EXECUTION COPY
EXHIBIT 10.1
SALE AND SERVICING AGREEMENT
dated as of February 1, 2000
by and among
ACCREDITED HOME LENDERS, INC.,
as Sponsor,
ACCREDITED MORTGAGE LOAN TRUST 2000-1,
as Issuer,
ACCREDITED HOME LENDERS, INC.,
as Master Servicer,
ADVANTA MORTGAGE CORP. USA
as Backup Servicer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Indenture Trustee
Table of Contents
PAGE
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms..................................................................1
Section 1.02. Provisions of General Application......................................................1
ARTICLE II
SALE AND CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01. Purchase and Sale of Initial Mortgage Loans............................................3
Section 2.02. Purchase and Sale of Subsequent Mortgage Loans.........................................3
Section 2.03. Purchase Price.........................................................................3
Section 2.04. Possession of Mortgage Files; Access to Mortgage Files.................................4
Section 2.05. Delivery of Mortgage Loan Documents....................................................4
Section 2.06. Acceptance of the Trust Estate; Certain Substitutions; Certification by the
Indenture Trustee..................................................................7
Section 2.07. Grant of Security Interest.............................................................8
Section 2.08. Further Action Evidencing Assignments..................................................9
Section 2.09. Assignment of Agreement...............................................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations of the Master Servicer................................................11
Section 3.02. Representations, Warranties and Covenants of the Sponsor..............................12
Section 3.03. Representations, Warranties and Covenants of the Backup Servicer......................13
Section 3.04. Representations, Warranties and Covenants of the Indenture Trustee....................14
Section 3.05. Covenants and Representations of the Sponsor and Master Servicer Regarding
Prepayment Charges................................................................15
ARTICLE IV
THE MORTGAGE LOANS
Section 4.01. Representations and Warranties Concerning the Mortgage Loans..........................17
Section 4.02. Purchase and Substitution.............................................................24
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01. The Master Servicer...................................................................26
Section 5.02. Collection of Certain Mortgage Loan Payments; Collection Account......................28
Section 5.03. Permitted Withdrawals from the Collection Account.....................................29
Section 5.04. Hazard Insurance Policies; Property Protection Expenses...............................30
(i)
Section 5.05. Assumption and Modification Agreements................................................32
Section 5.06. Realization Upon Defaulted Mortgage Loans.............................................32
Section 5.07. Indenture Trustee to Cooperate........................................................33
Section 5.08. Servicing Compensation; Payment of Certain Expenses by Master Servicer................35
Section 5.09. Annual Statement as to Compliance.....................................................35
Section 5.10. Annual Independent Public Accountants' Servicing Report...............................35
Section 5.11. Access to Certain Documentation.......................................................36
Section 5.12. Maintenance of Fidelity Bond..........................................................36
Section 5.13. Subservicing Agreements Between the Master Servicer and Subservicers..................36
Section 5.14. Reports to the Indenture Trustee; Collection Account Statements.......................37
Section 5.15. Optional Purchase of Defaulted Mortgage Loans.........................................38
Section 5.16. Reports to be Provided by the Master Servicer and the Backup Servicer.................39
Section 5.17. [Reserved]............................................................................40
Section 5.18. Periodic Advances.....................................................................40
Section 5.19. Indemnification; Third Party Claims...................................................41
Section 5.20. Maintenance of Corporate Existence and Licenses; Merger or Consolidation of
the Master Servicer and Backup Servicer...........................................41
Section 5.21. Assignment of Agreement by Master Servicer and Backup Servicer; Master
Servicer and Backup Servicer Not to Resign........................................41
Section 5.22. Periodic Filings with the Securities and Exchange Commission; Additional
Information.......................................................................42
Section 5.23. Administrative Duties.................................................................42
Section 5.24. Maintenance of and Claims Upon the Primary Mortgage Insurance Policy..................43
ARTICLE VI
APPLICATION OF FUNDS
Section 6.01. Deposits to the Payment Account.......................................................44
Section 6.02. Collection of Money...................................................................44
Section 6.03. Application of Principal and Interest.................................................44
Section 6.04. [Reserved]............................................................................44
Section 6.05. Compensating Interest.................................................................44
Section 6.06. Effect of Payments by the Note Insurer; Subrogation...................................44
ARTICLE VII
SERVICER DEFAULT
Section 7.01. Servicer Events of Default............................................................46
Section 7.02. Backup Servicer to Act; Appointment of Successor......................................49
Section 7.03. Waiver of Defaults....................................................................52
Section 7.04. Rights of the Note Insurer to Exercise Rights of the Noteholders......................52
Section 7.05. Indenture Trustee To Act Solely with Consent of the Note Insurer......................53
Section 7.06. Mortgage Loans, Trust Estate and Accounts Held for Benefit of the Note Insurer........53
Section 7.07. Note Insurer Default..................................................................53
(ii)
ARTICLE VIII
TERMINATION
Section 8.01. Termination...........................................................................55
Section 8.02. Additional Termination Requirements...................................................56
Section 8.03. Accounting Upon Termination of Master Servicer........................................56
Section 8.04. Retention and Termination of the Master Servicer......................................56
ARTICLE IX
[RESERVED]
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Limitation on Liability...............................................................59
Section 10.02. Acts of Noteholders...................................................................59
Section 10.03. Amendment.............................................................................60
Section 10.04. Recordation of Agreement..............................................................61
Section 10.05. Duration of Agreement.................................................................61
Section 10.06. Notices...............................................................................61
Section 10.07. Severability of Provisions............................................................61
Section 10.08. No Partnership........................................................................62
Section 10.09. Counterparts..........................................................................62
Section 10.10. Successors and Assigns................................................................62
Section 10.11. Headings..............................................................................62
Section 10.12. No Petition...........................................................................62
Section 10.13. Third Party Beneficiary...............................................................62
Section 10.14. Intent of the Parties.................................................................62
Section 10.15. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL..........................62
EXHIBITS
EXHIBIT A Contents of the Mortgage File
EXHIBIT B Indenture Trustee's Acknowledgement of Receipt
EXHIBIT C Collateral Agent's Acknowledgement of Receipt
EXHIBIT D Initial Certification of Collateral Agent
EXHIBIT E Final Certification of Collateral Agent
EXHIBIT F Request for Release of Documents
EXHIBIT G Form of Subsequent Transfer Agreement
EXHIBIT H Prepayment Charge Schedule
EXHIBIT I Schedule Of Mortgage Loan With LTVs Greater Than 75%
Which Are Not Covered By The Primary Mortgage
Insurance Policy
SCHEDULES
SCHEDULE I Mortgage Loan Schedule
(iii)
SALE AND SERVICING AGREEMENT, dated as of February 1, 2000 (this
"AGREEMENT"), by and among ACCREDITED HOME LENDERS, INC., a California
corporation, as sponsor (the "SPONSOR"), ACCREDITED MORTGAGE LOAN TRUST
2000-1, a Delaware statutory business trust, as issuer (the "TRUST"),
ACCREDITED HOME LENDERS, INC., a California corporation, as master servicer
(the "MASTER SERVICER"), ADVANTA MORTGAGE CORP. USA, a Delaware corporation,
as backup servicer (the "BACKUP SERVICER"), and NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, a national banking association, as indenture trustee
(the "INDENTURE TRUSTEE").
W I T N E S S E T H
WHEREAS, the Sponsor desires to sell to the Trust, and the Trust
desires to purchase from the Sponsor, the mortgage loans (the "MORTGAGE LOANS")
listed on Schedule I to this Agreement;
WHEREAS, immediately after such purchase, the Trust will pledge such
Mortgage Loans to the Indenture Trustee pursuant to the terms of an Indenture,
dated as of February 1, 2000 (the "INDENTURE"), between the Trust and the
Indenture Trustee, and issue the Accredited Mortgage Loan Trust 2000-1,
Asset-Backed Notes (the "NOTES");
WHEREAS, the Master Servicer has agreed to service the Mortgage
Loans, which constitute the principal assets of the Trust;
WHEREAS, the Backup Servicer has agreed to act as backup servicer of
the Mortgage Loans, which constitute the principal assets of the Trust; and
WHEREAS, the Indenture Trustee will hold the Mortgage Loans and
certain other assets pledged to the Indenture Trustee pursuant to the
Indenture;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Sponsor, the Trust, the Master Servicer, the
Backup Servicer and the Indenture Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS. Capitalized terms used
herein but not defined herein shall have the meanings ascribed to such terms
in Appendix I attached hereto.
Section 1.02. PROVISIONS OF GENERAL APPLICATION. (a) All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
(b) The terms defined herein and in Appendix I to the
Indenture include the plural as well as the singular.
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(c) The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole. All references to
Articles and Sections shall be deemed to refer to Articles and Sections of
this Agreement.
(d) Any reference to statutes are to be construed as
including all statutory provisions consolidating, amending or replacing the
statute to which reference is made and all regulations promulgated pursuant
to such statutes.
(e) All calculations of interest with respect to the Class
A-1 Notes provided for herein shall be made on the basis of a 360-day year
consisting of twelve 30-day months. All calculations of interest with respect
to the Class A-2 Notes provided for herein shall be on the basis of a 360-day
year and the actual number of days elapsed in the related Accrual Period. All
calculations of interest with respect to any Mortgage Loan provided for
herein shall be made in accordance with the terms of the related Mortgage
Note and Mortgage or, if such documents do not specify the basis upon which
interest accrues thereon, on the basis of a 360-day year consisting of twelve
30-day months, to the extent permitted by applicable law.
(f) Any Mortgage Loan payment is deemed to be received on
the date such payment is actually received by the Master Servicer or by any
Subservicer; PROVIDED, HOWEVER, that, for purposes of calculating payments on
the Notes, prepayments with respect to any Mortgage Loan are deemed to be
received on the date they are applied in accordance with Accepted Servicing
Practices consistent with the terms of the related Mortgage Note and Mortgage
to reduce the outstanding Principal Balance of such Mortgage Loan on which
interest accrues.
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ARTICLE II
SALE AND CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01. PURCHASE AND SALE OF INITIAL MORTGAGE LOANS. The
Sponsor does hereby sell, transfer, assign, set over and convey to the Trust,
to be included as part of Sub-Trust 1 or Sub-Trust 2, as specified in the
Mortgage Loan Schedule, in each case without recourse, but subject to the
terms and provisions of this Agreement, all of the right, title and interest
of the Sponsor in and to the Initial Mortgage Loans, including the Cut-Off
Date Principal Balance of such Initial Mortgage Loans listed on Schedule I
attached hereto, and all other assets included or to be included in the Trust
Estate. In addition, on or prior to the Closing Date, the Sponsor shall cause
the Note Insurer to deliver the Note Insurance Policy to the Indenture
Trustee for the benefit of the Noteholders.
Section 2.02. PURCHASE AND SALE OF SUBSEQUENT MORTGAGE LOANS. (a)
Subject to the satisfaction of the conditions set forth in Section 2.14(b) of
the Indenture, in consideration of the Trust's delivery on the related
Subsequent Transfer Dates to or upon the order of the Sponsor of all or a
portion of the balance of funds in the related Pre-Funding Account, the
Sponsor shall on any Subsequent Transfer Date sell, transfer, assign, set
over and convey to the Trust without recourse, but subject to terms and
provisions of this Agreement, all of the right, title and interest of the
Sponsor in and to the Subsequent Mortgage Loans in the related Loan Group,
including the Cut-Off Date Principal Balance, and interest due on, such
Subsequent Mortgage Loans, and all other assets included or to be included in
the Trust Estate.
The amount released from a Pre-Funding Account with respect to a
transfer of Subsequent Mortgage Loans to the related Loan Group shall be
one-hundred percent (100%) of the Cut-Off Date Principal Balance of the
Subsequent Mortgage Loans so transferred, as of the related Subsequent Cut-Off
Date.
(b) In connection with the transfer and assignment of the
Subsequent Mortgage Loans to the Trust, the Sponsor shall satisfy the
document delivery requirements set forth in Section 2.05 hereof.
(c) For any Subsequent Mortgage Loan that has a first Due
Date that occurs later than the last day of the Due Period following the Due
Period in which the related Subsequent Cut-Off Date occurs, on each
applicable Servicer Payment Date, the Master Servicer will deposit into the
related Payment Account 30 days' interest at the related Mortgage Interest
Rate, net of the Servicing Fee, for each month after the month in which the
Subsequent Transfer occurs until, but not including, the month in which such
first Due Date occurs. Notwithstanding anything in Section 7.02 to the
contrary, neither the Backup Servicer nor the Indenture Trustee is obligated
to make such deposit in the event the Master Servicer fails to do so.
Section 2.03. PURCHASE PRICE. On the Closing Date, as full
consideration for the Sponsor's sale of the Initial Mortgage Loans to the
Trust, the Underwriter, on behalf of the Trust, will deliver to, or at the
direction of, the Sponsor (i) an amount in cash equal to the sum of (A)
99.634375% and 99.650000% of the Original Note Principal Balance as of the
Closing Date of the Class A-1 Notes and the Class A-2 Notes, respectively,
plus (B) accrued interest on the
3
Original Note Principal Balance of the Class A-1 Notes at the rate of 7.94%
per annum from (and including) February 1, 2000 to (but not including) the
Closing Date, minus (C) the Original Pre-Funded Amount and the Original
Capitalized Interest Amount with respect to each Class of Notes, payable by
wire transfer of same day funds, and (ii) the Certificates to be issued
pursuant to the Trust Agreement.
Section 2.04. POSSESSION OF MORTGAGE FILES; ACCESS TO MORTGAGE
FILES. (a) Upon the receipt by the Sponsor, or its designee, of the purchase
price for the Initial Mortgage Loans set forth in Section 2.03 hereof, the
ownership of each Mortgage Note, each Mortgage and the contents of the
Mortgage File related to each Initial Mortgage Loan will be vested in the
Trust, and will be pledged to the Indenture Trustee, for the benefit of the
Noteholders and the Note Insurer.
(b) Pursuant to Section 2.05 hereof, the Sponsor has
delivered or caused to be delivered the Indenture Trustee's Mortgage File
related to each Initial Mortgage Loan to the Indenture Trustee.
(c) The Indenture Trustee will hold the Indenture Trustee's
Mortgage Files in trust pursuant to the terms of the Indenture for the
benefit of all present and future Noteholders and the Note Insurer.
(d) Consistent with the terms of the Indenture, the
Indenture Trustee shall afford the Sponsor, the Trust, the Note Insurer, the
Master Servicer and the Backup Servicer reasonable access to all records and
documentation regarding the Mortgage Loans relating to this Agreement, such
access being afforded at customary charges, upon reasonable prior written
request and during normal business hours at the offices of the Indenture
Trustee.
Section 2.05. DELIVERY OF MORTGAGE LOAN DOCUMENTS. (a) In connection
with the transfer and assignment of the Mortgage Loans, the Sponsor shall on
or before the Closing Date, with respect to the Initial Mortgage Loans, and
shall on or before the Subsequent Transfer Date with respect to Subsequent
Mortgage Loans, deliver, or cause to be delivered to the Indenture Trustee
(as pledgee of the Trust pursuant to the Indenture), the following documents
or instruments constituting the Indenture Trustee's Mortgage File with
respect to each Mortgage Loan so transferred or assigned:
(i) the original Mortgage Note, endorsed without recourse
in blank by the Sponsor, including all intervening endorsements showing
a complete chain of endorsement;
(ii) the related original Mortgage with evidence of
recording indicated thereon or a copy thereof certified by the
applicable recording office;
(iii) each intervening mortgage assignment, with evidence
of recording indicated thereon or if the original is not available, a
copy thereof certified by the applicable recording office, if any,
showing a complete chain of assignment from the originator of the
related Mortgage Loan to the Sponsor (which assignment may, at the
Sponsor's option, be combined with the assignment referred to in
subpart (iv) hereof, in which case it must be in recordable form, but
need not have been previously recorded);
4
(iv) a mortgage assignment in recordable form (which, if
acceptable for recording in the relevant jurisdiction, may be included
in a blanket assignment or assignments) of each Mortgage from the
Sponsor to the Indenture Trustee;
(v) originals of all assumption, modification and
substitution agreements in those instances where the terms or
provisions of a Mortgage or Mortgage Note have been modified or such
Mortgage or Mortgage Note has been assumed; and
(vi) an original title insurance policy or title opinion
(or (A) a copy of the title insurance policy or title opinion, or (B)
the related binder, commitment or preliminary report, or copy thereof
in which case the Sponsor hereby certifies that the original Mortgage
has been delivered to the title insurance company that issued such
binder, commitment or preliminary report).
In instances where the original recorded Mortgage or any intervening
mortgage assignment or a completed assignment of the Mortgage in recordable form
cannot be delivered by the Sponsor to the Indenture Trustee prior to or
concurrently with the execution and delivery of this Agreement (or, with respect
to Subsequent Mortgage Loans, prior to or on the related Subsequent Transfer
Date), due to a delay in connection with recording, the Sponsor may:
(x) in lieu of delivering such original recorded Mortgage or
intervening mortgage assignment, deliver to the Indenture Trustee, a
copy thereof and the Sponsor hereby certifies that the original
Mortgage has been delivered to a title insurance company for
recordation after receipt of its policy of title insurance or the
related binder, commitment or preliminary report therefor; and
(y) with respect to clause (iii) above, in lieu of delivering
the completed assignment in recordable form, deliver to the Indenture
Trustee, the assignment in recordable form, otherwise complete except
for recording information.
The Indenture Trustee, at the direction and authority of the parties to
this Agreement, shall promptly upon receipt thereof, with respect to each
Mortgage Note described in Section 2.05(a)(i) hereof and each assignment
described in Section 2.05(a)(iv) hereof, endorse such Mortgage Note and
assignment as follows: "Norwest Bank Minnesota, National Association, as
Indenture Trustee under the Indenture dated as of February 1, 2000, Accredited
Mortgage Loan Trust 2000-1."
(b) As promptly as practicable, but in any event within
thirty (30) days from the Closing Date or the Subsequent Transfer Date, as
applicable, the Sponsor shall promptly submit, or cause to be submitted for
recording in the appropriate public office for real property records, each
assignment referred to in Section 2.05(a)(iv); provided however, the Sponsor
need not cause to be recorded any assignment which relates to a Mortgage Loan
in any jurisdiction under the laws of which, as evidenced by an Opinion of
Counsel delivered by the Sponsor (at the Sponsor's expense) to the Indenture
Trustee, acceptable to the Rating Agencies and the Note Insurer, the
recordation of such assignment is not necessary to protect the Indenture
Trustee's, the Note Insurer's, the Noteholders' and the Certificates'
interest in the related Mortgage Loan. The Indenture Trustee, shall retain a
copy of each assignment submitted for recording. In the
5
event that any such assignment is lost or returned unrecorded because of a
defect therein, the Sponsor shall promptly prepare a substitute assignment or
cure such defect, as the case may be, and thereafter the Sponsor shall submit
each such assignment for recording. The costs relating to the delivery and
recordation of the documents in connection with the Mortgage Loans as
specified in this Article II shall be borne by the Sponsor.
(c) The Sponsor shall, within five (5) Business Days after
the receipt thereof, deliver, or cause to be delivered, to the Indenture
Trustee: (i) the original recorded Mortgage and related power of attorney, if
any, in those instances where a copy thereof certified by the Sponsor was
delivered to the Indenture Trustee; (ii) the original recorded assignment of
Mortgage from the Sponsor to the Indenture Trustee, which, together with any
intervening assignments of Mortgage, evidences a complete chain of assignment
from the originator of the Mortgage Loan to the Indenture Trustee, in those
instances where copies of such assignments certified by the Sponsor were
delivered to the Indenture Trustee; and (iii) the title insurance policy or
title opinion required in Section 2.05(a)(vi).
Notwithstanding anything to the contrary contained in this Section
2.05, in those instances where the public recording office retains the original
Mortgage, power of attorney, if any, assignment or assignment of Mortgage after
it has been recorded or such original has been lost, the Sponsor shall be deemed
to have satisfied its obligations hereunder upon delivery to the Indenture
Trustee, of a copy of such Mortgage, power of attorney, if any, assignment or
assignment of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
From time to time the Sponsor may forward, or cause to be forwarded, to
the Indenture Trustee, additional original documents evidencing any assumption
or modification of a Mortgage Loan.
(d) All original documents relating to the Mortgage Loans
that are not required to be delivered to the Indenture Trustee, pursuant to
Section 2.05(a) hereof are, and shall be, held by the Master Servicer or the
Sponsor, as the case may be, in trust for the benefit of the Indenture
Trustee, on behalf of the Noteholders and the Note Insurer. In the event that
any such original document is required pursuant to the terms of this Section
2.05 to be a part of an Indenture Trustee's Mortgage File, such document
shall be delivered promptly to the Indenture Trustee. From and after the sale
of the Mortgage Loans to the Trust pursuant hereto, to the extent that the
Sponsor retains legal title of record to any Mortgage Loans prior to the
vesting of legal title in the Trust, such title shall be retained in trust
for the Trust as the owner of the Mortgage Loans, and the Indenture Trustee,
as the pledgee of the Trust under the Indenture. In acting as custodian of
any original document which is part of the Indenture Trustee's Mortgage
Files, the Master Servicer agrees further that it does not and will not have
or assert any beneficial ownership interest in the related Mortgage Loans or
the Mortgage Files. Promptly upon the Master Servicer's receipt of any such
original document, the Master Servicer, on behalf of the Trust, shall ▇▇▇▇
conspicuously each such original document, and its master data processing
records with a legend evidencing that the Trust has purchased the related
Mortgage Loan and all right and title thereto and interest therein, and
pledged such Mortgage Loan and all right and title thereto and interest
therein to the Indenture Trustee, on behalf of the Noteholders and the Note
Insurer.
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Section 2.06. ACCEPTANCE OF THE TRUST ESTATE; CERTAIN SUBSTITUTIONS;
CERTIFICATION BY THE INDENTURE TRUSTEE. (a) The Indenture Trustee agrees to
execute and deliver to the Sponsor, the Note Insurer, the Master Servicer and
the Backup Servicer on or prior to the Closing Date an acknowledgement of
receipt of the Note Insurance Policy and the Primary Mortgage Insurance
Policy in the form attached as EXHIBIT B hereto.
(b) The Indenture Trustee is authorized and directed to
do the following:
(i) execute and deliver to the Sponsor, the Note Insurer,
the Master Servicer and the Backup Servicer, on or prior to the Closing
Date or any Subsequent Transfer Date, as applicable, with respect to
each Mortgage Loan transferred on such date, an acknowledgement of
receipt, in the form attached as EXHIBIT C hereto, of the original
Mortgage Note as required to be included in the Indenture Trustee's
Mortgage File (with any exceptions noted) and declares that it will
hold such documents and any amendments, replacements or supplements
thereto, as well as any other assets included in the definition of
Trust Estate and delivered to the Indenture Trustee, subject to the
conditions set forth in the Indenture, for the benefit of the
Noteholders and the Note Insurer.
(ii) to review (or cause to be reviewed) each Indenture
Trustee's Mortgage File within sixty (60) days after the Closing Date
or any Subsequent Transfer Date, as applicable (or, with respect to any
Qualified Substitute Mortgage Loans, within sixty (60) days after
receipt thereof), and to deliver to the Master Servicer, the Backup
Servicer, the Sponsor, and the Note Insurer a certification, in the
form attached hereto as EXHIBIT D, to the effect that, except as
otherwise noted, as to each Mortgage Loan listed in the related
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or
any Mortgage Loan specifically identified in such certification as not
covered by such certification), (i) all documents specified in Section
2.05 are in its possession, (ii) each such document has been reviewed
by it and appears, on its face, not to have been mutilated, damaged,
torn or otherwise physically altered (handwritten additions, changes or
corrections shall not constitute physical alteration if they reasonably
appear to have been initialed), appears regular on its face and relates
to such Mortgage Loan, and (iii) based on its examination and only as
to the foregoing documents, the information set forth on the Mortgage
Loan Schedule as to the information set forth in (i), (ii), (iii) and
(vi) of the definition of "Mortgage Loan Schedule" accurately reflects
the information set forth in the Indenture Trustee's Mortgage File
delivered on such date; PROVIDED HOWEVER, no certification of the
Indenture Trustee shall constitute a determination by the Indenture
Trustee of the proper form, adequacy or enforceability of any document
included in the Indenture Trustee's Mortgage File.
(iii) to review (or cause to be reviewed) each Indenture
Trustee's Mortgage File within one hundred eighty (180) days after the
Closing Date or any Subsequent Transfer Date, as applicable (or, with
respect to any Qualified Substitute Mortgage Loans, within one hundred
eighty (180) days after receipt thereof), and to deliver to the Master
Servicer, the Backup Servicer, the Sponsor and the Note Insurer a
certification in the form attached hereto as EXHIBIT E to the effect
that, except as otherwise noted, as to each Mortgage Loan listed in the
related Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or any Mortgage Loan specifically identified in such certification
as not
7
covered by such certification), (i) all documents specified in
Section 2.05 are in its possession, (ii) each such document has been
reviewed by it and has not been mutilated, damaged, torn or otherwise
physically altered (handwritten additions, changes or corrections shall
not constitute physical alteration if they reasonably appear to be
initialed by the Mortgagor), appears regular on its face and relates to
such Mortgage Loan, and (iii) based on its examination and only as to
the foregoing documents, the information set forth in items (i), (ii),
(iii) and (vi) of the definition of "Mortgage Loan Schedule" accurately
reflects the information set forth in the Indenture Trustee's Mortgage
File delivered on such date.
In performing any such review, the Indenture Trustee may conclusively
rely on the Sponsor as to the purported genuineness of any such document and any
signature thereon. It is understood that the scope of the Indenture Trustee's
review of the Indenture Trustee's Mortgage Files is limited solely to confirming
that the documents listed in Section 2.05 have been executed and received and
relate to the Indenture Trustee's Mortgage Files identified in the related
Mortgage Loan Schedule. The Indenture Trustee shall be under no duty or
obligation to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or
appropriate for the represented purpose or that they are other than what they
purport to be on their face.
(c) If the Indenture Trustee during the process of
reviewing the Indenture Trustee's Mortgage Files finds any document
constituting a part of a Indenture Trustee's Mortgage File which is not
executed, has not been received, is unrelated to the Mortgage Loan identified
in the related Mortgage Loan Schedule, or does not conform to the
requirements of Section 2.05 or the description thereof as set forth in the
related Mortgage Loan Schedule, the Indenture Trustee shall promptly so
notify the Master Servicer, the Backup Servicer, the Sponsor, the Note
Insurer and the Indenture Trustee. Upon receipt of such notice respecting
such defect, the Sponsor shall have a sixty (60) day period after such notice
within which to correct or cure any such defect. If, however, within such
sixty (60) day period, the Sponsor has not caused to be remedied the defect
and the defect materially and adversely affects the value of the related
Mortgage Loan or the interest of the Noteholders and the Note Insurer in the
related Mortgage Loan, the Sponsor will be obligated to either (i) substitute
in lieu of such Mortgage Loan a Qualified Substitute Mortgage Loan in the
manner and subject to the conditions set forth in this Section 2.06 or (ii)
purchase such Mortgage Loan at a purchase price equal to the Loan Repurchase
Price. Upon receipt by the Indenture Trustee of two copies of a
certification, in the form attached hereto as EXHIBIT F, of a Servicing
Officer of such substitution or purchase and, in the case of a substitution,
upon receipt by the Indenture Trustee, of the related Indenture Trustee's
Mortgage File, and the deposit of the amounts described above in the
Collection Account, the Indenture Trustee shall release to the Master
Servicer for release to the Sponsor the related Indenture Trustee's Mortgage
File and the Indenture Trustee shall execute, without recourse, and deliver
such instruments of transfer furnished by the Sponsor as may be necessary to
transfer such Mortgage Loan to the Sponsor. The Indenture Trustee shall
provide notice to the Note Insurer if the Sponsor fails to repurchase or
substitute for a Mortgage Loan in accordance with the foregoing.
Section 2.07. GRANT OF SECURITY INTEREST. (a) It is intended that
the conveyance of the Mortgage Loans and other property by the Sponsor to the
Trust as provided in this Article II be,
8
and be construed for all purposes other than tax purposes as, a sale of the
Mortgage Loans and such other property by the Sponsor to the Trust. It is,
for all purposes other than tax purposes further, not intended that such
conveyance be deemed a pledge of the Mortgage Loans or such other property by
the Sponsor to the Trust to secure a debt or other obligation of the Sponsor.
However, in the event that the Mortgage Loans or any of such other property
are held to be property of the Sponsor, or if for any reason this Agreement
is held or deemed to create a security interest in the Mortgage Loans or any
of such other property, then it is intended that: (i) this Agreement shall
also be deemed to be a security agreement within the meaning of the Uniform
Commercial Code; (ii) the conveyance provided for in this Article II shall be
deemed to be a grant by the Sponsor to the Trust of a security interest in
all of the Sponsor's right, title and interest in and to the Mortgage Loans
and such other property and all amounts payable to the holders of the
Mortgage Loans in accordance with the terms thereof and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash,
instruments, securities or other property, including, without limitation, all
amounts from time to time held or invested in the Accounts whether in the
form of cash, instruments, securities or other property; (iii) the possession
by the Indenture Trustee, of the Mortgage Notes and such other items of
property as constitute instruments, money, negotiable documents or chattel
paper shall be deemed to be "possession by the secured party" for purposes of
perfecting the security interest pursuant to the Uniform Commercial Code; and
(iv) notifications to persons holding such property, and acknowledgments,
receipts or confirmations from persons holding such property, shall be deemed
notifications to, or acknowledgments, receipts or confirmations from
financial intermediaries, bailees or agents, as applicable, of the Indenture
Trustee for the purpose of perfecting such security interest under applicable
law. The Sponsor, the Master Servicer, on behalf of the Trust and the
Indenture Trustee, shall, to the extent consistent with this Agreement, take
such actions as may be reasonably necessary to ensure that, if this Agreement
were deemed to create a security interest in the Mortgage Loans or any of
such other property, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement.
(b) The Sponsor, the Master Servicer and the Backup
Servicer shall take no action inconsistent with the Trust's ownership of the
Trust Estate and each shall indicate or shall cause to be indicated in its
records and records held on its behalf that ownership of each Mortgage Loan
and the other assets in the Trust Estate is vested in the Trust, as owner,
and is pledged to the Indenture Trustee, for the benefit of the Noteholders
and the Note Insurer pursuant to the terms of the Indenture. The Indenture
Trustee is authorized to act, pursuant to the terms of this Agreement for the
benefit of the Noteholders and Note Insurer and shall be authorized to act at
the direction of such parties. In addition, the Sponsor, the Master Servicer
and the Backup Servicer shall respond to any inquiries from third parties
with respect to ownership of a Mortgage Loan or any other asset in the Trust
Estate by stating that it is not the owner of such asset and that the Trust
is the owner of such Mortgage Loan or other asset in the Trust Estate, which
is pledged to the Indenture Trustee, for the benefit of the Noteholders and
the Note Insurer.
Section 2.08. FURTHER ACTION EVIDENCING ASSIGNMENTS. (a) The Master
Servicer agrees that, from time to time, at its expense, it shall cause the
Sponsor to, and the Sponsor agrees that it shall, promptly execute and
deliver all further instruments and documents, and take all further action,
that may be necessary or appropriate, or that the Master Servicer or the
Indenture Trustee
9
may reasonably request, in order to perfect, protect or more fully evidence
the transfer of ownership of the Mortgage Loans and other assets in the Trust
Estate or to enable the Indenture Trustee, to exercise or enforce any of its
rights hereunder. Without limiting the generality of the foregoing, the
Master Servicer and the Sponsor will, upon the request of the Master Servicer
or the Indenture Trustee execute and file (or cause to be executed and filed)
such real estate filings, financing or continuation statements, or amendments
thereto or assignments thereof, and such other instruments or notices, as may
be necessary or appropriate.
(b) The Sponsor hereby grants to the Master Servicer, the
Backup Servicer and the Indenture Trustee powers of attorney to execute all
documents on its behalf under this Agreement as may be necessary or desirable
to effectuate the foregoing.
Section 2.09. ASSIGNMENT OF AGREEMENT. The Sponsor and the Master
Servicer hereby acknowledge and agree that the Trust may assign its interest
under this Agreement to the Indenture Trustee, for the benefit of the
Noteholders and the Note Insurer, as may be required to effect the purposes
of the Indenture, without further notice to, or consent of, the Sponsor or
the Master Servicer, and the Indenture Trustee shall succeed to such of the
rights of the Trust hereunder as shall be so assigned. The Trust shall,
pursuant to the Indenture, assign all of its right, title and interest in and
to the Mortgage Loans and its right to exercise the remedies created by
Section 4.02 of this Agreement for breaches of the representations,
warranties, agreements and covenants of the Sponsor contained in Sections
3.02 and 4.01 of this Agreement, assign such right, title and interest to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer.
The Sponsor agrees that, upon such assignment to the Indenture Trustee, such
representations, warranties, agreements and covenants will run to and be for
the benefit of the Indenture Trustee and the Indenture Trustee may enforce,
without joinder of the Sponsor or the Trust, the repurchase obligations of
the Sponsor set forth herein with respect to breaches of such
representations, warranties, agreements and covenants.
10
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. REPRESENTATIONS OF THE MASTER SERVICER. The Master
Servicer hereby represents and warrants to the Indenture Trustee, the
Sponsor, the Trust, the Note Insurer, the Backup Servicer and the Noteholders
as of the Closing Date and during the term of this Agreement that:
(a) The Master Servicer is duly organized, validly existing
and in good standing under the laws of its state of incorporation and has the
power to own its assets and to transact the business in which it is currently
engaged. The Master Servicer is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
character of the business transacted by it or properties owned or leased by
it or the performance of its obligations hereunder requires such
qualification and in which the failure so to qualify could reasonably be
expected to have a material adverse effect on the business, properties,
assets, or condition (financial or other) of the Master Servicer or the
performance of its obligations hereunder.
(b) The Master Servicer has the power and authority to
make, execute, deliver and perform this Agreement and all of the transactions
contemplated under this Agreement, and has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement, and assuming the due authorization, execution and delivery hereof
by the other parties hereto constitutes, or will constitute, the legal, valid
and binding obligation of the Master Servicer, enforceable in accordance with
its terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in
equity or at law).
(c) The Master Servicer is not required to obtain the
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau
or agency which consent already has not been obtained in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement, except such as have been obtained prior to the Closing Date.
(d) The execution, delivery and performance of this
Agreement by the Master Servicer will not violate any provision of any
existing law or regulation or any order or decree of any court or the charter
or bylaws of the Master Servicer, or constitute a breach of any mortgage,
indenture, contract or other Agreement to which the Master Servicer is a
party or by which it may be bound.
(e) There is no action, suit, proceeding or investigation
pending or threatened against the Master Servicer which, either in any one
instance or in the aggregate, is, in the Master Servicer's judgment, likely
to result in any material adverse change in the business, operations,
financial condition, properties, or assets of the Master Servicer, or in any
material impairment of the right or ability of the Master Servicer to carry
on its business substantially as now conducted, or in any material liability
on the part of the Master Servicer, or which would draw into question
11
the validity of this Agreement, the Notes, or the Mortgage Loans or of any
action taken or to be taken in connection with the obligations of the Master
Servicer contemplated herein or therein, or which would be likely to impair
materially the ability of the Master Servicer to perform its obligations
hereunder.
(f) Neither this Agreement nor any statement, report, or
other document furnished by the Master Servicer pursuant to this Agreement or
in connection with the transactions contemplated hereby, including, without
limitation, the sale or placement of the Notes, contains any untrue statement
of fact provided by or on behalf of the Master Servicer or omits to state a
fact necessary to make the statements provided by or on behalf of the Master
Servicer contained herein or therein not misleading.
(g) The Master 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.
(h) The Master Servicer is not an "investment company" or a
company "controlled by an investment company," within the meaning of the
Investment Company Act of 1940, as amended.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.01 shall survive the delivery of the
respective Indenture Trustee's Mortgage Files to the Indenture Trustee and inure
to the benefit of the Indenture Trustee.
Section 3.02. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SPONSOR. The Sponsor hereby represents, warrants and covenants to the
Indenture Trustee, the Trust, the Backup Servicer, the Note Insurer and the
Master Servicer that as of the date of this Agreement or as of such date
specifically provided herein:
(a) The Sponsor is a corporation duly organized, validly
existing and in good standing under the laws of the State of California.
(b) The Sponsor has the corporate power and authority to
convey the Mortgage Loans and to execute, deliver and perform, and to enter
into and consummate the transactions contemplated by this Agreement.
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Sponsor, all requisite corporate action having
been taken, and, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes or will constitute the legal,
valid and binding agreement of the Sponsor, enforceable against the Sponsor
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
(d) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority or
court is required for the execution, delivery and performance of or
compliance by the Sponsor with this Agreement or the consummation by the
12
Sponsor of any of the transactions contemplated hereby, except as have been
made on or prior to the Closing Date.
(e) None of the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of,
or constitutes or will constitute a default or results or will result in an
acceleration under (A) the articles of incorporation or bylaws of the
Sponsor, or (B) of any term, condition or provision of any material
indenture, deed of trust, contract or other agreement or instrument to which
the Sponsor or any of its subsidiaries is a party or by which it or any of
its subsidiaries is bound; (ii) results or will result in a violation of any
law, rule, regulation, order, judgment or decree applicable to the Sponsor of
any court or governmental authority having jurisdiction over the Sponsor or
its subsidiaries; or (iii) results in the creation or imposition of any lien,
charge or encumbrance which would have a material adverse effect upon the
Mortgage Loans or any documents or instruments evidencing or securing the
Mortgage Loans.
(f) There are no actions, suits or proceedings before or
against or investigations of, the Sponsor pending, or to the knowledge of the
Sponsor, threatened, before any court, administrative agency or other
tribunal, and no notice of any such action, which, in the Sponsor's
reasonable judgment, might materially and adversely affect the performance by
the Sponsor of its obligations under this Agreement, or the validity or
enforceability of this Agreement.
(g) The Sponsor is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency that may materially and adversely
affect its performance hereunder.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.02 shall survive delivery of the
respective Indenture Trustee's Mortgage Files to the Indenture Trustee and shall
inure to the benefit of the Indenture Trustee.
Section 3.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
BACKUP SERVICER. The Backup Servicer hereby represents, warrants and
covenants to the Indenture Trustee, the Trust, the Master Servicer, the Note
Insurer and the Sponsor that as of the date of this Agreement:
(a) The Backup Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
(b) The Backup Servicer has the corporate power and
authority to execute, deliver and perform, and to enter into and consummate
transactions contemplated by this Agreement.
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Backup Servicer, all requisite corporate action
having been taken, and, assuming the due authorization, execution and
delivery hereof by the other parties hereto, constitutes or will constitute
the legal, valid and binding agreement of the Backup Servicer, enforceable
against the Backup Servicer in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting
13
the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in
equity or at law).
(d) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority or
court is required for the execution, delivery and performance of or
compliance by the Backup Servicer with this Agreement or the consummation by
the Backup Servicer of any of the transactions contemplated hereby, except as
have been made on or prior to the Closing Date;
(e) None of the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of,
or constitutes or will constitute a default or results or will result in an
acceleration under (A) the certificate of incorporation or bylaws of the
Backup Servicer, or (B) of any term, condition or provision of any material
indenture, deed of trust, contract or other agreement or instrument to which
the Backup Servicer or any of its subsidiaries is a party or by which it or
any of its subsidiaries is bound; (ii) results or will result in a violation
of any law, rule, regulation, order, judgment or decree applicable to the
Backup Servicer of any court or governmental authority having jurisdiction
over the Backup Servicer or its subsidiaries; or (iii) results in the
creation or imposition of any lien, charge or encumbrance which would have a
material adverse effect upon the Mortgage Loans or any documents or
instruments evidencing or securing the Mortgage Loans;
(f) There are no actions, suits or proceedings before or
against or investigations of, the Backup Servicer pending, or to the
knowledge of the Backup Servicer, threatened, before any court,
administrative agency or other tribunal, and no notice of any such action,
which, in the Backup Servicer's reasonable judgment, might materially and
adversely affect the performance by the Backup Servicer of its obligations
under this Agreement, or the validity or enforceability of this Agreement; and
(g) The Backup Servicer is not in default with respect to
any order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency that may materially and
adversely affect its performance hereunder.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.03 shall survive delivery of the
respective Indenture Trustee's Mortgage Files to the Indenture Trustee and shall
inure to the benefit of the Indenture Trustee.
Section 3.04. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
INDENTURE TRUSTEE. The Indenture Trustee hereby represents, warrants and
covenants to the Backup Servicer, the Trust, the Master Servicer, the Note
Insurer and the Sponsor that as of the date of this Agreement or as of such
date specifically provided herein:
(a) The Indenture Trustee is a national banking association
duly organized, validly existing and in good standing under the laws of the
United States of America.
14
(b) The Indenture Trustee has the requisite power and
authority to execute, deliver and perform, and to enter into and consummate
transactions contemplated by this Agreement.
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Indenture Trustee, all requisite action having
been taken, and, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes or will constitute the legal,
valid and binding agreement of the Indenture Trustee, enforceable against the
Indenture Trustee in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors generally, and
by general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
(d) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority or
court is required for the execution, delivery and performance of or
compliance by the Indenture Trustee with this Agreement or the consummation
by the Indenture Trustee of any of the transactions contemplated hereby,
except as have been made on or prior to the Closing Date;
(e) None of the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of,
or constitutes or will constitute a default or results or will result in an
acceleration under (A) the articles of association or bylaws of the Indenture
Trustee, or (B) of any term, condition or provision of any material
indenture, deed of trust, contract or other agreement or instrument to which
the Indenture Trustee is a party or by which it is bound; or (ii) results or
will result in a violation of any statute, rule, regulation, order, judgment
or decree applicable to the Indenture Trustee of any court or governmental
authority having jurisdiction over the Indenture Trustee or its subsidiaries;
and
(f) There are no actions, suits or proceedings before or
against or investigations of, the Indenture Trustee pending, or to the
knowledge of the Indenture Trustee, threatened, before any court,
administrative agency or other tribunal, and no notice of any such action,
which, in the Indenture Trustee's reasonable judgment, would materially and
adversely affect the performance by the Indenture Trustee of its obligations
under this Agreement, or the validity or enforceability of this Agreement.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.04 shall survive delivery of the
respective Indenture Trustee's Mortgage Files to the Indenture Trustee.
Section 3.05. COVENANTS AND REPRESENTATIONS OF THE SPONSOR AND
MASTER SERVICER REGARDING PREPAYMENT CHARGES. (a) The Master Servicer will
not waive any Prepayment Charge or part of a Prepayment Charge unless in
connection with a Mortgage Loan that is in default or for which a default is
reasonably foreseeable.
15
(b) The Sponsor hereby represents and warrants that the
information set forth in the Prepayment Charge Schedule is complete, true and
correct in all material respects at the date or dates respecting which such
information is furnished and each Prepayment Charge is permissible and
enforceable in accordance with its terms (except to the extent that the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights generally)
under applicable law.
(c) Upon discovery by the Sponsor or the Indenture Trustee
of a breach of the foregoing, the party discovering such breach shall give
prompt written notice to the other parties. Within 60 days of the earlier of
discovery by the Master Servicer or receipt of notice by the Master Servicer
of breach, the Master Servicer shall cure such breach in all material
respects. If the covenant made by the Master Servicer in clause (a) above is
breached the Master Servicer must pay into the Collection Account the amount
of the waived Prepayment Charge. If the representation made by the Sponsor in
clause (b) above is breached, the Sponsor must pay into the Collection
Account the amount of the scheduled Prepayment Charge, less any amount
previously collected and paid by the Master Servicer into the Collection
Account. The foregoing obligations of the Master Servicer and the Sponsor
shall be the sole and exclusive remedies for a breach of Section 3.05(a) or
(b).
16
ARTICLE IV
THE MORTGAGE LOANS
Section 4.01. REPRESENTATIONS AND WARRANTIES CONCERNING THE MORTGAGE
LOANS. The Sponsor makes the following representations and warranties to the
Master Servicer, the Backup Servicer, the Indenture Trustee, the Note Insurer
and the Trust as to the Mortgage Loans on which the Trust relies in accepting
the Mortgage Loans in trust and executing the Notes. Such representations,
warranties and covenants are made or deemed to be made (x) with respect to
the Initial Mortgage Loans, as of the Initial Cut-Off Date and (y) with
respect to the Subsequent Mortgage Loans, as of the related Subsequent
Cut-Off Date.
(a) The information with respect to each Mortgage Loan set forth in
the Mortgage Loan Schedule is true and correct as of the Cut-Off Date, based
on Cut-Off Date Principal Balances.
(b) Each Mortgage Loan is being serviced either (i) through the
Master Servicer or a Subservicer or (ii) a Person controlling, controlled by
or under common control with the Master Servicer and qualified to service
mortgage loans.
(c) Each Mortgage Loan was underwritten or reunderwritten pursuant
to the Underwriting Guidelines which conform in all material respects to the
description thereof set forth in the Prospectus Supplement.
(d) All of the original or certified documentation required to be
delivered to the Indenture Trustee pursuant to this Agreement (including all
material documents related thereto) with respect to each Mortgage Loan has
been or will be delivered to the Indenture Trustee in accordance with the
terms of this Agreement. Each of the documents and instruments specified to
be included therein has been duly executed and in due and proper form, and
each such document or instrument is in a form generally acceptable to prudent
mortgage lenders that regularly originate or purchase mortgage loans
comparable to the Mortgage Loans for sale to prudent investors in the
secondary market that invest in mortgage loans such as the Mortgage Loans.
(e) [Reserved].
(f) Each Mortgaged Property is improved by a single (one to four)
family residential dwelling, which may include condominiums, individual units
in a planned unit development and townhouses but shall not include
cooperatives.
(g) No Mortgage Loan in Loan Group 1 had a CLTV in excess of 90.00%
and No Mortgage Loan in Loan Group 2 had an LTV in excess of 90.00%.
(h) Each Mortgage Loan in Loan Group 1 is either a valid and
subsisting first or second lien and each Mortgage Loan in Loan Group 2 is a
valid and subsisting first lien as identified on the Mortgage Loan Schedule
on the Mortgaged Property (subject in the case of any second mortgage only to
any related first mortgage loan or loans on such Mortgaged Property) and
subject in all cases to the exceptions to title set forth in the title
insurance policy, with
17
respect to the related Mortgage Loan, which exceptions are generally
acceptable to banking institutions in connection with their regular mortgage
lending activities, and such other exceptions to which similar properties are
commonly subject and which do not individually, or in the aggregate,
materially and adversely affect the benefits of the security intended to be
provided by such Mortgage. At the time each Mortgage Loan in Loan Group 2 was
originated, the originator was a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 of the
National Housing Act or a savings and loan association, a savings bank, a
commercial bank or similar banking institution which was supervised and
examined by a Federal or State authority or a mortgage banker or broker
licensed or authorized to do business in the jurisdiction in which the
related Mortgaged Property is located, applying the same standards and
procedures used by the Sponsor in originating Mortgage Loans directly.
(i) Immediately prior to the transfer and assignment herein
contemplated, the Sponsor held good and indefeasible title to, and was the
sole owner of, each Mortgage Loan subject to no liens, charges, mortgages,
encumbrances or rights of others except liens which will be released
simultaneously with such transfer and assignment; and immediately upon the
transfer and assignment herein contemplated, the Indenture Trustee will hold
good and indefeasible title to, and be the sole owner of, each Mortgage Loan
subject to no liens, charges, mortgages, encumbrances or rights of others
except liens which will be released simultaneously with such transfer and
assignment.
(j) There is no delinquent tax or assessment lien on any Mortgaged
Property, and each Mortgaged Property is free of substantial damage and is in
good repair.
(k) There is no valid and enforceable right of rescission, offset,
defense or counterclaim to any Mortgage Note or Mortgage, including the
obligation of the related Mortgagor to pay the unpaid principal of or
interest on such Mortgage Note or the defense of usury, nor will the
operation of any of the terms of the Mortgage Note or the Mortgage, or the
exercise of any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto.
(l) There is no mechanics' lien or claim for work, labor or
material affecting any Mortgaged Property which is or may be a lien prior to,
or equal with, the lien of the related Mortgage except those which are
insured against by any title insurance policy referred to in paragraph (n)
below.
(m) Each Mortgage Loan at the time it was made complied with, and
each Mortgage Loan at all times was serviced in compliance with, in each
case, in all material respects, applicable state and federal laws and
regulations, including, without limitation, the federal Truth-in-Lending Act
and other consumer protection laws, the Home Ownership and Equity Protection
Act of 1994, real estate settlement procedure, usury, equal credit
opportunity, disclosure and recording laws.
(n) With respect to each Mortgage Loan, a lender's title insurance
policy, issued in standard California Land Title Association
18
form or American Land Title Association form, or other form acceptable in a
particular jurisdiction by a title insurance company authorized to transact
business in the state in which the related Mortgaged Property is situated, in
an amount at least equal to the original Principal Balance of such Mortgage
Loan insuring the mortgagee's interest under the related Mortgage Loan as the
holder of a valid first or second mortgage lien of record on the real
property described in the related Mortgage, as the case may be, subject only
to exceptions of the character referred to in paragraph (h) above, was
effective on the date of the origination of such Mortgage Loan, and, as of
the Closing Date such policy will be valid and inure to the benefit of the
Indenture Trustee on behalf of the Noteholders.
(o) The improvements upon each Mortgaged Property are covered by a
valid and existing hazard insurance policy (which may be a blanket policy of
the type described in this Agreement) with a generally acceptable carrier
that provides for fire and extended coverage representing coverage not less
than the least of (i) the outstanding Principal Balance of the related
Mortgage Loan (together, in the case of a second mortgage loan, with the
outstanding principal balance of the first mortgage loan), (ii) the minimum
amount required to compensate for damage or loss on a replacement cost basis
or (iii) the full insurable value of the Mortgaged Property.
(p) If any Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy (which may be a blanket policy of the
type described in this Agreement) in a form meeting the requirements of the
current guidelines of the Federal Insurance Administration is in effect with
respect to such Mortgaged Property with a generally acceptable carrier in an
amount representing coverage not less than the least of (i) the outstanding
Principal Balance of the related Mortgage Loan (together, in the case of a
second mortgage loan, with the outstanding principal balance of the first
mortgage loan), (ii) the minimum amount required to compensate for damage or
loss on a replacement cost basis or (iii) the maximum amount of insurance
that is available under the Flood Disaster Protection Act of 1973.
(q) Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its
terms, except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at law),
and all parties to each Mortgage Loan had full legal capacity to execute all
documents relating to such Mortgage Loan and convey the estate therein
purported to be conveyed.
(r) The Sponsor has caused to be performed any and all acts
required to be performed to preserve the rights and remedies of the Indenture
Trustee in any Insurance Policies applicable to any Mortgage Loan delivered
by the Sponsor including, to the extent such Mortgage Loan is not covered by
a blanket policy described in this Agreement, any necessary notifications of
insurers, assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the Indenture
Trustee.
(s) Each original Mortgage and all subsequent assignments of the
original Mortgage have been recorded or are in the process of being recorded,
in the appropriate
19
jurisdictions wherein such recordation is necessary to perfect the lien
thereof for the benefit of the Sponsor, subject to the provisions of Section
2.05(b) of this Agreement.
(t) The terms of each Mortgage Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to protect the interest of the
Noteholders and which has been delivered to the Indenture Trustee. The
substance of any such alteration or modification is reflected on the related
Mortgage Loan Schedule and has been approved by the Primary Mortgage
Insurance Provider, if applicable.
(u) The proceeds of each Mortgage Loan have been fully disbursed,
and there is no obligation on the part of the mortgagee to make future
advances thereunder. All costs, fees and expenses incurred in making or
closing or recording such Mortgage Loans were paid.
(v) Except as otherwise required by law or pursuant to the statute
under which the related Mortgage Loan was made, the related Mortgage Note is
not and has not been secured by any collateral, pledged account or other
security except the lien of the corresponding Mortgage.
(w) No Mortgage Loan was originated under a buydown plan.
(x) No Mortgage Loan provides for negative amortization, has a
shared appreciation feature, or other contingent interest feature.
(y) Each Mortgaged Property is located in the state identified in
the Mortgage Loan Schedule and consists of one or more parcels of real
property with a residential dwelling erected thereon.
(z) Each Mortgage securing a Mortgage Note contains a provision for
the acceleration of the payment of the unpaid Principal Balance of the
related Mortgage Loan in the event the related Mortgaged Property is sold
without the prior consent of the mortgagee thereunder.
(aa) Any advances made after the date of origination of a Mortgage
Loan but prior to the Cut-Off Date, have been consolidated with the
outstanding principal amount secured by the related Mortgage, and the secured
principal amount, as consolidated, bears a single interest rate and single
repayment term reflected on the Mortgage Loan Schedule. The consolidated
principal amount does not exceed the original principal amount of the related
Mortgage Loan. No Mortgage Note permits or obligates the Master Servicer, the
Backup Servicer, the Sponsor or any other Person to make future advances to
the related Mortgagor at the option of the Mortgagor.
(bb) There is no proceeding pending or threatened for the total or
partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and each Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, flood, tornado or other casualty, so as to
affect adversely the value of the Mortgaged Property as security for the
Mortgage Loan or the use for which the premises were intended.
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(cc) All of the improvements which were included for the purposes
of determining the Appraised Value of any Mortgaged Property lie wholly
within the boundaries and building restriction lines of such Mortgaged
Property, and no improvements on adjoining properties encroach upon such
Mortgaged Property, except as stated in the related title insurance policy
and affirmatively insured.
(dd) No improvement located on or being part of any Mortgaged
Property is in violation of any applicable zoning law or regulation. As of
the related date of origination, all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of each
Mortgaged Property and, with respect to the use and occupancy of the same,
including, but not limited to, certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities and such Mortgaged Property is lawfully occupied under the
applicable law.
(ee) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the Sponsor or the
related Trust to the trustee under the deed of trust, except in connection
with a trustee's sale after default by the related Mortgagor.
(ff) With respect to each Mortgage Loan which constitutes a second
mortgage loan, either (i) no consent for such Mortgage Loan was required by
the holder of the related first mortgage prior to the making of such Mortgage
Loan or (ii) such consent has been obtained and is contained in the related
Indenture Trustee's Mortgage File.
(gg) Each Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (ii) otherwise by judicial foreclosure. There is
no homestead or other exemption available which materially interferes with
the right to sell the related Mortgaged Property at a trustee's sale or the
right to foreclose the related Mortgage.
(hh) Except for a Mortgage Payment not more than 29 days
contractually delinquent, there is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Mortgage Note and no
event which, with the passage of time or with notice and the expiration of
any grace or cure period, would constitute a default, breach, violation or
event of acceleration; and the Sponsor has not waived any default, breach,
violation or event of acceleration.
(ii) No instrument of release or waiver has been executed in
connection with any Mortgage Loan, and no Mortgagor has been released, in
whole or in part, except in connection with an assumption agreement which has
been approved by the Primary Mortgage Insurance Provider, if applicable, and
which has been delivered to the Indenture Trustee.
(jj) The maturity date of each Mortgage Loan which is a second
mortgage loan is at least twelve months prior to the maturity date of the
related first mortgage loan if such first mortgage loan provides for a
balloon payment.
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(kk) The Sponsor has no actual knowledge that there exists on any
Mortgaged Property any hazardous substances, hazardous wastes or solid
wastes, as such terms are defined in the CERCLA, the Resource Conservation
and Recovery Act of 1976, or other federal, state or local environmental
legislation.
(ll) (i) No action, error, omission, misrepresentation, negligence,
fraud or similar occurrence with respect to a Mortgage Loan has taken place
on the part of any person, including, without limitation, the Mortgagor, any
appraiser, any builder or developer, or any other party involved in the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan and (ii) no action has been taken or failed to
be taken, no event has occurred and no state of facts exists or had existed
on or prior to the Closing Date (whether or not known to the Sponsor on or
prior to such date) which has resulted or will result in an exclusion from,
denial of, or defense to coverage under the Primary Mortgage Insurance
Policy, if applicable (including, without limitation, any exclusions, denials
or defenses which would limit or reduce the availability of the timely
payment of the full amount of the loss otherwise due thereunder to the
insured) whether arising out of actions, representations, errors, omissions,
negligence, or fraud of the Sponsor, the related Mortgagor or any party
involved in the application for such coverage, including the appraisal, plans
and specifications and other exhibits or documents submitted therewith to the
insurer under the Primary Mortgage Insurance Policy, or for any other reason
under such coverage, but not including the failure of the Primary Mortgage
Insurance Provider to pay by reason of such insurer's breach of the Primary
Mortgage Insurance Policy or the Primary Mortgage Insurance Provider's
financial inability to pay.
(mm) The Sponsor has not solicited the Mortgagor in connection with
any refinancing.
(nn) If the Mortgage Loan is an adjustable rate Mortgage Loan, all
of the adjustments to the Mortgage Interest Rate, to the amount of the
monthly payment, and to the principal balance have been made in accordance
with the terms of the related Mortgage Note.
(oo) The origination and collection practices used with respect to
the Mortgage Loan have been in all respects legal, proper, prudent and
customary in the mortgage origination and servicing business.
(pp) An appraisal of the related Mortgaged Property was made and
signed, prior to the approval of the Mortgage Loan application, by a
qualified appraiser who met the requirements of the Sponsor's appraisal
policy and procedures and who had no interest, direct or indirect in the
Mortgaged Property or in any loan made on the security thereof, whose
compensation was not affected by the approval or disapproval of the Mortgage
Loan.
(qq) The Mortgagor has received all disclosure materials required
by applicable law with respect to the making of adjustable rate mortgage
loans; and if the Mortgage Loan is a refinanced Mortgage Loan, the Mortgagor
has received all disclosure and rescission materials required by applicable
law with respect to the making of a refinanced Mortgage Loan, and evidence of
such receipt is and will remain in the Master Servicer's file.
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(rr) If the residential dwelling on the Mortgaged Property is a
condominium unit or a unit in a planned unit development (other than a de
minimis planned unit development), such condominium or planned unit
development project meets the Sponsor's eligibility requirements.
(ss) As of the Cut-Off Date, no Mortgage Loan was more than 29 days
contractually delinquent or had been dishonored. No Mortgage Loan has been
thirty or more days delinquent more than one time in the twelve months
preceding the Cut-Off Date.
(tt) The Sponsor has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a person other than the Mortgagor,
directly or indirectly, for the payment of any amount required under the
Mortgage Loan, except for interest prepaid upon the closing of the Mortgage
Loan. No Mortgage Loan contains any provision pursuant to which Monthly
Payments are: (i) paid or partially paid with funds deposited in any separate
account established by the Sponsor, the Mortgagor, or anyone on behalf of the
Mortgagor or (ii) paid by any source other than the Mortgagor. The Mortgage
Loan is not deemed a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature.
(uu) No foreclosure proceedings are pending against the Mortgaged
Property and the Mortgage Loan is not subject to any pending bankruptcy or
insolvency proceeding, and to the Sponsor's best knowledge, no material
litigation or material lawsuit relating to the Mortgage Loan is pending.
(vv) Principal payments on the Mortgage Loan commenced or will
commence within sixty days after the proceeds of the Mortgage Loan were
disbursed.
(ww) With respect to escrow deposits, if any, all such payments are
in the possession of, or under the control of, the Master Servicer and there
exists no deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made or could be made. No
escrow deposits or escrow advances or other charges or payments due the
Master Servicer have been capitalized under any Mortgage or the related
Mortgage Note.
(xx) The Sponsor used no selection procedures that identified the
Mortgage Loans as being less desirable or valuable than other comparable
mortgage loans originated or acquired by the Sponsor. The Mortgage Loans are
representative of the Sponsor's portfolio of fixed-rate or adjustable-rate
mortgage loans, as applicable.
(yy) Each Mortgage Loan conforms, and all such Mortgage Loans in
the aggregate conform in all material respects to the description thereof set
forth in the Prospectus Supplement.
(zz) All requirements for the valid transfer of each Insurance
Policy, including any assignments or notices required in each Insurance
Policy, have been satisfied;
(aaa) As of the Closing Date with respect to each Mortgage Loan
that is subject to the Primary Mortgage Insurance Policy, the Sponsor has not
taken any action, or omitted to
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take any action, and there are no circumstances that would cause the Primary
Mortgage Insurance Provider to deny a claim with respect to such Mortgage
Loan;
(bbb) [Reserved]; and
(ccc) Except for the Mortgage Loans listed in Exhibit I, as of the
Cut-off Date, all of the Mortgage Loans having Loan-to-Value Ratios exceeding
75% are covered by the Primary Mortgage Insurance Policy.
Section 4.02. PURCHASE AND SUBSTITUTION. (a) It is understood and agreed
that the representations and warranties set forth in Section 4.01 shall
survive the transfer of the Mortgage Loans by the Sponsor to the Trust, the
subsequent pledge thereof by the Trust to the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer, and the delivery of the
Notes to the Noteholders, and shall continue in full force and effect,
notwithstanding any restrictive or qualified endorsement on the Mortgage
Notes and notwithstanding subsequent termination of this Agreement.
(b) Upon discovery by the Sponsor, the Master Servicer, the
Indenture Trustee, the Note Insurer or a Noteholder of a breach of any of the
representations and warranties in Section 4.01 which materially and adversely
affects the value of any Mortgage Loan, or which materially and adversely
affects the interests of the Note Insurer or the Noteholders in the related
Mortgage Loan, the party discovering such breach or failure shall promptly
(and in any event within five (5) days of the discovery) give written notice
thereof to the others. Within sixty (60) days of the earlier of its discovery
or its receipt of notice of any breach of a representation or warranty, the
Sponsor shall (a) promptly cure such breach in all material respects, (b)
purchase such Mortgage Loan on the next succeeding Servicer Payment Date, in
the manner and at the price specified in Section 2.06(c) and this Section
4.02, or (c) remove such Mortgage Loan from the Trust Estate (in which case
it shall become a Deleted Mortgage Loan) and substitute one or more Qualified
Substitute Mortgage Loans in the manner specified in Section 2.06 and this
Section 4.02. The Indenture Trustee shall deliver prompt written notice to
the Note Insurer and the Rating Agencies of any repurchase or substitution
made pursuant to this Section 4.02 or Section 2.06(c).
(c) As to any Deleted Mortgage Loan for which the Sponsor
substitutes a Qualified Substitute Mortgage Loan or Loans, the Master
Servicer shall cause the Sponsor to effect such substitution by delivering to
the Indenture Trustee a certification, in the form attached hereto as EXHIBIT
F, executed by a Servicing Officer, and the documents described in Sections
2.05(a)(i)-(vi) for such Qualified Substitute Mortgage Loan or Loans.
(d) The Master Servicer shall deposit in the Collection Account all
payments received in connection with such Qualified Substitute Mortgage Loan
or Loans after the date of such substitution. Monthly Payments due with
respect to Qualified Substitute Mortgage Loans in or before the Due Period in
which the substitution occurs shall not be part of the Trust Estate and will
be retained by the Sponsor on the next succeeding Payment Date. For the Due
Period in which the substitution occurs, distributions to Noteholders will
include the Monthly Payment due on any Deleted Mortgage Loan for such Due
Period and thereafter the Sponsor shall be entitled to retain all amounts
received in respect of such Deleted Mortgage Loan. The Master Servicer
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shall give written notice to the Backup Servicer, the Indenture Trustee and
the Note Insurer that such substitution has taken place and shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan
from the terms of this Agreement and the substitution of the Qualified
Substitute Mortgage Loan or Loans. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects.
(e) With respect to any Mortgage Loan that has been converted to an
REO Mortgage Loan, all references in this Section 4.02 or Section 2.06 to
"Mortgage Loan" shall be deemed to also refer to the REO Mortgage Loan. With
respect to any Mortgage Loan that the Sponsor is required to repurchase that
is or becomes a Liquidated Mortgage Loan, in lieu of repurchasing such
Mortgage Loan, the Master Servicer shall deposit into the related Payment
Account, pursuant to Section 8.01 of the Indenture, an amount equal to the
amount of the Liquidated Loan Loss, if any, incurred in connection with the
liquidation of such Mortgage Loan within the same time period in which the
Master Servicer or Sponsor would have otherwise been required to repurchase
such Mortgage Loan.
(f) It is understood and agreed that the obligations of the Sponsor
set forth in Sections 2.06 and 4.02 to cure, purchase or substitute for a
defective Mortgage Loan, or to indemnify as described in Section 4.02(g)
constitute the sole remedies of the Indenture Trustee, the Note Insurer and
the Noteholders respecting a breach of the representations and warranties of
the Sponsor set forth in Section 4.01 of this Agreement.
(g) The Sponsor shall be obligated to indemnify the Indenture
Trustee, the Trust, the Owner Trustee, the Noteholders and the Note Insurer
for any third party claims arising out of a breach by the Sponsor of
representations or warranties regarding the Mortgage Loans.
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ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01. THE MASTER SERVICER. (a) Acting directly or through one or
more Subservicers as provided in Section 5.13, the Master Servicer shall
service and administer the Mortgage Loans in accordance with this Agreement
and in accordance with Accepted Servicing Practices, and shall have full
power and authority, acting alone, to do or cause to be done any and all
things in connection with such servicing and administration which it may deem
necessary or desirable.
(b) The duties of the Master Servicer shall include collecting and
posting of all payments, responding to inquiries of Mortgagors or by federal,
state or local government authorities with respect to the Mortgage Loans,
investigating delinquencies, reporting tax information to Mortgagors in
accordance with its customary practices and accounting for collections and
furnishing monthly and annual statements to the Indenture Trustee with
respect to distributions, paying Compensating Interest and making Periodic
Advances and Servicing Advances pursuant hereto. The Master Servicer shall
follow its customary standards, policies and procedures in performing its
duties as Master Servicer. The Master Servicer shall cooperate with the
Indenture Trustee and furnish to the Indenture Trustee with reasonable
promptness information in its possession as may be necessary or appropriate
to enable the Indenture Trustee to perform its tax reporting duties
hereunder. The Indenture Trustee shall furnish the Master Servicer, the
Backup Servicer or any Subservicer with any powers of attorney and other
documents as the Indenture Trustee shall deem necessary or appropriate to
enable the Master Servicer, the Backup Servicer and any Subservicer to carry
out its servicing and administrative duties hereunder; provided, however, the
Master Servicer, the Backup Servicer or any Subservicer shall prepare for and
deliver to the Indenture Trustee for its execution any such powers of
attorney.
(c) The Indenture Trustee is authorized to acknowledge, as
required, any subservicing agreement between a Subservicer and the Master
Servicer; PROVIDED, HOWEVER, that notwithstanding the terms of any such
subservicing agreement, the provisions of Section 5.13(c) hereof shall
control.
(d) The Master Servicer shall, in accordance with Accepted
Servicing Practices, have the right to approve requests of Mortgagors for
consent to (i) partial releases of Mortgage Loans and (ii) alterations,
removal, demolition or division of Mortgaged Properties subject to Mortgage
Loans. No such request shall be approved by the Master Servicer unless: (x)
the provisions of the related Mortgage Note have been complied with; (y) the
CLTV (which may, for this purpose, be determined at the time of any such
action in a manner reasonably acceptable to the Note Insurer) after any
release does not exceed the CLTV set forth for such Mortgage Loan in the
Mortgage Loan Schedule; and (z) the lien priority, monthly payment, Mortgage
Interest Rate or maturity date of the related Mortgage is not affected except
in accordance with Section 5.02; PROVIDED, HOWEVER, that the foregoing
requirements (x), (y) and (z) shall not apply to any such situation described
in this paragraph if such situation results from any condemnation or easement
activity by a governmental entity.
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(e) Notwithstanding anything else contained herein or in any
Subservicing Agreement, the Master Servicer may not, without the consent of
the Note Insurer, agree to a modification or extension of any Mortgage Loan
unless both (i) such Mortgage Loan is in default or a default thereon is
reasonably foreseeable and (ii) such modification or extension would not
result in the Master Servicer agreeing to modifications or extensions on
Mortgage Loans with aggregate Cut-Off Date Principal Balances of more than
5.0% of the Maximum Collateral Amount. In addition, the Master Servicer may
not agree to more than (i) one modification or extension with respect to any
individual Mortgage Loan in a calendar year or (ii) three modifications or
extensions of an individual Mortgage Loan during the life of such Mortgage
Loan.
(f) The Master Servicer may, and is hereby authorized to, perform
any of its servicing responsibilities with respect to all or certain of the
Mortgage Loans through a Subservicer as it may from time to time designate
with the approval of the Note Insurer as provided in Section 5.13, but no
such designation of a Subservicer shall serve to release the Master Servicer
from any of its obligations under this Agreement. Such Subservicer shall have
all the rights and powers of the Master Servicer with respect to such
Mortgage Loans under this Agreement.
(g) Without limiting the generality of the foregoing, but subject
to Sections 5.05 and 5.06, the Master Servicer in its own name or in the name
of a Subservicer may be authorized and empowered pursuant to a power of
attorney executed and delivered by the Indenture Trustee to execute and
deliver, and may be authorized and empowered by the Indenture Trustee, to
execute and deliver, on behalf of itself, the Noteholders and the Indenture
Trustee or any of them, (i) any and all instruments of satisfaction or
cancellation or of partial or full release or discharge and all other
comparable instruments with respect to the Mortgage Loans and with respect to
the Mortgaged Properties, (ii) and to institute foreclosure proceedings or
obtain a deed in lieu of foreclosure so as to effect ownership of any
Mortgaged Property on behalf of the Indenture Trustee, and (iii) to hold
title to any Mortgaged Property upon such foreclosure or deed in lieu of
foreclosure on behalf of the Indenture Trustee; PROVIDED, HOWEVER, that
Section 5.07(a) shall constitute a power of attorney from the Indenture
Trustee to the Master Servicer or a Subservicer to execute an instrument of
satisfaction (or assignment of mortgage without recourse) with respect to any
Mortgage Loan paid in full (or with respect to which payment in full has been
escrowed). Subject to Sections 5.05 and 5.06, the Indenture Trustee shall
furnish the Master Servicer and any Subservicer with any powers of attorney
and other documents as the Master Servicer or such Subservicer shall
reasonably request to enable the Master Servicer and such Subservicer to
carry out their respective servicing and administrative duties hereunder;
provided, however, the Master Servicer or any Subservicer shall prepare for
and deliver to the Indenture Trustee for its execution any such powers of
attorney.
(h) The Master Servicer shall give prompt notice to the Backup
Servicer, the Indenture Trustee and the Note Insurer of any action, of which
the Master Servicer has actual knowledge, to (i) assert a claim against the
Trust or (ii) assert jurisdiction over the Trust.
(i) Servicing Advances incurred by the Master Servicer or any
Subservicer in connection with the servicing of the Mortgage Loans (including
any penalties in connection with
27
the payment of any taxes and assessments or other charges) on any Mortgaged
Property shall be recoverable by the Master Servicer or such Subservicer to
the extent described herein.
(j) The Master Servicer or any Subservicer shall be entitled to
rely, and shall be fully protected in relying, upon any promissory note,
writing, resolution, notice, consent, certificate, affidavit, letter, e-mail,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document reasonably believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or persons and upon
advice and statements of legal counsel (including, without limitation,
counsel to the Mortgagor(s)), independent accountants and other experts
selected by the Master Servicer or any Subservicer.
(k) The Master Servicer shall have no liability to the Sponsor, the
Indenture Trustee, the Owner Trustee, the Note Insurer, any Noteholder or any
other Person for any action taken, or for refraining from the taking of any
action, in good faith pursuant to this Agreement, or for errors in judgment;
PROVIDED, HOWEVER, that the foregoing shall not apply to any breach of
representations or warranties made by the Master Servicer herein, or to any
specific liability imposed upon the Master Servicer pursuant to this
Agreement or any liability that would otherwise be imposed upon the Master
Servicer by reason of its willful misconduct, bad faith or negligence in the
performance of its duties hereunder or by reason of its failure to perform
its obligations or duties hereunder.
Section 5.02. COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS; COLLECTION
ACCOUNT. (a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement,
follow Accepted Servicing Practices. Consistent with the foregoing, the
Master Servicer may in its discretion waive any assumption fees or other fees
which may be collected in the ordinary course of servicing such Mortgage
Loans.
(b) The Master Servicer shall establish and maintain, in the name
of the Indenture Trustee, the Collection Account, in trust for the benefit of
the Noteholders and the Note Insurer. The Collection Account shall be
established and maintained as an Eligible Account.
(c) The Master Servicer shall deposit in the Collection Account any
amounts representing Monthly Payments on the Mortgage Loans due or to be
applied as of a date after the related Cut-Off Date (or, in the case of the
Initial Mortgage Loans, Monthly Payments due or to be applied after February
1, 2000), and thereafter, on each Business Day, but not less than two
Business Days after the date of collection, the following payments and
collections received or made by it (other than in respect of monthly payments
of principal on and interest of the Mortgage Loans that were due on or before
the related Cut-Off Date and monthly Payments due on February 1, 2000):
(i) payments of interest on the Mortgage Loans including Prepayment
Charges;
(ii) payments of principal of the Mortgage Loans, including Principal
Prepayments;
28
(iii) the Loan Repurchase Price of Mortgage Loans repurchased pursuant
to Sections 2.06(c) or 4.02;
(iv) the Substitution Adjustment received in connection with Mortgage
Loans for which Qualified Substitute Mortgage Loans are received pursuant to
Sections 2.06 and 4.02;
(v) all Net REO Proceeds;
(vi) all Net Liquidation Proceeds; and
(vii) all Insurance Proceeds, including proceeds of the Primary Mortgage
Insurance Policy (including, for this purpose, any amounts required to be
deposited by the Master Servicer pursuant to Section 5.04 hereof).
It is understood that the Master Servicer need not deposit amounts
representing fees, late payment charges or extension or other administrative
charges (other than Prepayment Charges) payable by Mortgagors, or amounts
received by the Master Servicer for the account of Mortgagors for application
towards the payment of taxes, insurance premiums, assessments and similar
items or foreclosure proceeds to the extent payable to the related Mortgagor.
(d) The Master Servicer shall invest any funds in the Collection
Account in Permitted Investments, which shall mature not later than the
Business Day next preceding the Servicer Payment Date next following the date
of such investment (except that any investment held by the Indenture Trustee
may mature on such Servicer Payment Date) and shall not be sold or disposed
of prior to its maturity. All net income and gain realized from any such
investment shall be for the benefit of the Master Servicer and shall be
subject to its withdrawal or order on a Servicer Payment Date. The Master
Servicer shall deposit from its own funds the amount of any loss, to the
extent not offset by investment income or earnings, in the Collection Account
upon the realization of such loss.
Section 5.03. PERMITTED WITHDRAWALS FROM THE COLLECTION ACCOUNT. The Master
Servicer may make withdrawals from the Collection Account, on or prior to any
Servicer Payment Date, for the following purposes:
(a) to pay to the Sponsor amounts received in respect of any
Defective Mortgage Loan purchased or substituted for by the Sponsor to the
extent that the payment of any such amounts on the Servicer Payment Date upon
which the proceeds of such purchase are paid would make the total amount
distributed in respect of any such Mortgage Loan on such Servicer Payment
Date greater than the Loan Repurchase Price or the Substitution Adjustment
therefor;
(b) to reimburse the Master Servicer for unreimbursed Periodic
Advances and unreimbursed Servicing Advances with respect to the Mortgage
Loans for which it has made a Periodic Advance or Servicing Advance, from
late or deferred payments collected, collections other than timely Monthly
Payments, Liquidation Proceeds, Insurance Proceeds and/or the Loan Repurchase
Price or Substitution Adjustment of or relating to such Mortgage Loans;
29
(c) to reimburse the Master Servicer for any Periodic Advances and
Servicing Advances determined in good faith to have become Nonrecoverable
Advances, such reimbursement to be made from any funds in the Collection
Account;
(d) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a trustee
in bankruptcy pursuant to the Bankruptcy Code in accordance with a final,
nonappealable order of a court having competent jurisdiction;
(e) to withdraw any funds deposited in the Collection Account that
were not required to be deposited therein;
(f) to pay the Master Servicer the Servicing Compensation pursuant
to Section 5.08 hereof to the extent not retained or paid;
(g) to pay the Backup Servicer the Backup Servicing Fee pursuant to
Section 5.08 hereof to the extent payments in respect of these amounts have
not been previously retained or paid;
(h) without duplication, and solely out of amounts which are
payable to a former master servicer pursuant to Section 7.02(g), to pay to
the Backup Servicer, the Indenture Trustee or any successor master servicer
amounts paid by them in connection with the transfer of the Master Servicer's
servicing obligations pursuant to Article VII hereof and required under such
Article VII to be borne by the Master Servicer;
(i) to withdraw income on the Collection Account as provided in
Section 5.02(d); and
(j) amounts deposited into the Collection Account in respect of
late fees, assumption fees and similar fees (other than Prepayment Charges).
The Master Servicer shall keep and maintain a separate accounting for
each Mortgage Loan for the purpose of accounting for withdrawals from the
Collection Account pursuant to this Section 5.03.
Section 5.04. HAZARD INSURANCE POLICIES; PROPERTY PROTECTION EXPENSES.
(a) The Master Servicer shall cause to be maintained with respect to each
Mortgage Loan a hazard insurance policy with a carrier licensed in the state
in which the Mortgaged Property is located that provides for fire and
extended coverage, and which provides for a recovery by the named insured of
insurance proceeds relating to such Mortgage Loan in an amount not less than
the least of (i) the outstanding Principal Balance of the Mortgage Loan plus
the outstanding principal balance of any mortgage loan senior to such
Mortgage Loan, but in no event shall such amount be less than is necessary to
prevent the Mortgagor from becoming a coinsurer thereunder, (ii) the minimum
amount required to compensate for loss or damage on a replacement cost basis
and (iii) the full insurable value of the related Mortgage Property. The
Master Servicer shall also maintain on property acquired upon foreclosure, or
by deed in lieu of foreclosure, hazard insurance with extended coverage in an
amount which is at least equal to the lesser of (i) the maximum insurable
value from time to time of the improvements which are a part of such property
or (ii) the sum of the Principal Balance of
30
such Mortgage Loan and the principal balance of any mortgage loan senior to
such Mortgage Loan at the time of such foreclosure plus accrued interest and
the good-faith estimate of the Master Servicer of related Liquidation
Expenses to be incurred in connection therewith. Amounts collected by the
Master Servicer under any such policies shall be deposited in the Collection
Account to the extent that they constitute Liquidation Proceeds or Insurance
Proceeds. Each hazard insurance policy shall contain a standard mortgage
clause naming the Master Servicer or a Subservicer, its successors and
assigns, as mortgagee. The Master Servicer shall be under no obligation to
require that any Mortgagor maintain earthquake (except as provided herein) or
other additional insurance and shall be under no obligation itself to
maintain any such additional insurance on property acquired in respect of a
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.
(b) In the event that the Master Servicer shall obtain and maintain
a blanket policy with an insurer either (i) having a General Policy rating of
A:VIII or better in Best's Key Rating Guide or (ii) approved in writing by
the Note Insurer, such approval not to be unreasonably withheld, insuring
against fire, flood and hazards of extended coverage on all of the Mortgage
Loans, then, to the extent such policy names the Master Servicer as loss
payee and provides coverage in an amount equal to the aggregate unpaid
Principal Balance on the Mortgage Loans without co-insurance, and otherwise
complies with the requirements of this Section 5.04, the Master Servicer
shall be deemed conclusively to have satisfied its obligations with respect
to fire and hazard insurance coverage under this Section 5.04, it being
understood and agreed that such blanket policy may contain a deductible
clause, in which case the Master Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the preceding paragraph of this Section 5.04, and there shall
have been a loss which would have been covered by such policy, deposit in the
Collection Account from the Master Servicer's own funds the difference, if
any, between the amount that would have been payable under a policy complying
with the preceding paragraph of this Section 5.04 and the amount paid under
such blanket policy. Upon the request of the Indenture Trustee or the Note
Insurer, the Master Servicer shall cause to be delivered to the Indenture
Trustee or the Note Insurer, a certified true copy of such policy.
(c) If the Mortgage Loan at the time of origination relates to a
Mortgaged Property in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards as
designated to the Master Servicer by the Sponsor, the Master Servicer will
cause to be maintained with respect thereto a flood insurance policy in a
form meeting the requirements of the current guidelines of the Federal
Insurance Administration with a generally acceptable carrier in an amount
representing coverage, and which provides for a recovery by the Master
Servicer on behalf of the Trust of insurance proceeds relating to such
Mortgage Loan of not less than the least of (i) the outstanding Principal
Balance of the related Mortgage Loan, plus the principal balance of the
related first lien, if any, (ii) the minimum amount required to compensate
for damage or loss on a replacement cost basis and (iii) the maximum amount
of insurance that is available under the Flood Disaster Protection Act of
1973. The Master Servicer shall indemnify the Trust and the Note Insurer out
of the Master Servicer's own funds for any loss to the Trust and the Note
Insurer resulting from the Master Servicer's failure to maintain the
insurance required by this Section.
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Section 5.05. ASSUMPTION AND MODIFICATION AGREEMENTS. When a Mortgaged
Property has been or is about to be conveyed by the Mortgagor, the Master
Servicer shall, to the extent it has knowledge of such conveyance or
prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Mortgage Note; PROVIDED, HOWEVER, that the Master Servicer shall
not exercise any such right if (i) the "due-on-sale" clause, in the
reasonable belief of the Master Servicer, is not enforceable under applicable
law or (ii) the Master Servicer reasonably believes that to permit an
assumption of the Mortgage Loan would not materially and adversely affect the
interest of the Noteholders or of the Note Insurer. In such event, the Master
Servicer shall enter into an assumption and modification agreement with the
Person to whom such property has been or is about to be conveyed, pursuant to
which such Person becomes liable under the Mortgage Note and, unless
prohibited by applicable law or the mortgage documents, the Mortgagor remains
liable thereon. If the foregoing is not permitted under applicable law, the
Master Servicer is authorized to enter into a substitution of liability
agreement with such Person, pursuant to which the original Mortgagor is
released from liability and such Person is substituted as Mortgagor and
becomes liable under the Mortgage Note; PROVIDED, HOWEVER, that to the extent
any such substitution of liability agreement would be delivered by the Master
Servicer outside of its usual procedures for mortgage loans held in its own
portfolio the Master Servicer shall, prior to executing and delivering such
agreement, obtain the prior written consent of the Note Insurer. The Mortgage
Loan, if assumed, shall conform in all respects to the requirements and
representations and warranties of this Agreement. The Master Servicer shall
notify the Indenture Trustee that any applicable assumption or substitution
agreement has been completed by forwarding to the Indenture Trustee the
original copy of such assumption or substitution agreement, which copy shall
be added by the Indenture Trustee to the related Indenture Trustee's Mortgage
File and which shall, for all purposes, be considered a part of such
Indenture Trustee's Mortgage File to the same extent as all other documents
and instruments constituting a part thereof. The Master Servicer shall be
responsible for promptly recording any such assumption or substitution
agreements. In connection with any such assumption or substitution agreement,
the required monthly payment on the related Mortgage Loan shall not be
changed but shall remain as in effect immediately prior to the assumption or
substitution, the stated maturity or outstanding Principal Balance of such
Mortgage Loan shall not be changed, the Mortgage Interest Rate shall not be
changed nor shall any required monthly payments of principal or interest be
deferred or forgiven. Any fee collected by the Master Servicer or the
Subservicer for consenting to any such conveyance or entering into an
assumption or substitution agreement shall be retained by or paid to the
Master Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach
or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Master Servicer may be restricted by law from preventing, for any reason
whatsoever.
Section 5.06. REALIZATION UPON DEFAULTED MORTGAGE LOANS. (a) The Master
Servicer shall foreclose upon or otherwise comparably effect the ownership on
behalf of the Trust of Mortgaged Properties relating to defaulted Mortgage
Loans as to which no satisfactory arrangements can be made for collection of
Delinquent payments and which the Sponsor has not purchased pursuant to
Section 5.15, unless the Master Servicer reasonably believes that Net
Liquidation Proceeds with respect to such Mortgage Loan would not be
increased as a result of such foreclosure or other action, in which case,
such Mortgage Loan will be charged-off and will become
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a Liquidated Mortgage Loan. The Master Servicer shall have no obligation to
purchase any Mortgaged Property at any foreclosure sale. In connection with
such foreclosure or other conversion, the Master Servicer shall exercise
foreclosure procedures with the same degree of care and skill in their
exercise or use, as it would ordinarily exercise or use under the
circumstances in the conduct of their own affairs. Any amounts including
Liquidation Expenses, advanced by the Master Servicer in connection with such
foreclosure or other action shall constitute Servicing Advances.
Pursuant to its efforts to sell any REO Property, the Master Servicer
either itself or through an agent selected by the Master Servicer shall
manage, conserve, protect and operate such REO Property in the same manner
and to such extent as is customary in the locality where such REO Property is
located and may, incident to its conservation and protection of the interests
of the Master Servicer, rent the same, or any part thereof, as the Master
Servicer deems to be in the best interest of the Trust and Note Insurer for
the period prior to the sale of such REO Property. The net income generated
from the REO Property and the proceeds from a sale of any REO Property shall
be deposited in the Collection Account.
(b) If the Master Servicer has reason to believe that a Mortgaged
Property which the Master Servicer is contemplating acquiring in foreclosure
or by deed in lieu of foreclosure contains environmental or hazardous waste
risks known to the Master Servicer, the Master Servicer shall notify the
Backup Servicer, the Indenture Trustee and the Note Insurer prior to
acquiring the Mortgaged Property. The Master Servicer shall not institute
foreclosure actions with respect to such a property if it reasonably believes
that such action would not be consistent with the Accepted Servicing
Practices, and in no event shall the Master Servicer be required to manage,
operate or take any other action with respect thereto which the Master
Servicer in good faith believes will result in "clean-up" or other liability
under applicable law, unless the Master Servicer receives an indemnity
acceptable to it in its sole discretion.
(c) The Master Servicer shall determine, with respect to each
defaulted Mortgage Loan, when it has recovered, whether through trustee's
sale, foreclosure sale or otherwise, all amounts if any it expects to recover
from or on account of such defaulted Mortgage Loan, whereupon such Mortgage
Loan shall become a Liquidated Mortgage Loan.
(d) Net Foreclosure Profits, if any, shall be paid directly to the
Sponsor.
(e) With respect to its obligations under this Section 5.06, the
Master Servicer shall take all such actions as it reasonably believes are
consistent with Accepted Servicing Practices.
Section 5.07. INDENTURE TRUSTEE TO COOPERATE. (a) Upon the payment in
full of any Mortgage Loan or the receipt by the Master Servicer of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Master Servicer or a Subservicer shall deliver to the
Indenture Trustee two copies of a Request for Release. Upon receipt of such
copies of the Request for Release, the Indenture Trustee shall promptly
release the related Indenture Trustee's Mortgage File, in trust to (i) the
Master Servicer or a Subservicer, as the case may be, (ii) an escrow agent or
(iii) any employee, agent or attorney of the Indenture Trustee, in each case
pending its release by the Master Servicer or a Subservicer, as the case may
be, such
33
escrow agent or such employee, agent or attorney of the Indenture Trustee, as
the case may be. Upon any such payment in full, or the receipt of such
notification that such funds have been placed in escrow, the Master Servicer
or a Subservicer is authorized to give, as attorney-in-fact for the Indenture
Trustee and the mortgagee under the Mortgage which secured the Mortgage Note,
an instrument of satisfaction (or assignment of Mortgage without recourse)
regarding the Mortgaged Property relating to such Mortgage, which instrument
of satisfaction or assignment, as the case may be, shall be delivered to the
Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection
with such instrument of satisfaction or assignment, as the case may be, shall
be chargeable to the Collection Account.
(b) (i) From time to time and as appropriate in the servicing of
any Mortgage Loan, including, without limitation, foreclosure or other
comparable conversion of a Mortgage Loan or collection under any applicable
Insurance Policy, the Indenture Trustee shall (except in the case of the
payment or liquidation pursuant to which the related Indenture Trustee's
Mortgage File is released to an escrow agent or an employee, agent or
attorney of the Indenture Trustee), upon request of the Master Servicer or a
Subservicer and delivery to the Indenture Trustee of two copies of a Request
for Release, release the related Indenture Trustee's Mortgage File to the
Master Servicer or a Subservicer and shall execute such documents as shall be
necessary to the prosecution of any such proceedings, including, without
limitation, an assignment without recourse of the related Mortgage to the
Master Servicer. The Indenture Trustee shall complete in the name of the
Indenture Trustee any endorsement in blank on any Mortgage Note prior to
releasing such Mortgage Note to the Master Servicer or a Subservicer. Such
receipt shall obligate the Master Servicer to return the Indenture Trustee's
Mortgage File to the Indenture Trustee when the need therefor by the Master
Servicer or a Subservicer no longer exists unless the Mortgage Loan shall be
liquidated, in which case, the Master Servicer shall deliver 2 copies of a
Request for Release indicating such loan has been paid in full. Upon receipt,
the Indenture Trustee will acknowledge by signing and returning one copy to
the Master Servicer.
(ii) Each Request for Release may be delivered to the
Indenture Trustee (x) via mail or courier, (y) via facsimile or (z)
by such other means, including, without limitation, electronic or
computer readable medium, as the Master Servicer or any Subservicer
and the Indenture Trustee shall mutually agree. The Indenture
Trustee shall promptly release the related Indenture Trustee's
Mortgage File(s) within three (3) Business Days of receipt of 2
copies of a properly completed Request for Release pursuant to
clauses (x), (y) or (z) above or such shorter period as may be
agreed upon by the Master Servicer or any Subservicer and the
Indenture Trustee. Receipt of a Request for Release pursuant to
clauses (x), (y) or (z) above shall be authorization to the
Indenture Trustee to release such Indenture Trustee's Mortgage
Files, provided the Indenture Trustee has determined that such
Request for Release has been executed, with respect to clauses (x)
or (y) above, or approved, with respect to clause (z) above, by a
Servicing Officer of the Master Servicer or Subservicer, as the
case may be. If the Indenture Trustee is unable to release the
Indenture Trustee's Mortgage Files within the time frames
previously specified, the Indenture Trustee shall immediately
notify the Master Servicer or Subservicer, as the case may be,
indicating the reason for such delay, but in no event shall such
notification be later than five Business Days after receipt of a
Request
34
for Release. If the Master Servicer or a Subservicer, as the case
may be, is required to pay penalties or damages due solely to the
Indenture Trustee's negligent failure to release the related
Indenture Trustee's Mortgage File or the Indenture Trustee's
negligent failure to execute and release documents in a timely
manner, the Indenture Trustee shall be liable for such penalties or
damages.
(c) No costs associated with the procedures described in this
Section 5.07 shall be an expense of the Trust.
Section 5.08. SERVICING COMPENSATION; PAYMENT OF CERTAIN EXPENSES BY
MASTER SERVICER. The Master Servicer shall be entitled to receive and retain,
out of collections on the Mortgage Loans for each Due Period, as servicing
compensation for such Due Period, an amount (the "SERVICING FEE") equal to
the product of one-twelfth of the Servicing Fee Rate and the aggregate Stated
Principal Balance of the Mortgage Loans in each Loan Group as of the
beginning of such Due Period. Additional servicing compensation in the form
of assumption fees, late payment charges or extension and other
administrative charges (other than Prepayment Charges) shall be retained by
the Master Servicer. The Master Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder
(including payment of all fees and expenses of the Subservicer, payment of
the Indenture Trustee Fee to the extent that monies in the Collection Account
are insufficient therefor, as provided in Section 6.16 of the Indenture, and
all other fees and expenses not expressly stated hereunder to be payable by
or from another source) and shall not be entitled to reimbursement therefor
except as specifically provided herein.
The Backup Servicer shall be entitled to receive, and the Master
Servicer shall pay, out of collections on the Mortgage Loans for each Due
Period, as servicing compensation for such Due Period, an amount (the "BACKUP
SERVICING FEE") equal to the product of one-twelfth of the Backup Servicing
Fee Rate and the aggregate Stated Principal Balance of the Mortgage Loans in
each Loan Group as of the beginning of such Due Period.
Section 5.09. ANNUAL STATEMENT AS TO COMPLIANCE. The Master Servicer
will deliver to the Backup Servicer, the Trust, the Indenture Trustee, the
Rating Agencies, the Note Insurer and, the Sponsor on or before April 30 of
each year, beginning April 30, 2001, an Officer's Certificate of the Master
Servicer stating that (a) a review of the activities of the Master Servicer
during the preceding calendar year and of its performance under this
Agreement has been made under such officer's supervision and (b) to the best
of such officer's knowledge, based on such review, the Master Servicer has
fulfilled all its material 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 5.10. ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before April 30 of each year, beginning April 30, 2001, the Master
Servicer at its expense shall cause a firm of independent public accountants
that is a member of the American Institute of Certified Public Accountants
(who may also render other services to the Master Servicer) to furnish a
report to the Backup Servicer, the Trust, the Indenture Trustee, the Rating
Agencies, the Note Insurer and the Sponsor to the effect that such firm has
examined certain documents and records relating to the servicing of mortgage
loans under servicing agreements (including this
35
Agreement) substantially similar to this Agreement, and that such
examination, which has been conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or the Audit Guide
for Audits of HUD Approved Nonsupervised Mortgagees (to the extent that the
procedures in such audit guide are applicable to the servicing obligations
set forth in such agreements), has disclosed no items of noncompliance with
the provisions of this Agreement which, in the opinion of such firm, are
material, except for such items of noncompliance as shall be set forth in
such report.
Section 5.11. ACCESS TO CERTAIN DOCUMENTATION. The Master Servicer shall
provide to the Backup Servicer, the Indenture Trustee, the Note Insurer, the
FDIC and the supervisory agents and examiners (as required in the latter case
by applicable State and federal regulations) of each of the foregoing access
to the documentation regarding the Mortgage Loans, such access being afforded
without charge but only upon reasonable request and during normal business
hours at the offices of the Master Servicer designated by it.
Upon any change in the format of the computer tape maintained by the
Master Servicer in respect of the Mortgage Loans, the Master Servicer shall
deliver a copy of such computer tape to the Indenture Trustee and the Backup
Servicer and in addition shall provide a copy of such computer tape to the
Indenture Trustee, the Backup Servicer and the Note Insurer at such other
times as the Indenture Trustee or the Note Insurer may reasonably request.
The Master Servicer shall keep confidential (including from affiliates
thereof) information concerning the Mortgage Loans, except as required by law.
Section 5.12. MAINTENANCE OF FIDELITY BOND. The Master Servicer and the
Backup Servicer shall each, during the term of its service as Master Servicer
and Backup Servicer, respectively, maintain in force a fidelity bond and
errors and omissions insurance in respect of their respective officers,
employees or agents. Such bond and insurance shall comply with the
requirements from time to time of ▇▇▇▇▇▇ ▇▇▇ for Persons performing servicing
for mortgage loans purchased by such association.
Section 5.13. SUBSERVICING AGREEMENTS BETWEEN THE MASTER SERVICER AND
SUBSERVICERS. (a) The Master Servicer may enter into Subservicing Agreements
for any servicing and administration of Mortgage Loans with any institution
which is in compliance with the laws of each state necessary to enable it to
perform its obligations under such Subservicing Agreement. The Master
Servicer shall give notice to the Backup Servicer, the Note Insurer and the
Indenture Trustee of the appointment of any Subservicer and shall furnish to
the Backup Servicer, the Note Insurer and the Indenture Trustee a copy of the
Subservicing Agreement. The Master Servicer shall give notice to each Rating
Agency of the appointment of any Subservicer. No such appointment of a
Subservicer shall be effective without the consent of the Note Insurer. For
purposes of this Agreement, the Master Servicer shall be deemed to have
received payments on Mortgage Loans when any Subservicer has received such
payments. Any such Subservicing Agreement shall be consistent with and not
violate the provisions of this Agreement.
(b) The Master Servicer may, with the consent of the Note Insurer,
terminate any Subservicing Agreement in accordance with the terms and
conditions of such Subservicing Agreement and thereafter directly service the
related Mortgage Loans itself or enter into a
36
Subservicing Agreement with a successor Subservicer that qualifies under
Subsection (a) of this Section 5.13. The Master Servicer shall give notice to
each Rating Agency of the termination of any Subservicer and the appointment
of any successor Subservicer.
(c) The Master Servicer shall not be relieved of its obligations
under this Agreement notwithstanding any Subservicing Agreement or any of the
provisions of this Agreement relating to agreements or arrangements between
the Master Servicer and a Subservicer or otherwise, and the Master Servicer
shall be obligated to the same extent and under the same terms and conditions
as if it alone were servicing and administering the Mortgage Loans. The
Master Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the Master Servicer by such Subservicer
and nothing contained in such Subservicing Agreement shall be deemed to limit
or modify this Agreement. The Trust shall not indemnify the Master Servicer
for any losses due to the Master Servicer's negligence.
(d) Any Subservicing Agreement and any other transactions or
services relating to the Mortgage Loans involving a Subservicer shall be
deemed to be between the Subservicer and the Master Servicer alone and the
Backup Servicer, the Note Insurer, the Indenture Trustee and the Noteholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to any Subservicer except as
set forth in Subsection (e) of this Section 5.13 and the related Subservicing
Agreement.
(e) Notwithstanding any contrary provision contained herein, in
connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Master Servicer
hereunder by the Backup Servicer, the Indenture Trustee or any other
successor master servicer pursuant to Section 7.02, it is understood and
agreed that the Master Servicer's rights and obligations under any
Subservicing Agreement then in force between the Master Servicer and a
Subservicer may be assumed or terminated (without cost) by the Backup
Servicer, the Indenture Trustee or any other successor master servicer at its
option as successor to the Master Servicer.
The Master Servicer shall, upon request of the Backup Servicer, the
Indenture Trustee or the Note Insurer, but at the expense of the Master
Servicer, deliver to the assuming party documents and records relating to
each Subservicing Agreement and an accounting of amounts collected and held
by it and otherwise use its best reasonable efforts to effect the orderly and
efficient transfer of the Subservicing Agreements to the assuming party,
without the payment of any fee by the Backup Servicer, the Indenture Trustee,
any Noteholders or the Note Insurer, notwithstanding any contrary provision
in any Subservicing Agreement.
Section 5.14. REPORTS TO THE INDENTURE TRUSTEE; COLLECTION ACCOUNT
STATEMENTS. Not later than twenty-five (25) days after each Payment Date, the
Master Servicer shall provide to the Backup Servicer and the Note Insurer a
statement, certified by a Servicing Officer, setting forth the status of the
Collection Account as of the close of business on the last day of the Due
Period preceding such Payment Date, stating that all payments required by
this Agreement to be made by the Master Servicer on behalf of the Indenture
Trustee have been made (or if any required payment has not been made by the
Master Servicer, specifying the nature and status thereof) and showing, for
the period covered by such statement, the aggregate of deposits into and
withdrawals from the Collection Account and the aggregate of deposits into
each Payment
37
Account as specified in Section 6.01. Such statement shall also state the
aggregate Stated Principal Balance and the aggregate unpaid principal balance
of all the Mortgage Loans as of the close of business on the last day of the
month preceding the month in which such Payment Date occurs.
Section 5.15. OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS. (a) Subject
to Sections 5.15(b) and 5.15(c), the Sponsor, in its sole discretion, shall
have the right to elect (by written notice sent to the Master Servicer, the
Indenture Trustee and the Note Insurer), but shall not be obligated, to
purchase for its own account from the Trust any Mortgage Loan which is ninety
(90) days or more Delinquent in the manner and at the Loan Repurchase Price
(except that the amount described in the definition of Loan Repurchase Price
shall in no case be net of the Servicing Fee and the Backup Servicing Fee).
The purchase price for any Mortgage Loan purchased hereunder shall be
deposited in the Collection Account and the Indenture Trustee, upon the
Indenture Trustee's receipt of notice by the Master Servicer of such deposit,
shall release or cause to be released to the purchaser of such Mortgage Loan
the related Indenture Trustee's Mortgage File and shall execute and deliver
such instruments of transfer or assignment prepared by the purchaser of such
Mortgage Loan, in each case without recourse, as shall be necessary to vest
in the purchaser of such Mortgage Loan any Mortgage Loan released pursuant
hereto and the purchaser of such Mortgage Loan shall succeed to all the
Indenture Trustee's right, title and interest in and to such Mortgage Loan
and all security and documents related thereto. Such assignment shall be an
assignment outright and not for security. The purchaser of such Mortgage Loan
shall thereupon own such Mortgage Loan, and all security and documents, free
of any further obligation to the Indenture Trustee, the Note Insurer or the
Noteholders with respect thereto. The purchaser of such Mortgage Loan shall
give written notice to the Note Insurer of the means by which any Mortgage
Loan purchased pursuant to this Section 5.15 is ultimately disposed of and
any other information regarding any such Mortgage Loan reasonably requested
by the Note Insurer.
(b) After the Sponsor or an Affiliate of the Sponsor has
repurchased any Mortgage Loans which are 90 days or more Delinquent in an
aggregate amount equal to 1% of the Maximum Collateral Amount, then
notwithstanding the foregoing, unless the Note Insurer consents, the Sponsor
or an Affiliate of the Sponsor may only exercise its option pursuant to this
Section 5.15 with respect to the Mortgage Loan or Mortgage Loans (including
REO Mortgage Loans) that have been Delinquent for the longest period at the
time of such repurchase. Any request by the Sponsor or an Affiliate of the
Sponsor to the Note Insurer for consent to repurchase Mortgage Loans that are
not the most Delinquent shall be accompanied by a description of the Mortgage
Loans that have been Delinquent longer than the Mortgage Loan or Mortgage
Loans the Sponsor or such Affiliate proposes to repurchase. If the Note
Insurer fails to respond to such request within ten (10) Business Days after
receipt thereof, the Sponsor or such Affiliate may repurchase the Mortgage
Loan or Mortgage Loans proposed to be repurchased without the consent of, or
any further action by, the Note Insurer. Notice to the Note Insurer shall be
delivered in accordance with the terms of the Insurance Agreement.
(c) After the Sponsor or an Affiliate of the Sponsor has
repurchased any Mortgage Loans which are 90 days or more Delinquent in an
aggregate amount equal to 3% of the Maximum Collateral Amount, then
notwithstanding the foregoing, unless the Note Insurer
38
consents, the Sponsor or an Affiliate of the Sponsor may not repurchase such
additional Mortgage Loans.
Section 5.16. REPORTS TO BE PROVIDED BY THE MASTER SERVICER AND THE
BACKUP SERVICER.
(a) By 3:00 p.m. eastern time on the second Business Day following
the fifteenth (15th) day of each month (the "Servicer Reporting Date"), the
Master Servicer shall deliver to the Indenture Trustee, the Backup Servicer,
the Underwriter, Intex, Bloomberg and the Note Insurer (via E-mail at
▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇) a Servicer Remittance Report for the related Servicer
Payment Date setting forth the following information with respect to all
Mortgage Loans as well as a break out as to each Loan Group as of the close
of business on the last Business Day of the prior calendar month (except as
otherwise provided in clause (v) below):
(i) the total number of Mortgage Loans and the Aggregate
Principal Balances thereof, together with the number, Aggregate
Principal Balances of such Mortgage Loans and the percentage (based
on the Aggregate Principal Balances of the Mortgage Loans) of the
Aggregate Principal Balances of such Mortgage Loans to the
Aggregate Principal Balance of all Mortgage Loans (A) 30-59 days
Delinquent, (B) 60-89 days Delinquent and (C) 90 or more days
Delinquent;
(ii) the number, Aggregate Principal Balances of all
Mortgage Loans and percentage (based on the Aggregate Principal
Balances of the Mortgage Loans) of the Aggregate Principal Balances
of such Mortgage Loans to the Aggregate Principal Balance of all
Mortgage Loans in foreclosure proceedings and the number, Aggregate
Principal Balances of all Mortgage Loans and percentage (based on
the Aggregate Principal Balances of the Mortgage Loans) of any such
Mortgage Loans also included in any of the statistics described in
the foregoing clause (i);
(iii) the number, Aggregate Principal Balances of all
Mortgage Loans and percentage (based on the Aggregate Principal
Balances of the Mortgage Loans) of the Aggregate Principal Balances
of such Mortgage Loans to the Aggregate Principal Balance of all
Mortgage Loans relating to Mortgagors in bankruptcy proceedings and
the number, Aggregate Principal Balances of all Mortgage Loans and
percentage (based on the Aggregate Principal Balances of the
Mortgage Loans) of any such Mortgage Loans also included in any of
the statistics described in the foregoing clause (i);
(iv) the number, Aggregate Principal Balances of all
Mortgage Loans and percentage (based on the Aggregate Principal
Balances of the Mortgage Loans) of the Aggregate Principal Balances
of such Mortgage Loans to the Aggregate Principal Balance of all
Mortgage Loans relating to REO Properties and the number, Aggregate
Principal Balances of all Mortgage Loans and percentage (based on
the Aggregate Principal Balances of the Mortgage Loans) of any such
Mortgage Loans also included in any of the statistics described in
the foregoing clause (i);
(v) the weighted average Mortgage Interest Rate for the
Mortgage Loans in Loan Group 1 and Loan Group 2, in each case, as
of the Due Date occurring in the Due Period related to such Payment
Date;
39
(vi) the weighted average remaining term to stated maturity
of all Mortgage Loans;
(vii) the book value of any REO Property;
(viii) the Cumulative Loan Losses during the related
Collection Period;
(ix) such other loan level information as either (a) the
Indenture Trustee may reasonably request to enable it to prepare
the Indenture Trustee's Remittance Report or (b) the Note Insurer
may reasonably request; and
(x) the aggregate of claims (i) pending under the Primary
Mortgage Insurance Policy, (ii) denied by the Primary Mortgage
Insurance Provider during the related Collection Period and (iii)
paid by the Primary Mortgage Insurance Provider during the related
Collection Period.
(b) [Reserved].
(c) In addition to the other obligations of the Backup
Servicer under this Agreement, the Backup Servicer shall establish and
maintain a system of transaction accounting in regard to the Mortgage Loans
substantially similar to that maintained by the Master Servicer and post to
such system all information relating to the Mortgage Loans obtained by the
Backup Servicer pursuant to Section 5.16 and 5.18, to enable the Backup
Servicer to perform the obligations of a successor master servicer
immediately upon any termination or resignation of the Master Servicer.
Section 5.17. [Reserved].
Section 5.18. PERIODIC ADVANCES. If, on any Servicer Payment Date, the
Master Servicer determines that any Monthly Payments due during the related
Due Period have not been received as of the end of the related Due Period,
the Master Servicer shall determine the amount of any Periodic Advance
required to be made with respect to the related Payment Date. The Master
Servicer shall deliver, one (1) Business Day after such Servicer Payment
Date, a magnetic tape, diskette (or such other electronic medium used by the
Master Servicer for such purpose) to the Backup Servicer indicating the
payment status of each Mortgage Loan as of the date which is two Business
Days prior to such Servicer Payment Date. The Master Servicer shall include
in the amount to be deposited in the related Payment Account on such Servicer
Payment Date an amount equal to the Periodic Advance, if any, which deposit
may be made in whole or in part from funds in the Collection Account being
held for future payment or withdrawal on or in connection with Payment Dates
in subsequent months, other than any such amounts which are voluntary
Principal Prepayments in full. Any funds being held for future payment to
Noteholders and so used shall be replaced by the Master Servicer from its own
funds by deposit in the Collection Account on or before the Business Day
preceding any future Servicer Payment Date to the extent that funds in the
Collection Account on such Servicer Payment Date shall be less than the
Servicer Remittance Amount for such Payment Date
The Master Servicer shall designate on its records the specific Mortgage
Loans and related installments (or portions thereof) as to which such
Periodic Advance shall be deemed to
40
have been made, such determination being conclusive for purposes of
withdrawals from the Collection Account pursuant to Section 5.03 hereof.
Section 5.19. INDEMNIFICATION; THIRD PARTY CLAIMS. The Master Servicer
agrees to indemnify and to hold each of the Trust, the Owner Trustee, the
Sponsor, the Backup Servicer, the Indenture Trustee, the Note Insurer and
each Noteholder harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses (including attorneys' fees and expenses) that the
Trust, the Owner Trustee, the Sponsor, the Backup Servicer, the Indenture
Trustee, the Note Insurer and any Noteholder (or any director, officer,
employee or agent of the foregoing) may sustain in any way related to the
failure of the Master Servicer to perform its duties and service the Mortgage
Loans in compliance with the terms of this Agreement and the other Basic
Documents. Each indemnified party and the Master Servicer shall immediately
notify the other indemnified parties if a claim is made by a third party with
respect to this Agreement and the other Basic Documents and the Master
Servicer shall assume the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Trust, the Owner Trustee, the Sponsor, the Backup Servicer, the Master
Servicer, the Indenture Trustee, the Note Insurer and/or a Noteholder (or any
director, officer, employee or agent of the foregoing) in respect of such
claim. The obligations of the Master Servicer under this Section 5.19 arising
prior to any resignation or termination of the Master Servicer hereunder
shall survive the resignation or termination of the Master Servicer or the
termination of this Agreement.
Section 5.20. MAINTENANCE OF CORPORATE EXISTENCE AND LICENSES; MERGER OR
CONSOLIDATION OF THE MASTER SERVICER AND BACKUP SERVICER. (a) Each of the
Master Servicer and the Backup Servicer will keep in full effect its
existence, rights and franchises as a corporation, will obtain and preserve
its qualification to do business as a foreign corporation in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement and will otherwise operate its business so as to cause the
representations and warranties under Section 3.01 hereof to be true and
correct at all times under this Agreement.
(b) Any corporation into which the Master Servicer or the Backup
Servicer may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to
which the Master Servicer or the Backup Servicer shall be a party, or any
corporation succeeding to all or substantially all of the business of the
Master Servicer or the Backup Servicer, shall be the successor of the Master
Servicer or the Backup Servicer, as applicable, hereunder, only with the
consent of the Note Insurer but without the execution or filing of any paper
or any further act on the part of any of the parties hereto provided that, in
the case of the Master Servicer, such corporation meets the qualifications
set forth in Section 7.02(b). The Master Servicer or the Backup Servicer, as
applicable, shall send notice of any such merger or consolidation to the
Owner Trustee, the Indenture Trustee, the Note Insurer and the Master
Servicer or the Backup Servicer, as applicable.
Section 5.21. ASSIGNMENT OF AGREEMENT BY MASTER SERVICER AND BACKUP
SERVICER; MASTER SERVICER AND BACKUP SERVICER NOT TO RESIGN. Neither the
Master Servicer nor the Backup Servicer shall assign this Agreement nor
resign from the obligations and duties hereby imposed
41
on it except by the consent of the Note Insurer, or upon the determination
that the Master Servicer's or Backup Servicer's duties hereunder are no
longer permissible under applicable law and that such incapacity cannot be
cured by the Master Servicer or the Backup Servicer, as applicable, without
incurring, in the reasonable judgment of the Note Insurer, unreasonable
expense, or, in the case of the Backup Servicer, in the event of the
permitted resignation or removal of the Backup Servicer as Subservicer under
the Subservicing Agreement between the Master Servicer and the Backup
Servicer of even date herewith. Any such determination that the Master
Servicer's or the Backup Servicer's duties hereunder are no longer
permissible under applicable law permitting the resignation of the Master
Servicer or the Backup Servicer, as applicable, shall be evidenced by a
written Opinion of Counsel (who may be counsel for the Master Servicer or the
Backup Servicer) to such effect delivered to the Indenture Trustee, the
Trust, the Sponsor, the Note Insurer and the Backup Servicer or the Master
Servicer, as applicable. No such resignation of the Master Servicer shall
become effective until the Backup Servicer or a successor master servicer
appointed in accordance with the terms of this Agreement has assumed the
Master Servicer's responsibilities and obligations hereunder in accordance
with Section 7.02. The Master Servicer or the Backup Servicer, as applicable,
shall provide the Indenture Trustee, the Rating Agencies and the Note Insurer
with 30 days' prior written notice of its intention to resign pursuant to
this Section 5.21.
Section 5.22. PERIODIC FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION; ADDITIONAL INFORMATION. Within 15 days after each Payment Date,
the Indenture Trustee shall, in accordance with industry standards, file with
the Commission via the Electronic Data Gathering and Retrieval System
(▇▇▇▇▇), a Form 8-K with a copy of the statement to the Certificateholders
for such Distribution Date as an exhibit thereto. Prior to January 30, 2001,
the Indenture Trustee shall, in accordance with industry standards, file a
Form 15 Suspension Notification with respect to the Trust, if applicable.
Prior to March 30, 2001, the Indenture Trustee shall file a Form 10-K, in
substance conforming to industry standards, with respect to the Trust. The
Sponsor hereby grants to the Indenture Trustee a limited power of attorney to
execute and file each such document on behalf of the Trust. Such power of
attorney shall continue until either the earlier of (i) receipt by the
Indenture Trustee from the Sponsor of written termination of such power of
attorney and (ii) the termination of the Trust. The Master Servicer and the
Sponsor each agree to promptly furnish to the Indenture Trustee, from time to
time upon request, such further information, reports, and financial
statements within its control related to this Agreement and the Mortgage
Loans as the Indenture Trustee reasonably deems appropriate to prepare and
file all necessary reports with the Commission. The Indenture Trustee shall
have no responsibility to file any items other than those specified in this
section.
Section 5.23. ADMINISTRATIVE DUTIES.
(a) DUTIES WITH RESPECT TO THE BASIC DOCUMENTS. The Master Servicer
shall perform all its duties and the duties of the Trust under the Basic
Documents. In addition, the Master Servicer shall consult with the Owner
Trustee as the Master Servicer deems appropriate regarding the duties of the
Trust under the Basic Documents. The Master Servicer shall monitor the
performance of the Trust and shall advise the Owner Trustee when action is
necessary to comply with the Trust's duties under the Basic Documents. The
Master Servicer shall prepare for execution by the Trust or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of
the
42
Trust to prepare, file or deliver pursuant to the Basic Documents. In
furtherance of the foregoing, the Master Servicer shall take all necessary
action that is the duty of the Trust to take pursuant to the Basic Documents.
(b) DUTIES WITH RESPECT TO THE TRUST.
In addition to the duties of the Master Servicer set forth in this
Agreement or any of the Basic Documents, the Master Servicer shall perform
such calculations and shall prepare for execution by the Trust or the Owner
Trustee or shall cause the preparation by other appropriate Persons of all
such documents, reports, filings, instruments, certificates and opinions as
it shall be the duty of the Trust or the Owner Trustee to prepare, file or
deliver pursuant to this Agreement or any of the Basic Documents or under
state and federal tax and securities laws shall take all appropriate action
that it is the duty of the Trust to take pursuant to this Agreement or any of
the Basic Documents. In accordance with the directions of the Trust or the
Owner Trustee, the Master Servicer shall administer, perform, or supervise
the performance of such other activities in connection with the Basic
Documents as are not covered by any of the foregoing provisions and as are
expressly requested by the Trust or the Owner Trustee and are reasonably
within the capability of the Master Servicer.
In carrying out the foregoing duties under this Agreement, the
Master Servicer may enter into transactions with or otherwise deal with any
of its Affiliates; PROVIDED, HOWEVER, that the terms of any such transactions
or dealings shall be in accordance with any directions received from the
Trust and shall be, in the Master Servicer's opinion, no less favorable to
the Trust in any material respect.
(c) ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER. The
Master Servicer shall furnish to the Owner Trustee from time to time such
additional information regarding the Trust or the Basic Documents as the
Owner Trustee shall reasonably request.
Section 5.24. MAINTENANCE OF AND CLAIMS UPON THE PRIMARY MORTGAGE
INSURANCE POLICY. The Master Servicer shall, on behalf of the Issuer, the
Indenture Trustee, the Noteholders and the Note Insurer, maintain the Primary
Mortgage Insurance Policy and prepare and file in a timely basis with the
Primary Mortgage Insurance Provider, with a copy to the Note Insurer, all
claims that may be made under the Primary Mortgage Insurance Policy with
respect to Primary Mortgage Insurance Mortgage Loans. Consistent with its
rights and obligations hereunder, the Master Servicer shall take all actions
required under the Primary Mortgage Insurance Policy as a condition to the
payment of any such claim. Any amount received from the Primary Mortgage
Insurance Provider with respect to any Primary Mortgage Insurance Mortgage
Loan shall be deposited by the Master Servicer on each Business Day, but no
less than two Business Days after the date of receipt thereof, into the
Collection Account for distribution on the related Payment Date as part of
Liquidation Proceeds for the related Loan Group.
Assuming that the premium for the Primary Mortgage Insurance Policy is
paid to the Primary Mortgage Insurance Provider in accordance with the terms
of the Indenture, the Master Servicer shall exercise its best reasonable
efforts to maintain and keep the Primary Mortgage Insurance Policy in full
force and effect throughout the terms of the Basic Documents, unless the
coverage thereunder has been exhausted through the payment of claims.
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ARTICLE VI
APPLICATION OF FUNDS
Section 6.01. DEPOSITS TO THE PAYMENT ACCOUNT. On each Servicer Payment
Date, the Master Servicer shall cause to be deposited in the related Payment
Account, from funds on deposit in the Collection Account, an amount equal to
the Servicer Remittance Amount with respect to the related Payment Date,
minus any portion thereof payable to the Master Servicer or the Backup
Servicer pursuant to Section 5.03. On each Servicer Payment Date, the Master
Servicer shall also deposit into the related Payment Account any amounts
required to be deposited in connection with a Subsequent Mortgage Loan
pursuant to Section 2.14(b) of the Indenture.
Section 6.02. COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of all
money and other property payable to or receivable by the Indenture Trustee
pursuant to this Agreement, including (a) all payments due on the Mortgage
Loans in accordance with the respective terms and conditions of such Mortgage
Loans and required to be paid over to the Indenture Trustee by the Master
Servicer or by any Subservicer and (b) Insured Payments. The Indenture
Trustee shall hold all such money and property received by it, as part of the
Trust Estate and shall apply it as provided in the Indenture.
Section 6.03. APPLICATION OF PRINCIPAL AND INTEREST. In the event that
Net Liquidation Proceeds on a Liquidated Mortgage Loan are less than the
Principal Balance of the related Mortgage Loan plus accrued interest thereon,
or any Mortgagor makes a partial payment of any Monthly Payment due on a
Mortgage Loan, such Net Liquidation Proceeds or partial payment shall be
applied to payment of the related Mortgage Note as provided therein, and if
not so provided, first to interest accrued at the Mortgage Interest Rate and
then to principal.
Section 6.04. [Reserved].
Section 6.05. COMPENSATING INTEREST. Not later than the Servicer Payment
Date, the Master Servicer shall remit to the Indenture Trustee (without right
to reimbursement therefor) for deposit into the related Payment Account, an
amount equal to, for all of the Mortgage Loans, the lesser of (a) the
Prepayment Interest Shortfalls for all of the Mortgage Loans for the related
Payment Date resulting from Principal Prepayments in full during the related
Prepayment Period and (b) its aggregate Servicing Fee with respect to all of
the Mortgage Loans for the related Due Period (the "COMPENSATING INTEREST").
Section 6.06. EFFECT OF PAYMENTS BY THE NOTE INSURER; SUBROGATION.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on the Notes which is made with moneys received
pursuant to the terms of the Note Insurance Policy shall not be considered
payment of the Notes from the Trust Estate. The Sponsor, the Master Servicer,
the Trust and the Indenture Trustee acknowledge and agree, that without the
need for any further action on the part of the Note Insurer, the Sponsor, the
Master Servicer, the Trust, the Indenture Trustee or the Note Registrar (a)
to the extent the Note Insurer makes payments, directly or indirectly, on
account of principal of or interest on the Notes to the Holders of such
Notes, the
44
Note Insurer will be fully subrogated to, and each Noteholder, the Master
Servicer, the Sponsor, the Trust and the Indenture Trustee hereby delegate
and assign to the Note Insurer, to the fullest extent permitted by law, the
rights of such Holders to receive such principal and interest from the Trust
Estate, including, without limitation, any amounts due to the Noteholders in
respect of securities law violations arising from the offer and sale of the
Notes, and (b) the Note Insurer shall be paid such amounts from the sources
and in the manner provided herein for the payment of such amounts and as
provided in the Insurance Agreement. The Indenture Trustee and the Master
Servicer shall cooperate in all respects with any reasonable request by the
Note Insurer for action to preserve or enforce the Note Insurer's rights or
interests under this Agreement without limiting the rights or affecting the
interests of the Holders as otherwise set forth herein.
45
ARTICLE VII
SERVICER DEFAULT
Section 7.01. SERVICER EVENTS OF DEFAULT. (a) I. The following events
shall each constitute a "SERVICER EVENT OF DEFAULT" hereunder:
(i) any failure by the Master Servicer to remit to the
Indenture Trustee any payment required to be made by the Master
Servicer under the terms of this Agreement (other than Servicing
Advances covered by clause (ii) below), which continues unremedied
for one (1) Business Day after the date upon which written notice
of such failure, requiring the same to be remedied, shall have been
given to the Master Servicer and the Note Insurer by the Indenture
Trustee or to the Master Servicer and the Indenture Trustee by the
Note Insurer or Noteholders affected thereby evidencing Percentage
Interests of at least 25%;
(ii) the failure by the Master Servicer to make any required
Servicing Advance, which failure continues unremedied for a period
of thirty (30) days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given
to the Master Servicer by the Indenture Trustee or to the Master
Servicer and the Indenture Trustee by the Note Insurer or
Noteholders affected thereby evidencing Percentage Interests of at
least 25%;
(iii) any failure on the part of the Master Servicer duly to
observe or perform in any material respect any other of the
covenants or agreements on the part of the Master Servicer
contained in this Agreement, or the failure of any representation
and warranty made pursuant to Section 3.01(a) hereof to be true and
correct which continues unremedied for a period of thirty (30) days
after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Master
Servicer by the Indenture Trustee or to the Master Servicer and the
Indenture Trustee by the Note Insurer or Noteholders affected
thereby evidencing Percentage Interests of at least 25%;
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction in an involuntary case under any
present or future federal or state bankruptcy, insolvency or
similar law or for the appointment of a conservator or receiver or
liquidation in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer and such decree or order shall have
remained in force, undischarged or unstayed for a period of ninety
(90) days;
(v) the Master Servicer shall consent to the appointment of
a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Master Servicer or of or
relating to all or substantially all of the Master Servicer's
property;
(vi) the Master Servicer shall admit in writing its
inability generally to pay its debts as they become due, file a
petition to take advantage of any applicable insolvency
46
or reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations;
(vii) the Note Insurer shall notify the Indenture Trustee of
any "event of default" under the Insurance Agreement;
(viii) if on any Payment Date the Rolling Three Month
Delinquency Rate exceeds 5.0%;
(ix) if on any Payment Date, Twelve Month Loss Amount
exceeds 1.50% of the Aggregate Principal Balance of the Mortgage
Loans, as of the close of business on the later of April 1, 2000
and the first day of the twelfth preceding calendar month;
(x) if (a) on any Payment Date occurring before March 1,
2001, the aggregate Cumulative Loan Losses since the Initial
Cut-Off Date exceed 1.25% of the Cut-Off Date Aggregate Principal
Balance of the Mortgage Loans in both Loan Groups, (b) on any
Payment Date after March 1, 2001 and before March 1, 2002, the
aggregate Cumulative Loan Losses since the Initial Cut-Off Date
exceed 1.75% of the Cut-Off Date Aggregate Principal Balance of the
Mortgage Loans in both Loan Groups, (c) on any Payment Date on or
after March 1, 2002 and before March 1, 2003, the aggregate
Cumulative Loan Losses since the Initial Cut-Off Date exceed 2.75%
of the Cut-Off Date Aggregate Principal Balance of the Mortgage
Loans in both Loan Groups, (d) on any Payment Date on or after
March 1, 2003 and before March 1, 2004, the aggregate Cumulative
Loan Losses since the Initial Cut-Off Date exceed 3.50% of the
Cut-Off Date Aggregate Principal Balance of the Mortgage Loans in
both Loan Groups, or (e) on any Payment Date on or after March 1,
2004, the aggregate Cumulative Loan Losses since the Initial
Cut-Off Date exceed 4.50% of the Cut-Off Date Aggregate Principal
Balance of the Mortgage Loans in both Loan Groups;
(xi) the occurrence of an Event of Default under the
Indenture; or
(xii) a Servicer Extension Notice shall not have been
delivered as set forth n Section 8.04 hereof.
II. The following events shall each constitute a "BACKUP SERVICER
EVENT OF DEFAULT" hereunder:
(i) any failure on the part of the Backup Servicer duly to observe
or perform in any material respect any other of the covenants or
agreements on the part of the Backup Servicer contained in this
Agreement, or the failure of any representation and warranty made
pursuant to Section 3.03(a) hereof to be true and correct which
continues unremedied for a period of thirty (30) days after the date
on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Backup Servicer by the
Indenture Trustee or to the Backup Servicer and the Indenture Trustee
by the Note Insurer or Noteholders affected thereby evidencing
Percentage Interests of at least 25%;
(ii) a decree or order of a court or agency or supervisory
authority having jurisdiction in an involuntary case under any
present or future federal or state bankruptcy,
47
insolvency or similar law or for the appointment of a conservator
or receiver or liquidation in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Backup Servicer and such
decree or order shall have remained in force, undischarged or
unstayed for a period of ninety (90) days;
(iii) the Backup Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Backup Servicer or of or relating to all or
substantially all of the Backup Servicer's property;
(iv) the Backup Servicer shall admit in writing its inability
generally to pay its debts as they become due, file a petition to
take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; and
(v) the Backup Servicer is no longer a Subservicer.
(b) So long as a Servicer Event of Default shall have
occurred and not have been remedied: (x) with respect solely to Section
7.01(a)(I)(i), if such payment is in respect of Periodic Advances or
Compensating Interest owing by the Master Servicer and such payment is not
made by 12:00 noon New York time on the second Business Day prior to the
applicable Payment Date, the Indenture Trustee, upon receipt of written
notice or discovery by a Responsible Officer of the Indenture Trustee of such
failure, shall give immediate telephonic and facsimile notice of such failure
to a Servicing Officer of the Master Servicer and the Backup Servicer and to
the Note Insurer, and the Indenture Trustee shall, with the consent of the
Note Insurer, terminate all of the rights and obligations of the Master
Servicer under this Agreement, except for the Master Servicer's
indemnification obligation under Section 5.19, and the Backup Servicer, the
Indenture Trustee or a successor master servicer appointed in accordance with
Section 7.02, shall immediately make such Periodic Advance or payment of
Compensating Interest as provided in Section 7.02 and assume, pursuant to
Section 7.02 hereof, the duties of a successor master servicer; (y) with
respect to that portion of Section 7.01(a)(I)(i) not referred to in the
preceding clause (x) and with respect to clauses (ii), (iii), (iv), (v),
(vi), (vii) and (xi) of Section 7.01(a)(I) or clauses (i) through (v) of
Section 7.01(a)(II), the Indenture Trustee shall, but only at the direction
of the Note Insurer or the Majority Noteholders, by notice in writing to the
Master Servicer, the Backup Servicer and a Responsible Officer of the
Indenture Trustee and subject to the prior written consent of the Note
Insurer in the case of any removal at the direction of the Majority
Noteholders, and in addition to whatever rights such Noteholders may have at
law or equity to damages, including injunctive relief and specific
performance, terminate all the rights and obligations of the Master Servicer
or Backup Servicer, as applicable, under this Agreement, except for the
Master Servicer's indemnification obligations under Section 5.19, and in and
to the Mortgage Loans and the proceeds thereof, as
48
Master Servicer; and (z) with respect to clauses (viii)-(x) of Section
7.01(a)(I), the Indenture Trustee shall, but only at the direction of the
Note Insurer, after notice in writing to the Master Servicer, the Backup
Servicer and a Responsible Officer of the Indenture Trustee, terminate all
the rights and obligations of the Master Servicer under this Agreement,
except for the Master Servicer's indemnification obligations under Section
5.19, and in and to the Mortgage Loans and the proceeds thereof, as Master
Servicer. Upon receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer under this Agreement, whether with
respect to the Mortgage Loans or otherwise, shall, subject to Section 7.02,
pass to and be vested in the Backup Servicer, or another successor master
servicer selected by the Note Insurer, and the Backup Servicer or another
successor master servicer is hereby authorized and empowered to execute and
deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise,
at the expense of the Master Servicer, any and all documents and other
instruments and do or cause to be done all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, including,
but not limited to, the transfer and endorsement or assignment of the
Mortgage Loans and related documents. The Master Servicer agrees to cooperate
(and to pay any related costs and expenses) with the Indenture Trustee and
the Backup Servicer or another successor master servicer in effecting the
termination of the Master Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to the Backup Servicer or another
successor master servicer, for administration by it of all amounts which
shall at the time be credited by the Master Servicer to the Collection
Account or thereafter received with respect to the Mortgage Loans. The
Indenture Trustee shall promptly notify the Note Insurer and the Rating
Agencies of the occurrence of a Servicer Event of Default upon discovery or
receipt of notice by a Responsible Officer of the Indenture Trustee.
Section 7.02. BACKUP SERVICER TO ACT; APPOINTMENT OF SUCCESSOR. (a) (i)
On and after the time the Master Servicer receives a notice of termination
pursuant to Section 7.01 or fails to receive a Servicer Extension Notice
pursuant to Section 8.04, or the Indenture Trustee receives the resignation
of the Master Servicer evidenced by an Opinion of Counsel pursuant to Section
5.21, or the Master Servicer is removed as Master Servicer pursuant to this
Article VII, in which event the Indenture Trustee shall promptly notify the
Rating Agencies, and except as otherwise provided in this Section 7.02, the
Backup Servicer or another successor master servicer selected by the Note
Insurer shall be the successor in all respects to the Master Servicer in its
capacity as master servicer under this Agreement and the transactions set
forth or provided for in this Agreement, and shall be subject to all the
responsibilities, restrictions, duties, liabilities and termination
provisions relating thereto placed on the Master Servicer by the terms and
provisions of this Agreement. The Backup Servicer or another successor master
servicer and the Indenture Trustee shall take such action, consistent with
this Agreement, as shall be necessary to effect any such succession. If the
Backup Servicer or any other successor master servicer is acting as Master
Servicer hereunder, it shall be subject to termination under Section 7.01
upon the occurrence or continuation of a Servicer Event of Default applicable
to it as Master Servicer. The Backup Servicer hereby agrees to act as
successor master servicer pursuant to the terms of this Agreement upon the
termination or resignation of the Master Servicer as provided in this Section
7.02. Any successor master servicer and the Backup Servicer prior to its
becoming the successor master servicer shall not be liable for any actions or
omissions of any master servicer prior to it or breaches of representations
and warranties of the master servicer prior to it. The Backup Servicer or any
other successor master servicer, as successor master servicer, shall be
obligated to pay Compensating Interest pursuant to Section 6.05 in any event
and to make Periodic Advances pursuant to Section 5.18 unless, and only to
the extent the Backup Servicer determines reasonably and in good faith that
such advances would not be recoverable from the proceeds of the related
Mortgage Loan pursuant to Section 5.03, such determination to be evidenced by
a certification of a Responsible Officer of the Backup Servicer delivered to
the Note Insurer.
49
(ii) In the event that the Backup Servicer is terminated or
resigns pursuant to this Agreement or otherwise becomes unable to
perform its obligations under this Agreement, the Note Insurer may (or
if the Note Insurer fails to do so promptly the Indenture Trustee will)
appoint a successor backup servicer in accordance with the provisions
of this Section 7.02; provided, that any successor backup servicer,
shall satisfy the requirements set forth in Section 7.02(b) and shall
be approved by the Rating Agencies and the Note Insurer.
(b) Any successor master servicer or successor backup servicer
hereunder (other than the Indenture Trustee) shall be a housing and home
finance institution, bank or mortgage servicing institution which has been
designated as an approved seller-servicer by ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac,
having equity of not less than $5,000,000 as determined in accordance with
GAAP, as the successor to the Master Servicer or the Backup Servicer
hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Master Servicer or the Backup Servicer, as
applicable, hereunder.
(c) In the event the Backup Servicer is the successor master
servicer, it shall be entitled to the same Servicing Compensation (including
the Servicing Fee as adjusted pursuant to the definition thereof) and other
funds pursuant to Section 5.08 hereof as the Master Servicer if the Master
Servicer had continued to act as master servicer hereunder, and shall
continue to be entitled to the Backup Servicing Fee.
(d) The Indenture Trustee, the Backup Servicer and any
successor master servicer or backup servicer shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Master Servicer agrees to cooperate with the Indenture
Trustee, the Backup Servicer and any successor master servicer in effecting
the termination of the Master Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Indenture Trustee, the Backup
Servicer or such successor master servicer, as applicable, at the Master
Servicer's cost and expense, all documents and records reasonably requested
by it to enable it to assume the Master Servicer's functions hereunder and
shall promptly also transfer to the Indenture Trustee, the Backup Servicer or
such successor master servicer, as applicable, all amounts that then have
been or should have been deposited in the Collection Account by the Master
Servicer or that are thereafter received with respect to the Mortgage Loans,
including without limitation all Liquidation Proceeds and Insurance Proceeds,
and payments of insurance deductible amounts by the Master Servicer pursuant
to Section 5.04(b) with respect to all insurance claims arising during the
Master Servicer's tenure. Any collections received by the Master Servicer
after such removal or resignation shall be endorsed by it to the Backup
Servicer or (if the Backup Servicer is not the successor master servicer) to
the Indenture Trustee and remitted directly to the Backup Servicer or the
Indenture Trustee, as applicable (or, at the direction of the Indenture
Trustee, to any other successor master servicer). Neither the Backup
Servicer, the Indenture Trustee nor any other successor master servicer shall
be held liable by reason of any failure to make, or any delay in making, any
payment hereunder or any portion thereof caused by (i) the failure of the
Master Servicer to deliver, or any delay in delivering, cash, documents or
records to it, or (ii) restrictions imposed by any regulatory authority
having jurisdiction over the Master Servicer hereunder. Notwithstanding
anything to the contrary herein, no appointment of a successor master
servicer under this Agreement shall be effective until the Note Insurer shall
have consented thereto, and written notice of such proposed
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appointment shall have been provided by the Indenture Trustee to the Note
Insurer and the Backup Servicer. The Indenture Trustee shall not resign as
Master Servicer until a successor master servicer reasonably acceptable to
the Note Insurer has been appointed. The Note Insurer shall have the right to
remove the Indenture Trustee as successor Master Servicer under this Section
7.02 without cause, and the Indenture Trustee shall appoint such other
successor master servicer as directed by the Note Insurer.
(e) In the event that the Master Servicer is terminated
hereunder and no Backup Servicer is obligated to act as successor master
servicer and no other successor master servicer has been appointed hereunder,
the Indenture Trustee may appoint a successor master servicer (which may be
an affiliate of the Indenture Trustee) or petition a court of competent
jurisdiction to appoint a successor master servicer. Pending appointment of a
successor master servicer hereunder, the Indenture Trustee shall act in such
capacity; PROVIDED, HOWEVER, that the Indenture Trustee, in its capacity as
successor master servicer pending appointment of another successor master
servicer, (i) shall be obligated to make Periodic Advances or Servicing
Advances only to the extent that the Indenture Trustee deems such advances to
be recoverable, (ii) shall be obligated to make Compensating Interest
payments in respect of any Payment Date only to the extent of any Servicing
Fee received by the Indenture Trustee in respect of such Payment Date, (iii)
shall not be obligated to perform any other duties or obligations of the
Master Servicer hereunder until the Indenture Trustee has received all master
servicing records and files from the predecessor master servicer or backup
servicer and in no event sooner than 90 days following the termination of the
Master Servicer, (iv) shall not be obligated to perform any of the
administrative duties specified in Section 5.23 hereof, and (v) shall be
entitled to payment of all Servicing Compensation and the Backup Servicing
Fee. In connection with any appointment and assumption of duties of a
successor master servicer, the Indenture Trustee may make such arrangements
for the compensation of such successor master servicer out of payments on
Mortgage Loans as the Note Insurer and such successor shall agree; PROVIDED,
HOWEVER, that such compensation may be in excess of that permitted the Master
Servicer pursuant to Section 5.08, together with other Servicing Compensation
and the Backup Servicing Fee. The Master Servicer, the Indenture Trustee and
such successor Master Servicer shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
(f) In the event the Backup Servicer, the Indenture Trustee, or
any successor master servicer incurs out-of-pocket expenses other than
Servicing Advances or Periodic Advances in connection with the transfer of
master servicing hereunder, which expenses are required to be borne by the
Master Servicer hereunder, and such expenses are not promptly reimbursed by
the Master Servicer or recoverable out of amounts reimbursable to the Master
Servicer out of the Collection Account, the Indenture Trustee shall make such
reimbursement to the applicable party out of funds in each Payment Account on
any Payment Date after all Payments to Noteholders on such Payment Date have
been made but before any distribution to the Certificateholders.
(g) In the event that the Master Servicer is terminated or
resigns hereunder, and at such time the Master Servicer has made unreimbursed
Periodic Advances or Servicing Advances out of its own funds,
51
(i) any such Periodic Advances or Servicing Advances
shall be allocated by the successor master servicer
in whole or in part to specific Mortgage Loans
which are delinquent at the time of the transfer of
master servicing, which allocation shall be based
on loan-level accounts of the portion of each
Periodic Advance or Servicing Advance which has
been funded by the Master Servicer from its own
funds consistently maintained by the former Master
Servicer, or, if no such accounts exist, then in
the successor master servicer's discretion;
(ii) following the transfer of master servicing, the
successor master servicer shall reimburse the
former Master Servicer for such Periodic Advances
and Servicing Advances in accordance with the
allocations determined in accordance with clause
(i) above only out of the proceeds of the Mortgage
Loans to which they relate and otherwise subject to
Section 5.03, or, to the extent the successor
master servicer determines any such Periodic
Advances or Servicing Advances to be a
Nonrecoverable Advances, out of any funds in the
Collection Account.
Section 7.03. WAIVER OF DEFAULTS. The Note Insurer or the Majority
Noteholders may, on behalf of all Noteholders, and subject to the consent of
the Note Insurer, waive any events permitting removal of the Master Servicer
as master servicer pursuant to this Article VII; PROVIDED, HOWEVER, that the
Majority Noteholders may not waive a default in making a required payment on
a Note without the consent of the Holder of such Note. Upon any waiver of a
past default, such default shall cease to exist, and any Servicer Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived. Notice of any such waiver shall be given by the
Indenture Trustee to the Rating Agencies and the Note Insurer.
Section 7.04. RIGHTS OF THE NOTE INSURER TO EXERCISE RIGHTS OF THE
NOTEHOLDERS. By accepting its Note, each Noteholder agrees that unless a Note
Insurer Default exists, the Note Insurer shall be deemed to be the
Noteholders for all purposes (other than with respect to the receipt of
payment on the Notes) and shall have the right to exercise all rights of the
Noteholders under this Agreement and under the Notes without any further
consent of the Noteholders, including, without limitation:
(a) the right to require the Sponsor to repurchase Mortgage
Loans pursuant to Sections 2.06 and 4.02 hereof to the extent set forth
therein;
(b) the right to give notices of breach or to terminate the
rights and obligations of the Master Servicer as master servicer pursuant to
Section 7.01 hereof and to consent to or direct waivers of Master Servicer
defaults pursuant to Section 7.03 hereof;
(c) the right to direct the actions of the Indenture
Trustee during the continuance of a Servicer Event of Default pursuant to
Sections 7.01 and 7.02 hereof;
52
(d) the right to institute proceedings against the Master
Servicer pursuant to Section 7.01 hereof;
(e) the right to remove the Indenture Trustee pursuant to
Section 6.09 of the Indenture;
(f) the right to direct foreclosures upon the failure of
the Master Servicer to do so in accordance with the provisions of Section
5.06 of this Agreement; and
(g) any rights or remedies expressly given the Majority
Noteholders.
In addition, each Noteholder agrees that, subject to Section 10.02,
unless a Note Insurer Default exists, the rights specifically enumerated
above may only be exercised by the Noteholders with the prior written consent
of the Note Insurer.
Section 7.05. INDENTURE TRUSTEE TO ACT SOLELY WITH CONSENT OF THE
NOTE INSURER. Unless a Note Insurer Default exists, the Indenture Trustee
shall not, without the Note Insurer's consent or unless directed by the Note
Insurer:
(a) terminate the rights and obligations of the Master
Servicer as master servicer pursuant to Section 7.01 hereof;
(b) agree to any amendment pursuant to Section 10.03
hereof; or
(c) undertake any litigation.
The Note Insurer may, in writing and in its sole discretion renounce
all or any of its rights under Sections 7.04, 7.05 or 7.06 or any requirement
for the Note Insurer's consent for any period of time.
Section 7.06. MORTGAGE LOANS, TRUST ESTATE AND ACCOUNTS HELD FOR
BENEFIT OF THE NOTE INSURER. (a) The Indenture Trustee shall hold the Trust
Estate and the Indenture Trustee's Mortgage Files, for the benefit of the
Noteholders and the Note Insurer, and all references in this Agreement, the
Notes and in any of the other Basic Documents to the benefit of Noteholders
shall be deemed to include the Note Insurer. The Indenture Trustee shall
cooperate in all reasonable respects with any reasonable request by the Note
Insurer for action to preserve or enforce the Note Insurer's rights or
interests under this Agreement, the Notes and in any of the Basic Documents
unless, as stated in an Opinion of Counsel addressed to the Indenture Trustee
and the Note Insurer, such action is adverse to the interests of the
Noteholders or diminishes the rights of the Noteholders or imposes additional
burdens or restrictions on the Noteholders.
(b) The Master Servicer hereby acknowledges and agrees that
it shall service the Mortgage Loans for the benefit of the Noteholders and
for the benefit of the Note Insurer, and all references in this Agreement and
in any of the other Basic Documents to the benefit of or actions on behalf of
the Noteholders shall be deemed to include the Note Insurer.
Section 7.07. NOTE INSURER DEFAULT. During the continuation of a
Note Insurer Default, rights granted or reserved to the Note Insurer
hereunder shall vest instead in the
53
Certificateholders; PROVIDED, that the Note Insurer shall be entitled to any
distributions of reimbursements as set forth in the Indenture and the
Insurance Agreement and the Note Insurer shall retain those rights under
Section 10.03 to consent to any amendment of this Agreement.
At such time as either (i) the outstanding Note Principal Balance of
the Notes has been reduced to zero or (ii) the Note Insurance Policy has been
terminated and in either case of (i) or (ii) the Note Insurer has been
reimbursed for all amounts owed under the Note Insurance Policy and the
Insurance Agreement (and the Note Insurer no longer has any obligation under the
Note Insurance Policy, except for breach thereof by the Note Insurer), then the
rights and benefits granted or reserved to the Note Insurer hereunder (including
the rights to direct certain actions and receive certain notices) shall
terminate and the Certificateholders shall be entitled to the exercise of such
rights and to receive such benefits of the Note Insurer following such
termination to the extent that such rights and benefits are applicable to the
Certificateholders..
54
ARTICLE VIII
TERMINATION
Section 8.01. TERMINATION. (a) Subject to Section 8.02, this
Agreement shall terminate upon notice to the Indenture Trustee of either: (i)
the disposition of all funds with respect to the last Mortgage Loan and the
remittance of all funds due hereunder and the payment of all amounts due and
payable to the Note Insurer and the Indenture Trustee or (ii) mutual consent
of the Owner Trustee, on behalf of the Trust, at the direction of all the
Certificateholders, the Indenture Trustee, the Master Servicer, the Note
Insurer and all Noteholders in writing.
(b) In addition, subject to Section 8.02, the Sponsor may,
at its sole option, cost and expense, terminate the Trust in accordance with
the terms of Section 10.01 of the Indenture.
(c) If on any date, the Master Servicer determines that
there are no outstanding Mortgage Loans and no other funds or assets in the
Trust Estate other than funds in the Payment Accounts, the Master Servicer
shall send a final payment notice promptly to the Indenture Trustee, who
shall forward notice to each Noteholder in accordance with Section 8.01(d).
(d) Notice of any termination, specifying the Payment Date
upon which the Trust will terminate and the Noteholders shall surrender their
Notes to the Indenture Trustee for final payment and cancellation, shall be
given promptly by the Master Servicer to the Indenture Trustee, who shall
forward the notice by letter to Noteholders mailed during the month of such
final payment before the Servicer Payment Date in such month, specifying (i)
the Payment Date upon which final payment of the Notes will be made upon
presentation and surrender of Notes at the office of the Indenture Trustee
therein designated, (ii) the amount of any such final payment and (iii) that
the Record Date otherwise applicable to such Payment Date is not applicable,
payments being made only upon presentation and surrender of the Notes at the
office of the Indenture Trustee therein specified. The obligations of the
Note Insurer hereunder shall terminate upon the deposit by the Sponsor with
the Indenture Trustee of a sum sufficient to purchase all of the Mortgage
Loans and REO Properties as set forth in Section 10.01 of the Indenture or
when the Note Principal Balance of the Notes has been reduced to zero.
(e) In the event that all of the Noteholders do not
surrender their Notes for cancellation within six (6) months after the time
specified in the above-mentioned written notice, the Indenture Trustee shall
give a second written notice to the remaining Noteholders to surrender their
Notes for cancellation and receive the final payment with respect thereto. If
within six (6) months after the second notice, all of the Notes shall not
have been surrendered for cancellation, the Indenture Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Noteholders concerning surrender of their Notes and the
cost thereof shall be paid out of the funds and other assets which remain
subject hereto. If within nine (9) months after the second notice all the
Notes shall not have been surrendered for cancellation, the
Certificateholders shall be entitled to all unclaimed funds and other assets
which remain subject hereto and the Indenture Trustee upon transfer of such
funds shall be discharged
55
of any responsibility for such funds and the Noteholders shall look only to
the Certificateholders for payment and not to the Note Insurer. Such funds
shall remain uninvested.
Section 8.02. ADDITIONAL TERMINATION REQUIREMENTS. By their
acceptance of the Notes, the Holders thereof hereby agree to appoint the
Master Servicer as their attorney in fact to: (i) adopt a plan of complete
liquidation (and the Noteholders hereby appoint the Indenture Trustee as
their attorney in fact to sign such plan) as appropriate or upon the written
request of the Note Insurer and (ii) to take such other action in connection
therewith as may be reasonably required to carry out such plan of complete
liquidation all in accordance with the terms hereof.
Section 8.03. ACCOUNTING UPON TERMINATION OF MASTER SERVICER. Upon
termination of the Master Servicer, the Master Servicer shall, at its expense:
(a) deliver to the successor master servicer or, if none
shall yet have been appointed, to the Indenture Trustee, the funds in any
Account administered by the Master Servicer;
(b) deliver to the successor master servicer or, if none
shall yet have been appointed, to the Indenture Trustee all Mortgage Files
and related documents and statements held by it hereunder and a Mortgage Loan
portfolio computer tape;
(c) deliver to the successor master servicer or, if none
shall yet have been appointed, to the Indenture Trustee a full accounting of
all funds, including a statement showing the Monthly Payments collected by it
and a statement of monies held in trust by it for the payments or charges
with respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all
acts reasonably requested in order to effect the orderly and efficient
transfer of servicing of the Mortgage Loans to the successor master servicer
and to more fully and definitively vest in such successor all rights, powers,
duties, responsibilities, obligations and liabilities of the Master Servicer
under this Agreement.
Section 8.04. RETENTION AND TERMINATION OF THE MASTER SERVICER. The
Master Servicer hereby covenants and agrees to act as Master Servicer under
this Agreement for an initial term commencing on the Closing Date and
expiring on June 30, 2000 (the "INITIAL TERM"). Thereafter, the Initial Term
shall be extendible in the sole discretion of the Note Insurer by written
notice (each, a "SERVICER EXTENSION NOTICE") of the Note Insurer (or the
Indenture Trustee if revocable written standing instructions of the Note
Insurer have been previously delivered to the Indenture Trustee), for any
specified number of three (3) month terms to the Master Servicer and the
Backup Servicer. Each such Servicer Extension Notice, if any, shall be
delivered by the Note Insurer (or the Indenture Trustee, as applicable,) to
the other parties to this Agreement. The Master Servicer hereby agrees that,
as of the date hereof and upon its receipt of any Servicer Extension Notice,
the Master Servicer shall be bound for the duration of the Initial Term and
the term covered by any such Servicer Extension Notice to act as the Master
Servicer, subject to and in accordance with the other provisions of this
Agreement. The Master Servicer agrees that if, as of the fifteenth day prior
to the last day of any such servicing term, the Master Servicer shall not
have received a Servicer Extension Notice from the Note Insurer or Indenture
Trustee, as
56
applicable, the Master Servicer shall, within five (5) days thereafter, give
written notice of such non-receipt to the Note Insurer, the Backup Servicer
and the Indenture Trustee. The failure of the Note Insurer or the Indenture
Trustee, as applicable, to deliver a Servicer Extension Notice by the end of
any such three-month term shall result in the automatic termination of the
Master Servicer, with the same effect as if a notice of termination had been
given under Section 7.01.
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ARTICLE IX
[RESERVED]
58
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. LIMITATION ON LIABILITY. (a) None of the Trust, the
Owner Trustee, the Sponsor, the Master Servicer, the Backup Servicer, the
Indenture Trustee or any of the directors, officers, employees or agents of
such Persons shall be under any liability to the Trust, the Noteholders or
the Note Insurer for any action taken, or for refraining from the taking of
any action, in good faith pursuant to this Agreement, or for errors in
judgment; PROVIDED, HOWEVER, that this provision shall not protect the Trust,
the Owner Trustee, the Sponsor, the Master Servicer, the Backup Servicer, the
Indenture Trustee or any such Person against liability for any breach of
warranties or representations made herein by such party, or against any
specific liability imposed on each such party pursuant to this Agreement or
against any liability which would otherwise be imposed upon such party by
reason of willful misfeasance, bad faith or negligence in the performance of
duties or by reason of failure to perform its obligations or duties
hereunder. The Trust, the Owner Trustee, the Sponsor, the Master Servicer,
the Backup Servicer, the Indenture Trustee and any director, officer,
employee or agent of such Person may rely in good faith on any document of
any kind which, prima facie, is properly executed and submitted by any
appropriate Person respecting any matters arising hereunder.
(b) It is expressly understood and agreed by the parties
hereto that (i) this Agreement is executed and delivered by Wilmington Trust
Company, not individually or personally but solely as Owner Trustee under the
Trust Agreement, in the exercise of the powers and authority conferred and
vested in it under the Trust Agreement, (ii) each of the representations,
undertakings and agreements herein made on the part of the Trust is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Trust, (iii) nothing herein contained shall be construed as creating
any liability on Wilmington Trust Company, individually or personally, to
perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (iv) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Trust or be liable for the
breach or failure of any obligation, representation, warranty or covenant
made or undertaken by the Trust under this Agreement or any other related
documents.
Section 10.02. ACTS OF NOTEHOLDERS. (a) Except as otherwise
specifically provided herein, whenever Noteholder action, consent or approval
is required under this Agreement, such action, consent or approval shall be
deemed to have been taken or given on behalf of, and shall be binding upon,
all Noteholders if the Majority Noteholders or the Note Insurer agrees to
take such action or give such consent or approval.
(b) The death or incapacity of any Noteholder shall not
operate to terminate this Agreement or the Trust, nor entitle such
Noteholder's legal representatives or heirs to claim an accounting or to take
any action or proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
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(c) No Noteholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Notes, be construed so as to constitute the Noteholders from time to time as
partners or members of an association; nor shall any Noteholder be under any
liability to any third person by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
Section 10.03. AMENDMENT. (a) This Agreement may be amended from
time to time by the Owner Trustee, on behalf of the Trust, the Master
Servicer, the Sponsor, the Backup Servicer and the Indenture Trustee by
written agreement, upon the prior written consent of the Note Insurer,
without notice to or consent of the Noteholders to cure any ambiguity, to
correct or supplement any provisions herein, to comply with any changes in
the Code, or to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with
the provisions of this Agreement; PROVIDED, HOWEVER, that such action shall
not, as evidenced by (i) an Opinion of Counsel, at the expense of the party
requesting the change, delivered to the Indenture Trustee or (ii) a letter
from each Rating Agency confirming that such action will not result in the
reduction, qualification or withdrawal of the then-current ratings on the
Notes, adversely affect in any material respect the interests of any
Noteholder. The Indenture Trustee shall give prompt written notice to the
Rating Agencies of any amendment made pursuant to this Section 10.03.
(b) This Agreement may be amended from time to time by the
Owner Trustee, on behalf of the Trust, the Master Servicer, the Sponsor, the
Backup Servicer and the Indenture Trustee, with the consent of the Note
Insurer, the Noteholders representing at least 51% of the outstanding
Principal Balance of the Notes of each affected Class and all of the
Certificateholders; PROVIDED, HOWEVER, that no such amendment shall reduce in
any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be paid on any Class of Notes without
the consent of the Holders of such Class of Notes or reduce the percentage
for the Holders of which are required to consent to any such amendment
without the consent of the Holders of 100% of such Class of Notes affected
thereby.
(c) It shall not be necessary for the consent of Holders
under this Section 10.03 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof.
(d) In executing, or accepting the additional trusts
created by, any supplemental indenture permitted by Article IX of the
Indenture or the modifications thereby of the trusts created by the
Indenture, the Indenture Trustee shall be entitled to receive, and (subject
to Section 6.01 of the Indenture) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by the Indenture. The Indenture Trustee
may, but shall not be obligated to, enter into any such supplemental
indenture that affects the Indenture Trustee's own rights, duties or
immunities under the Indenture or otherwise. The Master Servicer, on behalf
of the Trust, shall cause executed copies of any supplemental indentures to
be delivered to the Note Insurer and the Rating Agencies.
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Section 10.04. RECORDATION OF AGREEMENT. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices
for real property records in all of the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages
are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Master Servicer at the
Noteholders' expense on direction and at the expense of Majority Noteholders
requesting such recordation, but only when accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially
affects the interests of the Noteholders or is necessary for the
administration or servicing of the Mortgage Loans.
Section 10.05. DURATION OF AGREEMENT. This Agreement shall continue
in existence and effect until terminated as herein provided.
Section 10.06. NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given
when delivered to (i) in the case of the Master Servicer, Accredited Home
Lenders, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Director of Operations with a copy to General Counsel; (ii)
in the case of the Backup Servicer, Advanta Mortgage Corp. USA, ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: Senior Vice President
Loan Servicing; (iii) in the case of the Trust, Accredited Mortgage Loan
Trust 2000-1, c/o the Owner Trustee at its Corporate Trust Office, Attention:
Corporate Trust Administration; (iv) in the case of the Indenture Trustee,
Norwest Bank Minnesota, National Association, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Services, Accredited
Series 2000-1, with a copy to the following address: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate
Trust Services, Accredited Series 2000-1; (v) in the case of the Sponsor,
Accredited Home Lenders, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Administration; (vi) in the case
of the Underwriter, ▇▇▇▇▇▇ Brothers Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ World
Financial Center, New York, New York 10285, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇;
(vii) in the case of the Note Insurer, Financial Security Assurance Inc., ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Surveillance Department (in
each case in which notice or other communication to the Note Insurer refers
to an Event of Default, a Servicer Event of Default or a claim on the Note
Insurance Policy or with respect to which failure on the part of the Note
Insurer to respond shall be deemed to constitute consent or acceptance, then
a copy of such notice or other communication should also be sent to the
attention of each of the General Counsel and the Head- Financial Guaranty
Group, and shall be marked to indicate "URGENT MATERIAL ENCLOSED"); (viii) in
the case of Standard & Poor's Rating Services, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Residential Mortgage Surveillance Group; (ix) in the
case of ▇▇▇▇▇'▇ Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇; and (x) in the case of the Noteholders, as
set forth in the Note Register. Any such notices shall be deemed to be
effective with respect to any party hereto upon the receipt of such notice by
such party, except that notices to the Noteholders shall be effective upon
mailing or personal delivery.
Section 10.07. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no
61
way affect the validity or enforceability of the other covenants, agreements,
provisions or terms of this Agreement.
Section 10.08. NO PARTNERSHIP. Nothing herein contained shall be
deemed or construed to create a co-partnership or joint venture between the
parties hereto and the services of the Master Servicer shall be rendered as
an independent contractor and not as agent for the Noteholders.
Section 10.09. COUNTERPARTS. This Agreement may be executed in one
or more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an
original; such counterparts, together, shall constitute one and the same
agreement.
Section 10.10. SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the Trust, the Master Servicer, the Backup
Servicer, the Sponsor, the Indenture Trustee and the Noteholders and their
respective successors and permitted assigns.
Section 10.11. HEADINGS. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
Section 10.12. NO PETITION. The Master Servicer and the Backup
Servicer, by entering into this Agreement, hereby covenant and agree that
they will not at any time institute against the Sponsor or the Trust, or join
in any institution against the Sponsor or the Trust of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy law in
connection with any obligations relating to the Certificates, the Notes, this
Agreement or any of the other Basic Documents.
This Section 10.12 will survive for one year and one day following the
termination of this Agreement.
Section 10.13. THIRD PARTY BENEFICIARY. The parties agree that each
of the Owner Trustee and the Note Insurer is intended and shall have all
rights of a third-party beneficiary of this Agreement.
Section 10.14. INTENT OF THE PARTIES. It is the intent of the
parties hereto and Noteholders that, for federal income taxes, state and
local income or franchise taxes and other taxes imposed on or measured by
income, the Notes be treated as debt. The parties to this Agreement and the
Holder of each Note, by acceptance of its Note, and each Beneficial Owner
thereof, agree to treat, and to take no action inconsistent with the
treatment of, the related Notes in accordance with the preceding sentence for
purposes of federal income taxes, state and local income and franchise taxes
and other taxes imposed on or measured by income.
Section 10.15. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF NEW YORK.
62
(b) THE TRUST, THE MASTER SERVICER, THE SPONSOR, THE BACKUP
SERVICER AND THE INDENTURE TRUSTEE HEREBY SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS
SET FORTH IN SECTION 10.06 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S.
MAILS, POSTAGE PREPAID. THE TRUST, THE SPONSOR, THE MASTER SERVICER, THE
BACKUP SERVICER AND THE INDENTURE TRUSTEE EACH HEREBY WAIVE ANY OBJECTION
BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 10.15
SHALL AFFECT THE RIGHT OF THE TRUST, THE SPONSOR, THE MASTER SERVICER, THE
BACKUP SERVICER OR THE INDENTURE TRUSTEE TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR AFFECT ANY OF THEIR RIGHTS TO BRING ANY ACTION OR
PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(c) THE TRUST, THE SPONSOR, THE MASTER SERVICER, THE BACKUP
SERVICER AND THE INDENTURE TRUSTEE EACH HEREBY WAIVES ANY RIGHT TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE WILL BE RESOLVED IN A
BENCH TRIAL WITHOUT A JURY.
[Remainder of Page Intentionally Left Blank]
63
IN WITNESS WHEREOF, the Master Servicer, the Backup Servicer, the
Trust, the Indenture Trustee and the Sponsor have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
ACCREDITED HOME LENDERS, INC.,
as Sponsor
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: General Counsel
ACCREDITED MORTGAGE LOAN
TRUST 2000-1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner
Trustee under the Trust Agreement
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title:
ACCREDITED HOME LENDERS, INC.,
as Master Servicer
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: General Counsel
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Indenture Trustee
By: /s/ ▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Assistant Vice President
ADVANTA MORTGAGE CORP. USA,
as Backup Servicer
By: /s/ ▇▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇
Title:
[Signature Page to Sale and Servicing Agreement]
SCHEDULE I
MORTGAGE LOAN SCHEDULE
I-1
APPENDIX I
DEFINED TERMS
[See Appendix I to Indenture]
