortgage Bankers, such servicing has been conducted in compliance
with this Agreement, except for (i) such exceptions as such firm shall believe
to be immaterial, and (ii) such other exceptions as shall be set forth in such
statement.
Section 6.06 Owner's Right to Examine Servicer Records
The Owner shall have the right to examine and audit, during business hours
or at such other times as are reasonable under applicable circumstances, upon 5
Business Days advance
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notice any and all of (i) the credit and other loan files relating to the
Mortgage Loans or the Mortgagors, (ii) any and all books, records, documentation
or other information of the Servicer (whether held by the Servicer or by
another) relating to the servicing of the Mortgage Loans and (iii) any and all
books, records, documentation or other information of the Servicer (whether held
by the Servicer or by another) that are relevant to the performance or
observance by the Servicer of the terms, covenants or conditions of this
Agreement; provided that in the case of an Event of Default hereunder, such
advance notice shall not be required. The Servicer shall be obligated to make
the foregoing information available to the Owner at the site where such
information is stored; provided that the Owner shall be required to pay all
reasonable costs and expenses incurred by the Servicer in making such
information available.
ARTICLE VII:
REPORTS TO BE PREPARED BY THE SERVICER
Section 7.01 Financial Statements
The Servicer understands that, in connection with marketing the Mortgage
Loans, the Owner may make available to any prospective Owner of the Mortgage
Loans the Servicer 's audited financial statements for its fiscal year 2003 and
its audited financial statements for fiscal year 2004, together with any
additional statements provided pursuant to the next sentence. During the term
hereof, the Servicer will deliver to the Owner audited financial statements for
each of its fiscal years following the Effective Date and all other financial
statements prepared following the Effective Date to the extent any such
statements are available upon request to the public at large.
The Servicer also agrees to make available upon reasonable notice and
during normal business hours to any prospective purchasers of the Mortgage Loans
a knowledgeable financial or accounting officer for the purpose of answering
questions respecting recent developments affecting the Servicer or the financial
statements of the Servicer which may affect, in any material respect, the
Servicer 's ability to comply with its obligations under this Agreement, and to
permit any prospective purchasers upon reasonable notice and during normal
business hours to inspect the Servicer 's servicing facilities for the purpose
of satisfying such prospective purchasers that the Servicer has the ability to
service the Mortgage Loans in accordance with this Agreement.
ARTICLE VIII:
THE SERVICER
Section 8.01 Indemnification; Third Party Claims
(a) The Servicer shall indemnify and hold harmless the Owner, its
directors, officers, agents, employees, and assignees (each, an "Indemnified
Party") from and against any costs, damages, expenses (including reasonable
attorneys' fees and costs, irrespective of whether or not incurred in connection
with the defense of any actual or threatened action, proceeding, or claim),
fines, forfeitures, injuries, liabilities or losses ("Losses") suffered or
sustained in any way by any such Person, no matter how or when arising
(including Losses incurred or sustained in connection with any judgment, award,
or settlement), in connection with or relating to (i) a
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breach by the Servicer of any of its representations and warranties contained in
Article II or (ii) a breach by the Servicer of any of its covenants and other
obligations contained herein including any failure to service the Mortgage Loans
in compliance with the terms hereof and in accordance with the standard of care
in Section 4.01. The Servicer shall immediately (i) notify the Owner if a claim
is made by a third party with respect to this Agreement, any Mortgage Loan
and/or any REO Property for which the Servicer is required to indemnify the
Owner pursuant to this Section 8.01(a), (ii) assume (with the prior written
consent of the Owner) the defense of any such claim and pay all expenses in
connection therewith, including attorneys' fees, and (iii) promptly pay,
discharge and satisfy any judgment, award, or decree that may be entered against
it or the Owner in respect of such claim. Nothing contained herein shall
prohibit the Owner, at its expense, from retaining its own counsel to assist in
any such proceedings or to observe such proceedings; provided that the Servicer
shall not be obligated to pay or comply with any settlement to which it has not
consented.
(b) The Servicer shall immediately (i) notify the Owner if a claim is made
by a third party with respect to this Agreement, any Mortgage Loan and/or any
REO Property for which the Servicer is not obligated to indemnify the Owner
pursuant to Section 8.01(a), (ii) assume (with the prior written consent of the
Owner) the defense of any such claim and pay all expenses in connection
therewith, including attorneys' fees, and (iii) promptly pay, discharge and
satisfy any judgment, award, or decree that may be entered against it or the
Owner in respect of such claim. Nothing contained herein shall prohibit the
Owner, at its expense, from retaining its own counsel to assist in any such
proceedings or to observe such proceedings; provided that the Servicer shall not
be obligated to pay or comply with any settlement to which it has not consented.
The Servicer shall be reimbursed from amounts on deposit in the Collection
Account for all amounts advanced by it pursuant to the second preceding sentence
except when the claim in any way relates to the Servicer's indemnification
pursuant to Section 8.01(a).
Section 8.02 Merger or Consolidation of the Servicer
The Servicer will keep in full effect its existence, rights and franchises
as a corporation, under the laws of the state of its organization and will
obtain and preserve its qualification to do business as a foreign entity in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans and
to perform its duties under this Agreement.
Any Person into which a Servicer may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation (including by
means of the sale of all or substantially all of such Servicer's assets to such
Person) to which the Servicer shall be a party, or any Person succeeding to the
business of the Servicer, shall be the successor of the Servicer hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided that, unless otherwise consented to by the Owner, the successor or
surviving Person, in the case of a merger or consolidation, etc. of the
Servicer, shall be an institution qualified to service mortgage loans on behalf
of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and shall not cause a rating on any security backed
by a
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Mortgage Loan to be downgraded and shall satisfy the requirements of Section
11.01 with respect to the qualifications of a successor to such Servicer.
Section 8.03 Limitation on Liability of the Servicer and Others
Neither the Servicer nor any of the officers, employees or agents of the
Servicer shall be under any liability to the Owner for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement or pursuant to the express written instructions of the Owner, or for
errors in judgment made in good faith; provided that this provision shall not
protect the Servicer or any such Person against any breach of warranties or
representations made herein, or failure to perform its obligations in compliance
with any standard of care set forth in this Agreement, or any liability which
would otherwise be imposed by reasons of willful misfeasance, bad faith, gross
negligence or any breach in the performance of the obligations and duties
hereunder. The Servicer and any officer, employee or agent of the Servicer may
rely in good faith on any document of any kind reasonably believed by the
Servicer or such Person to be genuine and prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
The Servicer shall not be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its duties hereunder and which
in its opinion may involve it in any expense or liability; provided that the
Servicer may in its discretion undertake any such action that it may deem
necessary or desirable in respect of this Agreement and the rights and duties of
the parties hereto. In such event, the legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and liabilities
for which the Servicer shall be entitled to be reimbursed therefor out of the
Collection Account. This indemnity shall survive termination of this Agreement.
Section 8.04 Servicer Not to Resign
With respect to the retention by the Servicer of the servicing of the
Mortgage Loans and the REO Properties hereunder, the Servicer acknowledges that
the Owner has acted in reliance upon the Servicer's independent status, the
adequacy of its servicing facilities, plan, personnel, records and procedures,
its integrity, reputation and financial standing and the continuance thereof.
Consequently, the Servicer shall not assign the servicing rights retained by it
hereunder to any third party nor resign from the obligations and duties hereby
imposed on it except (i) in the case of a partial or complete assignment of the
servicing rights to one or more servicers that are ▇▇▇▇▇▇ ▇▇▇- or ▇▇▇▇▇▇▇
Mac-approved, or (ii) 5 Business Days following any determination that its
duties hereunder are no longer permissible under applicable law and such
incapacity cannot be cured by the Servicer. Any determination permitting the
transfer of the servicing rights or the resignation of the Servicer under
Subsection (ii) hereof shall be evidenced by an opinion of counsel to such
effect delivered to the Owner, which opinion of counsel shall be in form and
substance reasonably acceptable to the Owner.
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ARTICLE IX:
DEFAULT
Section 9.01 Events of Default
In case one or more of the following events shall occur and be continuing:
(1) any failure by the Servicer to remit to the Owner any payment required to be
made under the terms of this Agreement which continues unremedied for a period
of 2 Business Days unless such failure to remit is due to a cause beyond the
Servicer 's control, including an act of God, act of civil, military or
governmental authority, fire, epidemic, flood, blizzard, earthquake, riot, war,
or sabotage, provided that the Servicer gives the Owner notice of such cause
promptly and uses its reasonable efforts to correct such failure to remit and
does so remit within 1 Business Day following the end of the duration of the
cause of such failure to remit;
(2) any failure on the part of the Servicer duly to observe or perform in any
material respect any of the covenants or agreements on the part of the Servicer
set forth in this Agreement which continues unremedied for a period of 30 days
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the the Servicer by the Owner.
(3) any filing of an Insolvency Proceeding by or on behalf of the Servicer, any
consent by or on behalf of the Servicer to the filing of an Insolvency
Proceeding against the Servicer, or any admission by or on behalf of the
Servicer of its inability to pay its debts generally as the same become due;
(4) any filing of an Insolvency Proceeding against the Servicer that remains
undismissed or unstayed for a period of 60 days after the filing thereof;
(5) any issuance of any attachment or execution against, or any appointment of a
conservator, receiver or liquidator with respect to, all or substantially all of
the assets of the Servicer;
(6) any failure or inability of the Servicer to be eligible to service Mortgage
Loans for ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac;
(7) any sale, transfer, assignment, or other disposition by the Servicer of all
or substantially all of its property or assets to a Person who does not meet the
qualifications enumerated or incorporated by reference into Section 8.02, any
assignment by the Servicer of this Agreement or any of a Servicer's/Servicer's
rights or obligations hereunder except in accordance with Section 8.04, or any
action taken or omitted to be taken by the Servicer in contemplation or in
furtherance of any of the foregoing, without the consent of the Owner; or
(8) any failure by the Servicer to be in compliance with applicable "doing
business" or licensing laws of any jurisdiction where Mortgaged Property is
located;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Owner, by notice in writing to the Servicer may, in
addition to whatever rights the Owner may have at law or in equity to damages,
including injunctive relief and specific
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performance, terminate all the rights and obligations of the Servicer under this
Agreement and in and to the Mortgage Loans and the proceeds thereof subject to
Section 11.01, without the Owner's incurring any penalty or fee of any kind
whatsoever in connection therewith; provided that, upon the occurrence of an
Event of Default under Subsection (3), (4) or (5) of this Section 9.01, this
Agreement and all authority and power of the Servicer hereunder (whether with
respect to the Mortgage Loans, the REO Properties or otherwise) shall
automatically cease. On or after the receipt by the Servicer of such written
notice, all authority and power of the Servicer under this Agreement (whether
with respect to the Mortgage Loans or otherwise) shall cease. Notwithstanding
the occurrence of an Event of Default, the Servicer shall be entitled to all
amounts due to such party and remaining unpaid on such date of termination.
ARTICLE X:
TERMINATION AND TRANSFER OF MORTGAGE LOANS
Section 10.01 Term and Termination
(1) The servicing obligations of the Servicer under this Agreement may be
terminated as provided in Section 9.01 hereof.
(2) In any case other than as provided under Subsection (1) hereof, the
obligations and responsibilities of the Servicer hereunder shall terminate upon:
(a) the later of the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or the disposition of all REO
Property and the remittance of all funds due hereunder; or (b) the mutual
written consent of the Servicer and the Owner.
(3) Upon any termination of this Agreement or the servicing obligations of the
Servicer hereunder, then the Servicer shall prepare, execute and deliver all
agreements, documents and instruments, including all Servicer Mortgage Files,
and do or accomplish all other acts or things necessary or appropriate to effect
such termination, all at the Servicer 's sole expense. In any such event, the
Servicer agrees to cooperate with the Owner in effecting the termination of the
Servicer 's servicing responsibilities hereunder, including the transfer to the
Owner or its designee for administration by it of all cash amounts which shall
at the time be contained in, or credited by the Servicer to, the Collection
Account and/or the Escrow Account or thereafter received with respect to any
Mortgage Loan or REO Property.
Section 10.02 Removal of Mortgage Loans from Inclusion under this Agreement
Upon a Whole Loan Transfer or a Pass-Through Transfer on One or More
Reconstitution Dates.
The Servicer and the Owner agree that with respect to some or all of the
Mortgage Loans, the Owner may effect either one or more Whole Loan Transfers
and/or one or more Pass-Through Transfers, retaining the Servicer as the
servicer thereof or subservicer if a master servicer is employed. At the
election of the Owner, from and after the Reconstitution Date, the Mortgage
Loans transferred shall remain covered by this Agreement, insofar as the
Servicer shall continue to service such Mortgage Loans on behalf of the Owner in
accordance with the terms and provisions of this Agreement or shall be subject
to a pooling and servicing agreement or a subservicing agreement containing
customary secondary market servicing provisions with respect to mortgage loans
that are subject to a rated mortgage loan securitization.
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With respect to each Whole Loan Transfer or Pass-Through Transfer, as the
case may be, entered into by the Owner, the Servicer agrees:
(1) to cooperate fully with the Owner and any prospective purchaser with
respect to all reasonable requests and due diligence procedures and with respect
to the preparation (including, but not limited to, the endorsement, delivery,
assignment, and execution) of the Mortgage Loan Documents and other related
documents, provided that the Owner shall pay all preparation and recording costs
associated therewith, and with respect to servicing requirements reasonably
requested by the rating agencies and credit enhancers;
(2) to execute all Reconstitution Agreements provided that each of the
Servicer and the Owner is given an opportunity to review and reasonably
negotiate in good faith the content of such documents not specifically
referenced or provided for herein (including any reporting requirements in such
Reconstitution Agreements to the extent they are inconsistent with or additional
to the requirements set forth in Section 5.02 hereof) and provided further that
such Reconstitution Agreements create no greater obligation or cost on the part
of the Servicer than otherwise set forth in this Agreement. The Servicer shall
retain a Servicing Fee at a rate per annum no less than the rate provided for
herein;
(3) with respect to any Whole Loan Transfer or Pass-Through Transfer, the
Servicer shall make the representations and warranties in Section 2.01 regarding
the Servicer;
(4) provide a ▇▇▇▇▇▇▇▇-▇▇▇▇▇ certification in the form of Exhibit 11 or
such other form as is appropriate to reflect any changes in applicable law;
(5) provide as applicable any and all information and appropriate
verification of information which may be reasonably available to the Servicer,
including the Servicer's foreclosure and delinquency experience, whether through
letters of its auditors and counsel or otherwise, as the Owner shall request and
indemnify the Owner for any material misstatements or omissions contained in the
information provided pursuant to this clause (4), provided that the Owner shall
also provide indemnification to the Servicer, it successors or assigns, with
respect to the accuracy of all other information the Owner may disclose in any
securitization offering materials; and
(6) to deliver to the Owner, and to any Person designated by the Owner,
such legal documents and Opinions of Counsel as are customarily delivered by
servicers and reasonably determined by the Owner to be necessary in connection
with Whole Loan Transfers or Pass-Through Transfers, as the case may be, such
Opinions of Counsel for a Pass-Through Transfer to be in the form reasonably
acceptable to the Owner, it being understood that the cost of any opinions of
outside special counsel that may be required for a Whole Loan Transfer or
Pass-Through Transfer, as the case may be, shall be the responsibility of the
Owner;
All Mortgage Loans not sold or transferred pursuant to a Whole Loan
Transfer or Pass-Through Transfer shall be subject to this Agreement and shall
continue to be serviced in accordance with the terms of this Agreement and with
respect thereto this Agreement shall remain in full force and effect. The Owner
shall reimburse the Servicer for all reasonable out-of-pocket expenses,
including attorneys' fees, incurred by the Servicer in connection with any
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Whole Loan Transfer or Pass-Through Transfer.
Section 10.03 Transfer of Mortgage Loans
Subject to the provisions of this Section 10.03, the Owner shall have the
right, without the consent of the Servicer, at any time and from time to time,
to assign any of the Mortgage Loans and all or any part of its interest under
this Agreement and designate any person to exercise any rights of the Owner
hereunder, and the assignees or designees shall accede to the rights and
obligations hereunder of the Owner with respect to such Mortgage Loans. All of
the provisions of this Agreement shall inure to the benefit of the Owner and any
such assignees or designees. All references to the Owner shall be deemed to
include its assignees or designees.
The Servicer shall cooperate in any such assignment of the Mortgage Loans
and this Agreement; provided that the Owner shall bear all reasonable
out-of-pocket costs associated with any such assignment of the Mortgage Loans
and this Agreement. The Servicer and Owner agree that in no event will the
Servicer be required to remit funds or make available via Servicer's website
remittance reports to more than two (2) Persons (not including the Servicer or
any Affiliate or transferee thereof) at any given time with respect to any
Mortgage Loans sold on a single date.
The Servicer and the Owner acknowledge that the Servicer shall continue to
remit payments to the Owner on the Remittance Date after the transfer of the
Mortgage Loans, unless the Servicer was notified in writing of the new record
owner of the Mortgage Loans 3 Business Days prior to the Record Date, in which
case, the Servicer shall remit to the new record owner (or trustee or master
servicer, as the case may be) of the Mortgage Loans.
The Servicer shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Servicer shall
note transfers of Mortgage Loans. The Owner may, subject to the terms of this
Agreement, sell and transfer any or all of the Mortgage Loans; provided that no
such sale and transfer shall be binding upon the Servicer unless such transferee
shall agree in writing to be bound by the terms of this Agreement and an
Assignment, Assumption and Recognition Agreement, in substantially the form of
Exhibit 2.05 attached hereto, and an executed copy of such Assignment,
Assumption and Recognition Agreement shall have been delivered to the Servicer.
The Servicer shall evidence its acknowledgment of any transfers of the Mortgage
Loans to any assignees of the Owner by executing such Assignment, Assumption and
Recognition Agreement. The Servicer shall ▇▇▇▇ its books and records to reflect
the ownership of the Mortgage Loans by any such assignees, and the previous
Owner shall be released from its obligations hereunder accruing after the date
of transfer to the extent such obligations relate to Mortgage Loans sold by the
Owner. This Agreement shall be binding upon and inure to the benefit of the
Owner and the Servicer and their permitted successors, assignees and designees.
Section 10.04 Survival
Notwithstanding anything to the contrary contained herein, the
representations and warranties of the parties contained herein and in any
certificate or other instrument delivered pursuant hereto, as well as the other
covenants hereof (including those set forth in Section 8.01)
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that, by their terms, require performance after the termination by this
Agreement, shall survive the delivery and payment for the Mortgage Loans on each
Effective Date as well as the termination of this Agreement and shall inure to
the benefit of the parties, their successors and assigns. The Servicer further
agrees that the representations, warranties and covenants made by the Servicer
herein and in any certificate or other instrument delivered pursuant hereto
shall be deemed to be relied upon by Owner notwithstanding any investigation
heretofore made by Owner or on Owner's behalf.
ARTICLE XI:
GENERAL PROVISIONS
Section 11.01 Successor to the Servicer
Upon the termination of the Servicer 's servicing responsibilities and
duties under this Agreement pursuant to Section 8.04, 9.01, or 10.01, the Owner
shall (i) succeed to and assume all of the Servicer 's responsibilities, rights,
duties and obligations under this Agreement or (ii) appoint a successor servicer
which shall succeed to all rights and assume all of the responsibilities, duties
and liabilities of the Servicer under this Agreement prior to the termination of
the Servicer 's responsibilities, duties and liabilities under this Agreement;
provided, however, that in the case of any assignment by the Servicer of the
servicing rights pursuant to clause (i) of the second sentence of Section 8.04,
any related assignee of such servicing rights shall succeed to and assume all of
the Servicer's responsibilities, rights, duties and obligations under this
Agreement with respect to the Mortgage Loans to be serviced by such assignee. If
the Servicer 's duties, responsibilities and liabilities under this Agreement
should be terminated pursuant to the aforementioned sections, then the Servicer
shall continue to discharge such duties and responsibilities during the period
from the date it acquires knowledge of such termination until the effective date
thereof (if applicable) all on the terms and conditions contained herein and
shall take no action whatsoever that might impair or prejudice the rights or
financial condition of its successor. The termination of the Servicer 's
servicing responsibilities pursuant to any of the aforementioned Sections shall
not, among other things, relieve the Servicer of its obligations pursuant to
Section 8.01 or the representations and warranties or other obligations and the
remedies available to the Owner under the various provisions of this Agreement.
In addition, such termination shall not affect any claims that the Owner may
have against the Servicer arising prior to any such termination.
The Servicer shall promptly deliver to the successor the funds in the
Collection Account and the Escrow Account and the Mortgage Files and related
documents and statements held by it hereunder and the Servicer shall account for
all funds. The Servicer shall execute and deliver such instruments and do such
other things all as may reasonably be required to more fully and definitely vest
and confirm in the successor all such rights, powers, duties, responsibilities,
obligations and liability of the Servicer. The successor shall make such
arrangements as it may deem appropriate to reimburse the Servicer for
unrecovered Servicing Advances which the successor retains hereunder and which
could otherwise have been recovered by the Servicer pursuant to this Agreement
but for the appointment of the successor Servicer.
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Section 11.02 Governing Law
This Agreement is to be governed by, and construed in accordance with the
internal laws of the State of New York without giving effect to principles of
conflicts of laws (other than Section 5-1401 of the General Obligations Laws).
The obligations, rights, and remedies of the parties hereunder shall be
determined in accordance with such laws.
Section 11.03 Notices
Any notices or other communications permitted or required hereunder shall
be in writing and shall be deemed conclusively to have been given if personally
delivered, sent by courier with delivery against signature therefor, mailed by
registered mail, postage prepaid, and return receipt requested or transmitted by
telex, telegraph or telecopier and confirmed by a similar writing mailed or sent
by courier as provided above, to (i) in the case of the Owner, Taberna Realty
Holdings Trust, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇ ▇▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇, (ii) in the case of the Servicer, PHH
Mortgage Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
Vice President, Servicing, or such other address as may hereafter be furnished
by a party to the other party.
Section 11.04 Severability of Provisions
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, the invalidity
of any such covenant, agreement, provision or term of this Agreement shall in no
way affect the validity or enforceability of the other provisions of this
Agreement.
Section 11.05 Schedules and Exhibits
The schedules and exhibits that are attached to this Agreement are hereby
incorporated herein and made a part hereof by this reference.
Section 11.06 General Interpretive Principles
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(1) the terms defined in this Agreement have the meanings assigned to them in
this Agreement and include the plural as well as the singular, and the use of
any gender herein shall be deemed to include the other gender;
(2) any reference in this Agreement to this Agreement or any other agreement,
document, or instrument shall be a reference to this Agreement or any other such
agreement, document, or instrument as the same has been amended, modified, or
supplemented in accordance with the terms hereof and thereof (as applicable);
(3) accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with generally accepted accounting principles;
-43-
(4) references herein to "Articles," "Sections," "Subsections," "Paragraphs, "
and other subdivisions without reference to a document are to designated
articles, sections, subsections, paragraphs and other subdivisions of this
Agreement, unless the context shall otherwise require;
(5) a reference to a subsection without further reference to a section is a
reference to such subsection as contained in the same section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(6) a reference to a "day" shall be a reference to a calendar day;
(7) the words "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular provision; and
(8) the terms "include" and "including" shall mean without limitation by reason
of enumeration.
Section 11.07 Waivers and Amendments, Noncontractual Remedies; Preservation
of Remedies
This Agreement may be amended, superseded, canceled, renewed or extended
and the terms hereof may be waived, only by a written instrument signed by
authorized representatives of the parties or, in the case of a waiver, by an
authorized representative of the party waiving compliance. No such written
instrument shall be effective unless it expressly recites that it is intended to
amend, supersede, cancel, renew or extend this Agreement or to waive compliance
with one or more of the terms hereof, as the case may be. No delay on the part
of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party of any such
right, power or privilege, or any single or partial exercise of any such right,
power or privilege, preclude any further exercise thereof or the exercise of any
other such right, power or privilege. The rights and remedies herein provided
are cumulative and are not exclusive of any rights or remedies that any party
may otherwise have at law or in equity.
Section 11.08 Captions
All section titles or captions contained in this Agreement or in any
schedule or exhibit annexed hereto or referred to herein, and the table of
contents to this Agreement, are for convenience only, shall not be deemed a part
of this Agreement and shall not affect the meaning or interpretation of this
Agreement.
Section 11.09 Counterparts; Effectiveness
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
This Agreement shall become effective as of the date first set forth herein upon
the due execution and delivery of this Agreement by each of the parties hereto.
-44-
Section 11.10 Entire Agreement; Amendment
This Agreement (including the schedules and exhibits annexed hereto or
referred to herein), the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and supersedes all prior
agreements, written or oral, with respect thereto. No amendment, modification or
alteration of the terms or provisions of this Agreement shall be binding unless
the same shall be in writing and duly executed by the authorized representatives
of the parties hereto.
Section 11.11 Further Assurances
Each party hereto shall take such additional action as may be reasonably
necessary to effectuate this Agreement and the transactions contemplated hereby.
The Servicer will promptly and duly execute and deliver to the Owner such
documents and assurances and take such further action as the Owner may from time
to time reasonably request in order to carry out more effectively the intent and
purpose of this Agreement and to establish and protect the rights and remedies
created or intended to be created in favor of the Owner.
-45-
IN WITNESS WHEREOF, the Servicer and the Owner have caused their names to be
signed hereto by their respective officers as of the date first written above.
TABERNA REALTY HOLDINGS TRUST
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PHH MORTGAGE CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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EXHIBIT 2.05
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
THIS ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT (this "Assignment"),
dated of _________ __, 2004, is entered into among [______________], a
___________________ (the "Assignee"), Taberna Realty Holdings Trust (the
"Assignor") and PHH Mortgage Corporation, as the servicer (the "Servicer").
RECITALS
WHEREAS the Assignor and the Servicer have entered into a certain Mortgage
Loan Servicing Agreement, dated as of October 1, 2005 (as amended or modified to
the date hereof, the "Agreement"), pursuant to which the Servicer has agreed to
service certain Mortgage Loans pursuant to the terms of the Agreement for the
benefit of the Owner; and
WHEREAS the Assignee has agreed, on the terms and conditions contained
herein, to purchase from the Assignor [certain] [all] of the Mortgage Loans (the
"Specified Mortgage Loans") which are subject to the provisions of the Agreement
and are listed on the mortgage loan schedule attached as Exhibit I hereto (the
"Specified Mortgage Loan Schedule");
NOW, THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration (the receipt and sufficiency of which
are hereby acknowledged), the parties agree as follows:
1. Assignment and Assumption
(a) On and as of the date hereof, the Assignor hereby sells, assigns and
transfers to the Assignee all of its right, title and interest in the Specified
Mortgage Loans and all rights related thereto as provided under the Agreement to
the extent relating to the Specified Mortgage Loans, the Assignee hereby accepts
such assignment from the Assignor, and the Servicer hereby acknowledges such
assignment and assumption.
(b) On and as of the date hereof, the Assignor represents and warrants to
the Assignee that the Assignor has not taken any action that would serve to
impair or encumber the Assignee's ownership interests in the Specified Mortgage
Loans since the date of the Assignor's acquisition of the Specified Mortgage
Loans.
2. Recognition of Assignee
From and after the date hereof, both the Assignee and the Servicer shall
note the transfer of the Specified Mortgage Loans to the Assignee in their
respective books and records and shall recognize the Assignee as the owner of
the Specified Mortgage Loans, and Servicer shall service the Specified Mortgage
Loans for the benefit of the Assignee pursuant to the Agreement, the terms of
which are incorporated herein by reference. From and after the date hereof,
Assignor
shall have no further obligations under the Agreement with respect to the
Specified Mortgage Loans. It is the intention of the Servicer, the Assignee and
the Assignor that the Assignment shall be binding upon and inure to the benefit
of the Assignee and the Assignor and their successors and assigns.
3. Representations, Warranties and Covenants.
(a) The Assignee represents and warrants that it is a sophisticated
investor able to evaluate the risks and merits of the transactions contemplated
hereby, and that it has not relied in connection therewith upon any statements
or representations of the Servicer or the Assignor other than those contained in
the Agreement or this Assignment.
(b) Each of the parties hereto represents and warrants that it is duly and
legally authorized to enter into this Assignment.
(c) Each of the parties hereto represents and warrants that this Assignment
has been duly authorized, executed and delivered by it and (assuming due
authorization, execution and delivery thereof by each of the other parties
hereto) constitutes its legal, valid and binding obligation, enforceable against
it in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
(d) The Assignee agrees to be bound, as "Owner", by all of the terms,
covenants and conditions of the Agreement with respect to the Specified Mortgage
Loans, and from and after the date hereof, the Assignee assumes for the benefit
of each of the Servicer and the Assignor all of the Assignor's obligations as
"Owner" thereunder, with respect to the Specified Mortgage Loans.
4. Continuing Effect
Except as contemplated hereby, the Agreement shall remain in full force and
effect in accordance with its terms.
5. Governing Law
This Assignment and the rights and obligations hereunder shall be governed
by and construed in accordance with the internal laws of the State of New York.
6. Notices
Any notices or other communications permitted or required under the
Agreement to be made to the Assignee shall be made in accordance with the terms
of the Agreement and shall be sent to the Assignee as follows:
[_____________________], or to such other address as may hereafter be furnished
by the Assignee to the parties in accordance with the provisions of the
Agreement.
7. Counterparts
This Agreement may be executed in counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same instrument.
8. Definitions
Any capitalized term used but not defined in this Agreement has the same
meaning as in the Agreement.
[Assignment continues with signature page]
IN WITNESS WHEREOF, the parties hereto have executed this Assignment the
day and year first above written.
ASSIGNOR:
TABERNA REALTY HOLDINGS TRUST
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ASSIGNEE:
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SERVICER:
PHH MORTGAGE CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exhibit 9
PHH MORTGAGE CORPORATION
ASSISTANT SECRETARY'S CERTIFICATE
I, ____________________, hereby certify that:
1. I am a duly elected, qualified and acting Assistant Secretary of
PHH Mortgage Corporation (the "Company"), a New Jersey corporation, and as such
have access to the Company's corporate records and am familiar with the matters
herein certified.
2. Attachment A hereto is a true and correct copy of resolutions duly
adopted by the board of Directors of the Company on December 20, 1993, and such
resolutions are in full force and effect on and as of the date hereof, not
having been amended, altered or repealed, and such resolutions are duly filed
with the records of the Board of Directors.
3. The following documents have been reviewed and, where applicable,
executed and delivered by the Company pursuant to and in accordance with the
resolutions set forth in Attachment A:
(a) Mortgage Loan Servicing Agreement, dated as of October 1, 2005
(the "Agreement") between Taberna Realty Holdings Trust as Owner, and PHH
Mortgage Corporation, as Servicer, providing for the servicing of Mortgage Loans
by the Servicer for the benefit of the Owner.
4. Each person who, as a manager or officer of the Company, has signed
manually or by facsimile any and all documents delivered by the Servicer in
connection with the execution and delivery of Agreement, was duly elected or
appointed, qualified and acting as such manager or officer at the respective
times of such signing and delivery, and the signatures of such persons appearing
on such documents or instruments are their genuine signatures.
5. Attachment B hereto is a true, correct and complete copy of the
Bylaws and Articles of Incorporation of the Company, and all amendments thereto,
which are in full force and effect as of the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate
seal of the Company as of this __th day of _____ 200_.
----------------------------------------
EXHIBIT 10
FORM OF TERMS LETTER
[DATE]
PHH Mortgage Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
You are hereby notified that as of [DATE] (the "Effective Date"), the mortgage
loans listed on the attached schedule (the "Mortgage Loans") shall be subject to
the terms and conditions of the Mortgage Loan Servicing Agreement, dated as of
October 1, 2005, between PHH Mortgage Corporation, as servicer and Taberna
Realty Holdings Trust, as owner (the "Servicing Agreement"). You agree to
service such Mortgage Loans from and after the Effective Date as Mortgage Loans
under the certain Servicing Agreement for the benefit of the Owner.
TABERNA REALTY HOLDINGS TRUST, as Owner
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Confirmed and Agreed to:
PHH MORTGAGE CORPORATION, as Servicer
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
EXHIBIT A
MORTGAGE LOANS
[Intentionally Omitted]
EXHIBIT 11
FORM OF ▇▇▇▇▇▇▇▇-▇▇▇▇▇ CERTIFICATION
I, ▇▇▇▇▇▇ ▇▇▇▇▇▇, certify to [Owner or][Master Servicer Name], in connection
with [Insert name and date of applicable contract and/or name of securitization
deal] (the "Agreement"), that I am a duly elected Senior Vice President of PHH
Mortgage Corporation, a corporation organized under the laws of the State of New
Jersey (the "Servicer") and further as follows:
(i) To the best of my knowledge, the information in the Annual Statement of
Compliance, and the Annual Independent Public Accountant's Servicing Report and
all servicing reports, officer's certificates and other information relating to
the servicing of the Mortgage Loans submitted to the [Owner or] [Master
Servicer] by the Servicer, does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not
misleading, as of the last day of the period covered by the Annual Statement of
Compliance;
(ii) To the best of my knowledge, the servicing information required to be
provided to the Master Servicer by the Servicer under the Agreement has been
provided to the Master Servicer;
(iii) I am responsible for reviewing the activities performed by the Servicer
under this Agreement and based upon the review required by this Agreement, and
except as disclosed in the Annual Statement of Compliance, the Annual
Independent Public Accountant's Servicing Report, or otherwise disclosed in a
writing submitted to the Master Servicer, the Servicer has, as of last day of
the period covered by the Annual Statement of Compliance, fulfilled its
obligations under this Agreement; and
(iv) I have disclosed to the Master Servicer all significant deficiencies
relating to the Servicer 's compliance with the minimum servicing standards as
determined in accordance with a review conducted in compliance with the Uniform
Single Attestation Program for Mortgage Bankers as set forth in this Agreement.
Capitalized terms used herein and not defined shall have the meanings ascribed
to them in the Agreement.
PHH Mortgage Corporation
By:
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Senior Vice President
Date:
---------------
SCHEDULE B-1
CONTENTS OF OWNER'S MORTGAGE FILE
With respect to each Mortgage Loan, the Owner's Mortgage File shall include
each of the following items:
1. The original Mortgage Note bearing all intervening endorsements,
endorsed, at the direction of the Owner either (1) "Pay to the order
of "-------", without recourse," or (2) in blank and signed in the
name of the applicable seller by an authorized officer. To the extent
that there is no space on the face of the Mortgage Notes for
endorsements, the endorsement may be contained on an allonge, if state
law so allows and the Owner is so advised by the applicable seller
that state law so allows.
2. If the Mortgage Loan is not a MERS Mortgage Loan, the original
Assignment of Mortgage for each Mortgage Loan, in form and substance
acceptable for recording. The Mortgage shall be assigned, at the
direction of the Owner either (1) to "---------" or (2) with
assignee's name left blank. The Assignment of Mortgage must be duly
recorded only on the direction of the Owner. If the Mortgage Loan was
acquired by the applicable seller in a merger, the Assignment of
Mortgage must be made by "PHH Mortgage Corporation, successor by
merger to [name of predecessor]." If the Mortgage Loan was acquired or
originated by the seller while doing business under another name or
under an assumed name, the Assignment must be by "PHH Mortgage
Corporation formerly known as [previous name] or [PHH Mortgage
Corporation dba ______________, ] respectively.
3. With respect to each Additional Collateral Mortgage Loan, a copy of
the related Mortgage 100K Pledge Agreement or Parent Power(R)
Agreement, as the case may be.
4. With respect to each Additional Collateral Mortgage Loan, a copy of
the UCC-1, to the extent MLCC was required to deliver such UCC-1 to
Servicer, and an original form UCC-3, if applicable, to the extent
MLCC was required to deliver such UCC-3 to Servicer, together with a
copy of the applicable notice of assignment to and acknowledgment by
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated.
5. With respect to each Cooperative Loan, the original Stock Certificate
and related Stock Power, in blank, executed by the Mortgagor with such
signature guaranteed and original Stock Power, in blank executed by
the applicable seller provided, that if the applicable seller delivers
a certified copy, the applicable seller shall deliver
the original Stock Certificate and Stock Powers to the Custodian on or
prior to the date which is 180 days after the related Closing Date;
THE MORTGAGE FILE SHALL INCLUDE EACH OF THE FOLLOWING ITEMS WITHIN 180 DAYS
AFTER THE RELATED EFFECTIVE DATE:
1. the original Mortgage with evidence of recording thereon. If in
connection with any Mortgage Loan, the applicable seller cannot
deliver or cause to be delivered the original Mortgage with evidence
of recording thereon on or prior to the Closing Date because of a
delay caused by the public recording office where such Mortgage has
been delivered for recordation or because such Mortgage has been lost
or because such public recording office retains the original recorded
Mortgage, the applicable seller shall deliver or cause to be delivered
to the Custodian, a photocopy of such Mortgage, together with (i) in
the case of a delay caused by the public recording office, an
Officer's Certificate of the applicable seller (or certified by the
title company, escrow agent, or closing attorney) stating that such
Mortgage has been dispatched to the appropriate public recording
office for recordation and that the original recorded Mortgage or a
copy of such Mortgage certified by such public recording office to be
a true and complete copy of the original recorded Mortgage will be
promptly delivered to the Custodian upon receipt thereof by the
applicable seller; or (ii) in the case of a Mortgage where a public
recording office retains the original recorded Mortgage or in the case
where a Mortgage is lost after recordation in a public recording
office, a copy of such Mortgage certified by such public recording
office to be a true and complete copy of the original recorded
Mortgage;
2. To the extent applicable, the original of each power of attorney,
surety agreement or guaranty agreement with respect to such Mortgage
Loan;
3. Originals of any executed intervening assignments of the Mortgage,
with evidence of recording thereon or, if the original intervening
assignment has not yet been returned from the recording office, a copy
of such assignment certified by the applicable seller to be a true
copy of the original of the assignment which has been sent for
recording in the appropriate jurisdiction in which the Mortgaged
Property is located.
4. Originals of all assumption, modification and substitution agreements,
if any, or, if the originals of any such assumption, modification and
substitution agreements have not yet been returned from the recording
office, a copy of such instruments certified by the applicable seller
to be a true copy of the original of such instruments which have been
sent for recording in the appropriate jurisdictions in which the
Mortgaged Properties are located.
5. The original mortgagee policy of title insurance or, in the event such
original title policy is unavailable, a certified true copy of the
related policy binder or
commitment for title certified to be true and complete by the title
insurance company, in each case, including an Environmental Protection
Agency Endorsement and an adjustable-rate endorsement.
6. With respect to each Cooperative Loan, the original Recognition
Agreement and the original Assignment of Recognition Agreement;
7. With respect to each Cooperative Loan, an Estoppel Letter and/or
Consent;
8. With respect to each Cooperative Loan, the Cooperative Lien Search;
9. With respect to each Cooperative Loan, the guaranty of the Mortgage
Note and Cooperative Loan, if any; and
10. With respect to each Cooperative Loan, the original Cooperative Pledge
Agreement.
11. With respect to each Cooperative Loan, the original Proprietary Lease
and the Assignment of Proprietary Lease executed by the Mortgagor in
blank or if the Proprietary Lease has been assigned by the Mortgagor
to the applicable seller, then the applicable seller must execute an
assignment of the Assignment of Proprietary Lease in blank;
12. With respect to each Cooperative Loan, the recorded state and county
Financing Statements and Financing Statement Changes;
From time to time, the Servicer shall forward to the Custodian additional
original documents pursuant to the Agreement or additional documents evidencing
an assumption, modification, consolidation or extension of a Mortgage Loan
approved by the Servicer, in accordance with the Agreement. All such mortgage
documents held by the Custodian as to each Mortgage Loan shall constitute the
"Custodial File".