EXHIBIT 99.1
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CWHEQ, Inc.
Depositor
Countrywide Home Loans, Inc.
Sponsor and Master Servicer
CWHEQ Revolving Home Equity Loan Trust,
Series 2005-M
the Trust
JPMorgan Chase Bank, N.A.
Indenture Trustee
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Sale and Servicing Agreement
Dated as of December 29, 2005
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Revolving Home Equity Loan Asset Backed Notes
Series 2005-M
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Table of Contents
Page
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ARTICLE I
Definitions and Other Provisions of General Application
Section 1.01. Definitions. ............................................................................1
Section 1.02. Other Terms. ............................................................................1
Section 1.03. Rules of Construction....................................................................1
Section 1.04. Interest Calculations....................................................................3
ARTICLE II
Conveyance of Mortgage Loans; Tax Treatment
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to Fund Advances
Under Credit Line Agreements...........................................................3
Section 2.02. Acceptance by Indenture Trustee. ........................................................8
Section 2.03. Representations, Warranties, and Covenants Regarding the Master Servicer. ..............10
Section 2.04. Representations and Warranties Regarding the Mortgage Loans; Retransfer
of Certain Mortgage Loans.............................................................11
Section 2.05. Covenants of the Depositor. ............................................................14
Section 2.06. Transfers of Mortgage Loans at Election of Transferor.................................. 14
Section 2.07. Retransfers and Transfer Deficiencies. .................................................16
Section 2.08. Tax Reporting.......................................................................... 16
Section 2.09. Representations and Warranties of the Depositor........................................ 17
Section 2.10. Substitution and Repurchase Opinions. ..................................................17
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. The Master Servicer.................................................................... 18
Section 3.02. Collection of Certain Mortgage Loan Payments; Establishment of Accounts................ 22
Section 3.03. Deposits to Payment Account. ...........................................................24
Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses. .........................24
Section 3.05. Assumption and Modification Agreements................................................. 25
Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage Loans........ 25
Section 3.07. Indenture Trustee to Cooperate. ........................................................27
Section 3.08. Servicing Compensation; Payment of Certain Expenses by Master Servicer................. 29
Section 3.09. Annual Statement as to Compliance...................................................... 29
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Section 3.10. Annual Servicing Report................................................................ 29
Section 3.11. Access to Certain Documentation and Information Regarding the Mortgage Loans. ..........29
Section 3.12. Maintenance of Certain Servicing Insurance Policies. ...................................30
Section 3.13. Reports to the Securities and Exchange Commission.......................................30
Section 3.14. Filing Obligations. ....................................................................30
Section 3.15. Tax Treatment. .........................................................................32
ARTICLE IV
Servicing Certificate
Section 4.01. Servicing Certificate...................................................................32
Section 4.02. Acknowledgement and Cooperation. .......................................................35
Section 4.03. Optional Advances of the Master Servicer. ..............................................35
Section 4.04. Statements to Noteholders. .............................................................35
ARTICLE V
The Master Servicer, the Sponsor, and the Depositor
Section 5.01. Liability of the Sponsor, the Master Servicer, and the Depositor........................37
Section 5.02. Merger or Consolidation of, or Assumption of the Obligations of,
the Master Servicer or the Depositor..................................................37
Section 5.03. Limitation on Liability of the Master Servicer and Others...............................38
Section 5.04. Master Servicer Not to Resign. .........................................................38
Section 5.05. Delegation of Duties....................................................................39
Section 5.06. Indemnification by the Master Servicer. ................................................39
Section 5.07. Credit Enhancer's Rights Regarding Actions, Proceedings, or Investigations. ............40
ARTICLE VI
Servicing Termination
Section 6.01. Events of Servicing Termination.........................................................40
Section 6.02. Indenture Trustee to Act; Appointment of Successor. ....................................42
Section 6.03. Notification to Noteholders and the Transferor. ........................................43
ARTICLE VII
Termination
Section 7.01. Termination.............................................................................44
Section 7.02. Additional Termination Requirements. ...................................................44
ARTICLE VIII
Miscellaneous Provisions
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Section 8.01. Amendment. .............................................................................45
Section 8.02. Governing Law. .........................................................................46
Section 8.03. Notices. ...............................................................................46
Section 8.04. Severability of Provisions. ............................................................48
Section 8.05. Assignment. ............................................................................48
Section 8.06. Third-Party Beneficiaries. .............................................................48
Section 8.07. Counterparts; Electronic Delivery. .....................................................48
Section 8.08. Effect of Headings and Table of Contents. ..............................................48
Exhibit A - Mortgage Loan Schedule.................................................................A-1
Exhibit B - Letter of Representations..............................................................B-1
Exhibit C - Form of Request For Release............................................................C-1
Exhibit D - Form of Transfer Document..............................................................D-1
Annex 1 Definitions........................................................................▇▇▇-1-1
Annex 2 Adoption Annex.....................................................................▇▇▇-2-1
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This Sale and Servicing Agreement, dated as of December 29, 2005,
among CWHEQ, Inc., as depositor, Countrywide Home Loans, Inc., as sponsor and
master servicer, CWHEQ Revolving Home Equity Loan Trust, Series 2005-M, and
JPMorgan Chase Bank, N.A., as Indenture Trustee,
Witnesseth That:
The parties agree as follows:
ARTICLE I
Definitions and Other Provisions of General Application
Section 1.01. Definitions.
Unless the context requires a different meaning, capitalized terms
are used in this Agreement as defined in Annex 1.
Section 1.02. Other Terms.
Capitalized terms used in this Agreement that are not otherwise
defined have the meanings given to them in the Indenture. Defined terms that
are used only in one section or only in another definition may be omitted from
the list of defined terms in Annex 1. Defined terms used in this Agreement are
sometimes defined after their first use without a reference such as "(as
hereinafter defined)."
Section 1.03. Rules of Construction.
Except as otherwise expressly provided in this Agreement or unless
the context clearly requires otherwise:
(a) Defined terms include, as appropriate, all genders and the plural
as well as the singular.
(b) References to designated articles, sections, subsections,
exhibits, and other subdivisions of this Agreement, such as "Section 6.12
(a)," refer to the designated article, section, subsection, exhibit, or other
subdivision of this Agreement as a whole and to all subdivisions of the
designated article, section, subsection, exhibit, or other subdivision. The
exhibits and other attachments to this Agreement are a part of this Agreement.
The words "herein," "hereof," "hereto," "hereunder," and other words of
similar import refer to this Agreement as a whole and not to any particular
article, section, exhibit, or other subdivision of this Agreement.
(c) Any term that relates to a document or a statute, rule, or
regulation includes any amendments, modifications, supplements, or any other
changes that may have occurred since the document, statute, rule, or
regulation came into being, including changes that occur after the date of
this Agreement. References to law are not limited to statutes. References to
statutes include any rules or regulations promulgated under them by a
governmental authority charged
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with the administration of the statute. Any reference to any person includes
references to its successors and assigns.
(d) Any party may execute any of the requirements under this
Agreement either directly or through others, and the right to cause something
to be done rather than doing it directly shall be implicit in every
requirement under this Agreement. Unless a provision is restricted as to time
or limited as to frequency, all provisions under this Agreement are implicitly
available from time to time.
(e) The term "including" and all its variations mean "including but
not limited to." Except when used in conjunction with the word "either," the
word "or" is always used inclusively (for example, the phrase "A or B" means
"A or B or both," not "either A or B but not both").
(f) A reference to "a [thing]" or "any [of a thing]" does not imply
the existence or occurrence of the thing referred to even though not followed
by "if any," and "any [of a thing]" is any and all of it. A reference to the
plural of anything as to which there could be either one or more than one does
not imply the existence of more than one (for instance, the phrase "the
obligors on a note" means "the obligor or obligors on a note"). "Until
[something occurs]" does not imply that it must occur, and will not be
modified by the word "unless." The word "due" and the word "payable" are each
used in the sense that the stated time for payment has passed. The word
"accrued" is used in its accounting sense, i.e., an amount paid is no longer
accrued. In the calculation of amounts of things, differences and sums may
generally result in negative numbers, but when the calculation of the excess
of one thing over another results in zero or a negative number, the
calculation is disregarded and an "excess" does not exist. Portions of things
may be expressed as fractions or percentages interchangeably. The word "shall"
is used in its imperative sense, as for instance meaning a party agrees to
something or something must occur or exist.
(g) All accounting terms used in an accounting context and not
otherwise defined, and accounting terms partly defined in this Agreement, to
the extent not completely defined, shall be construed in accordance with
generally accepted accounting principles in the United States. To the extent
that the definitions of accounting terms in this Agreement are inconsistent
with their meanings under generally accepted accounting principles, the
definitions in this Agreement shall control. Capitalized terms used in this
Agreement without definition that are defined in the Uniform Commercial Code
of the relevant jurisdiction are used in this Agreement as defined in that
Uniform Commercial Code.
(h) In the computation of a period of time from a specified date to a
later specified date or an open-ended period, the words "from" and "beginning"
mean "from and including," the word "after" means "from but excluding," the
words "to" and "until" mean "to but excluding," and the word "through" means
"to and including." Likewise, in setting deadlines or other periods, "by"
means "on or before." The words "preceding," "following," and words of similar
import, mean immediately preceding or following. References to a month or a
year refer to calendar months and calendar years.
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(i) Any reference to the enforceability of any agreement against a
party means that it is enforceable against the party in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, and other
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
Section 1.04. Interest Calculations.
All calculations of interest on the Asset Balance of a Mortgage Loan
under this Agreement are on a daily basis using a 365-day year. All
calculations of interest on the Notes are on the basis of the actual number of
days in an Interest Period and a year of 360 days. The calculation of the
Servicing Fee is on the basis of a 360-day year consisting of twelve 30-day
months. All dollar amounts calculated under this Agreement are rounded to the
nearest cent with one-half of one cent being rounded down.
ARTICLE II
Conveyance of Mortgage Loans; Tax Treatment
Section 2.01. Conveyance of Mortgage Loans; Retention of
Obligation to Fund Advances Under Credit Line Agreements.
(a) Concurrently with the execution and delivery of this Agreement,
the Depositor hereby transfers to the Trust without recourse (subject to
Sections 2.02 and 2.04) all of its right, title, and interest in
(i) each Initial Mortgage Loan, including its Asset Balance
(including all Additional Balances), the related Mortgage File, all
property that secures the Mortgage Loan, and all collections
received on it after the Cut-off Date (excluding payments due by the
Cut-off Date);
(ii) property that secured an Initial Mortgage Loan that is
acquired by foreclosure or deed in lieu of foreclosure;
(iii) the Depositor's rights under the Purchase Agreement;
(iv) the Depositor's rights under the hazard insurance
policies;
(v) all rights under any guaranty executed in connection with a
Mortgage Loan;
(vi) all other assets included or to be included in the Trust
for the benefit of the Secured Parties; and
(vii) all proceeds of the foregoing.
This transfer to the Trust is to the Owner Trustee, on behalf of the Trust,
and each reference in this Agreement to this transfer shall be construed
accordingly. In addition, by the Closing Date, the Depositor shall cause the
Credit Enhancer to deliver the Policy to the Indenture Trustee for the benefit
of the Holders of the Insured Notes.
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(b) Additional Transfers; Conditions Precedent to Subsequent
Additions.
(i) The Depositor may sell to the Trust Additional Home Equity
Loans on any Subsequent Closing Date designated by the Depositor by
the Latest Subsequent Closing Date. The Depositor shall notify the
Owner Trustee, the Indenture Trustee, the Credit Enhancer, and each
Rating Agency of its designation of a Subsequent Closing Date at
least one Business Day in advance. On each Subsequent Closing Date
the Depositor shall deliver a Transfer Document to the Owner Trustee
and the Officer's Certificate referred to in Section 2.01(b)(ii)(I)
to the Owner Trustee, the Indenture Trustee, and the Credit
Enhancer, and the Indenture Trustee shall pay, on behalf of the
Trust, to the order of the Depositor, from the applicable Additional
Loan Account, and set aside in an account under its control for the
benefit of the Depositor for later delivery to the Depositor, the
purchase price in an amount equal to the Cut-off Date Asset Balance
specified in the Transfer Document, up to the amount of funds
remaining in that Additional Loan Account.
Upon delivery of the Transfer Document and payment of the
purchase price, the Depositor hereby transfers to the Trust without
recourse (subject to Sections 2.02 and 2.04) all of its right, title,
and interest in each Additional Home Equity Loan identified in the
Transfer Document, including its Asset Balance (including all
Additional Balances) and all collections received on it after the
relevant Subsequent Cut-off Date (excluding payments due by the
Subsequent Cut-off Date) and all proceeds of the foregoing. This
transfer to the Trust is to the Owner Trustee, on behalf of the
Trust, and each reference in this Agreement to this transfer shall be
construed accordingly.
The Depositor shall also deliver to the Owner Trustee, the
Indenture Trustee, and the Credit Enhancer by the Opinion Delivery
Date an opinion of counsel relating to each Subsequent Closing Date
to the effect that a court in a bankruptcy context addressing the
transfer of the Additional Home Equity Loans would characterize the
transfer as a sale rather than as a secured lending and an opinion of
counsel relating to the perfection of security interest in the
Additional Home Equity Loans substantially in the form delivered on
the Closing Date. In addition, the Depositor shall also deliver to
the Owner Trustee, the Indenture Trustee, and the Credit Enhancer an
Opinion of Counsel to the effect that the purchase of Additional Home
Equity Loans will not result in the imposition of the tax on
prohibited transactions on the Trust or contributions after the
Startup Date, as defined in Sections 860F(a)(2) and 860G(d) of the
Code, respectively or cause any REMIC created under the Trust
Agreement to fail to qualify as a REMIC. On the day the revised
Mortgage Loan Schedule and the opinions of counsel are delivered, the
Indenture Trustee shall deliver, on behalf of the Trust, to the order
of the Depositor the funds for the purchase price for the Additional
Home Equity Loans set aside on the relevant Subsequent Closing Date,
and any earnings on those funds since the relevant Subsequent Closing
Date.
(ii) The obligation of the Indenture Trustee on behalf of the
Trust to pay the purchase price from the relevant Additional Loan
Account for the benefit of the
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Depositor and the acceptance by the Owner Trustee of the transfer of
the Additional Home Equity Loans and the other property and rights
relating to them on the related Subsequent Closing Date are subject
to the satisfaction of each of the following conditions by the
Subsequent Closing Date:
(A) the Depositor shall have delivered to the Owner
Trustee a properly completed and executed Transfer Document;
(B) as of the related Subsequent Closing Date, neither the
Sponsor nor the Depositor is insolvent nor shall either of them
be made insolvent by the transfer of the Additional Home Equity
Loans nor is either of them aware of any pending insolvency;
(C) the addition shall not result in a material adverse
federal tax consequence to the Trust, the Transferor, or the
Noteholders;
(D) the Subsequent Closing Date is not after the Latest
Subsequent Closing Date;
(E) neither the Depositor nor the Trust shall have been
advised in writing by any Rating Agency that the transfer of
the Additional Home Equity Loans would result in a reduction or
withdrawal of the Rating Agency's then current rating of the
Notes (without regard to the Policy);
(F) the Sponsor represents and warrants that on the
Subsequent Closing Date each of the representations and
warranties in Section 2.04(a) by virtue of repetition of
Section 3.02(a) of the Purchase Agreement (excluding clauses
(18), (30), (32), (33), and (34) of Section 3.02(a) of the
Purchase Agreement) are true with respect to the Additional
Home Equity Loans;
(G) the Sponsor represents and warrants that the addition
of the Additional Home Equity Loans will not result in a
significant variance as of the Subsequent Closing Date from the
Mortgage Loan pool characteristics covered by the
representations and warranties in Section 3.02(a)(18), (30),
(32), (33), and (34) of the Purchase Agreement after taking
into account the addition of the Additional Home Equity Loans;
(H) as of the relevant Subsequent Closing Date, the
Sponsor is not aware of any mechanics' or similar liens or
claims that have been filed for work, labor, or material
affecting the related Mortgaged Property that are, or may be,
liens prior or equal to the lien of the related mortgage,
except liens that are fully insured against by the title
insurance policy referred to in Section 3.02(16) of the
Purchase Agreement; and
(I) the Depositor shall have delivered or caused the
Sponsor to deliver to the Owner Trustee, the Indenture Trustee,
and the Credit Enhancer an Officer's Certificate confirming the
satisfaction of each of these conditions precedent.
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Neither the Owner Trustee nor the Indenture Trustee need investigate or
otherwise verify compliance with these conditions, except for its receipt of
the documents specified to be delivered to it in Section 2.01(b)(i), and they
may rely on the Officer's Certificate specified in Section 2.01(b)(ii)(I).
(c) Additional Balances; Future Fundings. Additional Balances shall
be part of the Asset Balance and are hereby transferred to the Trust on the
Closing Date for the Initial Mortgage Loans and on the relevant Subsequent
Closing Date for the Additional Home Equity Loans pursuant to this Section
2.01, and therefore are part of the Trust property. Neither the Owner Trustee
nor the Trust nor the Indenture Trustee assumes the obligation under any
Credit Line Agreement that provides for the funding of future advances to the
mortgagor under it, and neither the Trust nor the Owner Trustee nor the
Indenture Trustee may fund these future advances.
(d) Delayed Delivery. In connection with the transfer under Section
2.01(a) by the Depositor, the Depositor shall effect delivery of the Mortgage
Loan Schedule to the Trust and the Indenture Trustee by the Closing Date and
delivery of the Initial Mortgage Files to the Trust, and the Trust shall
deliver them to the Indenture Trustee,
(i) no later than the Closing Date, with respect to no less
than 50% of the Initial Mortgage Loans,
(ii) no later than the twentieth day after the Closing Date,
with respect to no less than 40% of the Initial Mortgage Loans in
addition to those delivered on the Closing Date, and
(iii) within thirty days following the Closing Date, with
respect to the remaining Initial Mortgage Loans.
In connection with the transfers by the Depositor under Section
2.01(b), the Depositor shall effect delivery of a revised Mortgage Loan
Schedule reflecting the addition of the Additional Home Equity Loans to the
Indenture Trustee within 15 days following the relevant Subsequent Closing
Date and of the relevant Initial Mortgage Files to the Custodian,
(A) no later than the relevant Subsequent Closing Date,
with respect to no less than 10% of the relevant Additional
Home Equity Loans, and
(B) within twenty days following the relevant Subsequent
Closing Date, with respect to the remaining relevant Additional
Home Equity Loans.
In lieu of delivery of original documentation, the Depositor may
deliver documents that have been imaged optically on delivery of an opinion of
counsel to the Indenture Trustee and the Credit Enhancer that the imaged
documents are enforceable to the same extent as the originals and do not
impair the enforceability of the transfer to the Trust of the Mortgage Loans,
if the retention of the imaged documents in the delivered format will not
result in a reduction in the then current rating of the Notes without regard
to the Policy.
(e) ▇▇▇▇ Records. The Sponsor hereby confirms to the Owner Trustee
and the Indenture Trustee, on behalf of itself and any other Seller, that each
Seller has caused the
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portions of the Electronic Ledgers relating to the Initial Mortgage Loans to
be clearly and unambiguously marked, and has made the appropriate entries in
its general accounting records, to indicate that the Initial Mortgage Loans
have been transferred to the Trust at the direction of the Depositor. The
Master Servicer hereby confirms to the Owner Trustee and the Indenture Trustee
that it has clearly and unambiguously made appropriate entries in its general
accounting records indicating that those Initial Mortgage Loans constitute
part of the Trust and are serviced by it on behalf of the Trust in accordance
with this Agreement.
By the relevant Subsequent Closing Date, the Sponsor shall cause the
portions of the Electronic Ledgers relating to the Additional Home Equity
Loans to be clearly and unambiguously marked, and shall make appropriate
entries in its general accounting records, to indicate that those Additional
Home Equity Loans have been transferred to the Trust at the direction of the
Depositor. By the relevant Subsequent Closing Date, the Master Servicer shall
clearly and unambiguously make appropriate entries in its general accounting
records indicating that those Additional Home Equity Loans constitute part of
the Trust and are serviced by it on behalf of the Trust in accordance with
this Agreement.
(f) UCC Filings. The Depositor and the Trust agree (subject to
Section 2.01(h)) to effect any actions and execute any documents necessary to
perfect and protect the Trust's, the Indenture Trustee's and the Secured
Parties' interests in each Cut-off Date Asset Balance and Additional Balances
and their proceeds, including filing all necessary Continuation Statements for
the UCC1 Financing Statements filed in the State of Delaware (which shall have
been filed by the Closing Date) describing the Cut-off Date Asset Balances and
Additional Balances and naming the Depositor as debtor and the Trust as
secured party or naming the Trust as debtor and the Indenture Trustee as
secured party and any amendments to UCC1 Financing Statements required to
reflect a change in the UCC or in the name or organizational structure of the
Depositor or the Trust or the filing of any additional UCC1 Financing
Statements due to the change in the state of organization of the Depositor or
the Trust (within 30 days of any event necessitating the filing).
(g) Sponsor Rating Downgrade. If either an Event of Servicing
Termination has occurred and not been waived or the long term senior unsecured
corporate debt rating of Countrywide Home Loans, Inc. falls below "BBB" by
Standard & Poor's or "Baa2" by ▇▇▇▇▇'▇, then as promptly as practicable but in
any case within 90 days of the event, the Master Servicer shall, at its
expense, either
(x) request that the Indenture Trustee deliver to it the
original Assignment of Mortgage previously delivered to the Indenture
Trustee pursuant to Section 2.01(d) and then record the Assignment of
Mortgage in favor of the Indenture Trustee (which may be a blanket
assignment if permitted by applicable law) in the appropriate real
property or other records,
(y) deliver to the Indenture Trustee an Opinion of Counsel
addressed to the Indenture Trustee and the Credit Enhancer to the
effect that recording is not required to protect the Indenture
Trustee's interest in the related Mortgage Loan or, in case a court
should recharacterize the sale of the Mortgage Loans as a financing,
to perfect a first
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priority Security Interest in favor of the Indenture Trustee in the
related Mortgage Loan, which Opinion of Counsel also shall be
reasonably acceptable to each of the Rating Agencies (as evidenced
in writing) and the Credit Enhancer, or
(z) cause the MERS(R) System to indicate (and provide
evidence to the Indenture Trustee that it has done so) that the
Mortgage Loans have been assigned by the Trust to the Indenture
Trustee in accordance with this Agreement for the benefit of the
Noteholders and the Credit Enhancer by including (or deleting, in the
case of Mortgage Loans that are repurchased in accordance with this
Agreement) in the MERS computer files (a) the appropriate code that
identifies the Indenture Trustee in the field for identifying the
assignee and (b) the appropriate code that has been assigned to
identify the Notes to the MERS(R) System in the field "Pool Field"
identifying the Notes issued in connection with the Mortgage Loans.
(h) Sale Treatment. The transfer of the Mortgage Loans is a sale by
each Seller to the Depositor and by the Depositor to the Trust of all of each
Seller's and then all the Depositor's interest in the Mortgage Loans and other
property described above. From the time the Notes are issued until such time
as all or a portion of the Notes are sold to one or more unaffiliated parties,
each Seller will report the transfer of the Mortgage Loans and the related
Additional Balances to the Depositor as a transfer of assets in exchange for
beneficial interests in the form of asset-backed securities and servicing
rights. If the transfer were to be characterized as a transfer for security
and not as a sale, however, then the Depositor hereby grants to the Trust a
Security Interest in all of the Depositor's right, title, and interest in the
Mortgage Loans whether existing now or in the future, all monies due or to
become due on the Mortgage Loans, and all their proceeds; and this Agreement
shall constitute a Security Agreement under applicable law.
Section 2.02. Acceptance by Indenture Trustee.
(a) On the Closing Date, the Custodian shall execute and deliver to
the Depositor, the Master Servicer, and the Sponsor (with a copy to the Credit
Enhancer) the Initial Certification pursuant to the Custodial Agreement. If
Mortgage Files with respect to either Initial Mortgage Loans have been
delivered after the Closing Date or Additional Home Equity Loans have been
delivered after the Subsequent Closing date pursuant to Section 2.01(d), the
Custodian shall execute and deliver to the Depositor, the Master Servicer, and
the Sponsor (with a copy to the Credit Enhancer) a Delay Delivery
Certification pursuant to the Custodial Agreement within the period specified
in the Custodial Agreement. Within 180 days after the Closing Date, Custodian
shall deliver to the Depositor, the Master Servicer, and the Sponsor (with a
copy to the Credit Enhancer) a Final Certification pursuant to the Custodial
Agreement. The Sponsor shall correct any defect noted in the Final
Certification within 90 days of its receipt and in no event later than 270
days after the Closing Date.
(b) Upon the satisfaction of the requirements of Section 2.07, all
interest of the Trust in a Mortgage Loan shall automatically be retransferred
no later than the 270th day after the Closing Date without recourse,
representation, or warranty to the Sponsor and the Asset Balance of the
Mortgage Loan shall be deducted from the Loan Pool Balance, if
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(i) the Indenture Trustee does not receive the Mortgage File
for any Mortgage Loan as required by Section 2.01(d),
(ii) the time to correct any defect in the Mortgage Loan noted
on the Final Certification has expired,
(iii) the Trust ever incurs any loss on the Mortgage Loan
because any document in its Mortgage File is defective, or
(iv) an Assignment of Mortgage to the Indenture Trustee has not
been recorded in accordance with Section 2.01(g) and the Mortgage
Loan is not registered on the MERS(R) System.
Subject to the prior satisfaction of the requirements of Section
2.07, the Owner Trustee shall execute any documents of transfer presented by
the Sponsor, without recourse, representation, or warranty, and take any other
actions reasonably requested by the Sponsor to effect the transfer by the
Trust of the Defective Mortgage Loan pursuant to this Section as promptly as
practical.
The sole remedy of the Secured Parties, the Transferor, the Owner
Trustee, and the Indenture Trustee against the Sponsor for the transfer of a
Defective Mortgage Loan to the Trust is the Sponsor's obligation to accept a
transfer of a Defective Mortgage Loan and to convey an Eligible Substitute
Mortgage Loan or to make a deposit of any Transfer Deposit Amount into the
Collection Account in accordance with Section 2.07. The foregoing shall not
preclude the Credit Enhancer from pursuing any independent remedies or rights
it has against the Sponsor under the Insurance Agreement, the Indenture and
the Trust Agreement.
Promptly following the transfer of any Defective Mortgage Loan from
the Trust pursuant to this Section or Section 2.07, the Master Servicer shall
amend the Mortgage Loan Schedule, deliver the amended Mortgage Loan Schedule
to the Indenture Trustee, and make appropriate entries in its general account
records to reflect the transfer. Following the retransfer, the Master Servicer
shall appropriately ▇▇▇▇ its records to indicate that it is no longer
servicing the Mortgage Loan on behalf of the Trust. The Sponsor shall
appropriately ▇▇▇▇ its Electronic Ledger and make appropriate entries in its
general account records to reflect the transfer promptly following the
transfer.
(c) The Sponsor shall deliver to the Indenture Trustee any documents
required to be held by the Indenture Trustee in accordance with Section 2.01
with respect to any Eligible Substitute Mortgage Loans. The Master Servicer
shall determine the Transfer Deposit Amount in any Collection Period during
which the Sponsor substitutes Eligible Substitute Mortgage Loans and the
Sponsor shall deposit that amount in the Collection Account at the time of
substitution. All amounts received on the Eligible Substitute Mortgage Loans
during the Collection Period in which the circumstances giving rise to their
transfer to the Trust occur shall not be a part of the Trust and shall not be
deposited by the Master Servicer in the Collection Account. All amounts
received on a removed Defective Mortgage Loan during the Collection Period in
which the circumstances giving rise to its transfer to the Trust occur shall
be a part of the Trust and shall be deposited by the Master Servicer in the
Collection Account. An Eligible
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Substitute Mortgage Loan will be subject to the terms of this Agreement in all
respects when transferred to the Trust, and the Sponsor hereby makes the
representations, warranties, and covenants in Section 2.04 with respect to the
Eligible Substitute Mortgage Loan as of the date of substitution.
(d) The Custodian shall retain possession of each Mortgage File on
behalf of the Indenture Trustee in accordance with the Custodial Agreement.
The Master Servicer shall promptly deliver to the Indenture Trustee the
originals of any other documents constituting the Mortgage File coming into
its possession on their execution or receipt. Any documents to be delivered to
the Indenture Trustee under this Agreement may be delivered to the Custodian
acting on behalf of the Indenture Trustee.
Section 2.03. Representations, Warranties, and Covenants Regarding
the Master Servicer.
The Master Servicer represents and warrants to the Indenture Trustee
and the Credit Enhancer that as of the Closing Date:
(i) The Master Servicer is a New York corporation, validly
existing and in good standing under the laws of the State of New
York, and has the corporate power to own its assets and to transact
the business in which it is currently engaged. The Master Servicer
is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the character of its
business or any properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets, or
condition (financial or other) of the Master Servicer.
(ii) The Master Servicer has the power and authority to make,
execute, deliver, and perform this Agreement and all of the
transactions contemplated under this Agreement, and has taken all
necessary corporate action to authorize the execution, delivery, and
performance of this Agreement. When executed and delivered, this
Agreement will constitute a valid and legally binding obligation of
the Master Servicer enforceable in accordance with its terms.
(iii) The Master Servicer is not required to obtain the consent
of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any
governmental authority, bureau, or agency in connection with the
execution, delivery, performance, validity, or enforceability of
this Agreement, except for consents, licenses, approvals or
authorizations, or registrations or declarations that have been
obtained or filed, as the case may be, before the Closing Date.
(iv) The execution, delivery, and performance of this Agreement
by the Master Servicer will not violate any existing law or
regulation or any order or decree of any court applicable to the
Master Servicer or the certificate of incorporation or bylaws of the
Master Servicer, or constitute a material breach of any mortgage,
indenture, contract, or other agreement to which the Master Servicer
is a party or by which the Master Servicer may be bound.
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(v) No litigation or administrative proceeding of or before any
court, tribunal, or governmental body is currently pending, or to
the knowledge of the Master Servicer threatened, against the Master
Servicer or any of its properties or with respect to this Agreement,
the Indenture, or the Notes that in the opinion of the Master
Servicer has a reasonable likelihood of resulting in a material
adverse effect on the transactions contemplated by the Transaction
Documents.
(vi) If any Mortgage Loan has been registered on the MERS(R)
System, the Master Servicer is a member of MERS in good standing.
The Master Servicer covenants that it will fully furnish, in
accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (i.e., favorable and
unfavorable) on its credit files for the related Mortgagor for each Mortgage
Loan to Equifax, Experian, and Trans Union Credit Information Company on a
monthly basis.
The representations, warranties, and covenants in this Section shall
survive the transfer of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representation, warranty, or covenant that materially and
adversely affects the interests of the Transferor, the Noteholders, or the
Credit Enhancer, the person discovering the breach shall give prompt notice to
the other parties and to the Credit Enhancer. The Master Servicer shall cure
in all material respects any breach of any representation, warranty, or
covenant within 90 days of becoming aware of it or, if the Mortgage Loan
represents a "qualified mortgage" within the meaning of Section 860(a)(3) of
the Code (but without regard to the rule in Treasury Regulation ss.
1.860G-2(f)(2) that treats a defective obligation as a qualified mortgage, or
any substantially similar successor provision) and if a Responsible Officer of
the Indenture Trustee consents, any longer period specified in the consent.
Section 2.04. Representations and Warranties Regarding the Mortgage
Loans; Retransfer of Certain Mortgage Loans.
(a) The Sponsor by this reference repeats and incorporates in this
Agreement each representation and warranty made by it (as a Seller) in Section
3.02(a) of the Purchase Agreement (other than Section 3.02(a)(1) and (2)) to
the Indenture Trustee, the Trust, and the Credit Enhancer and, in addition,
represents and warrants to the Indenture Trustee, the Trust, and the Credit
Enhancer that as of the Cut-off Date, unless specifically stated otherwise:
(i) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date with respect to any
Additional Home Equity Loans, or the applicable date of substitution
with respect to any Eligible Substitute Mortgage Loan, this
Agreement constitutes a valid and legally binding obligation of the
Sponsor, enforceable against the Sponsor in accordance with its
terms.
(ii) As of the Closing Date with respect to the Initial
Mortgage Loans, the relevant Subsequent Closing Date with respect to
any Additional Home Equity Loans, or the applicable date of
substitution with respect to any Eligible Substitute Mortgage Loan,
either
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(A) the Purchase Agreement constitutes a valid transfer to
the Depositor of all right, title, and interest of the Sellers
in the applicable Mortgage Loans, all collections received from
the Mortgage Loans after the Cut-off Date (excluding payments
due by the Cut-off Date), all proceeds of the applicable
Mortgage Loans, and any funds from time to time deposited in
the Collection Account and in the Payment Account and all other
property specified in Section 2.01(a) or (b), as applicable,
and this Agreement constitutes a valid transfer to the Trust of
the foregoing property such that, on execution of this
Agreement, it is owned by the Trust free of all liens and other
encumbrances, and is part of the corpus of the Trust conveyed
to the Trust by the Depositor, and upon payment for the
Additional Balances, the Purchase Agreement and this Agreement
will constitute a valid transfer to the Trust of all right,
title, and interest of the Sellers in the Additional Balances,
all monies due or to become due on them, all proceeds of the
Additional Balances, and all other property specified in
Section 2.01(a) relating to the Additional Balances free of all
liens and other encumbrances, or
(B) the Purchase Agreement or this Agreement, as
appropriate, constitutes a Grant of a Security Interest to the
Owner Trustee on behalf of the Trust in the property described
in clause (A) above and the Indenture constitutes a Grant of a
Security Interest to the Indenture Trustee in the Collateral.
The Indenture Trustee has a first priority perfected Security
Interest in the Collateral, subject to the effect of Section
9-315 of the UCC with respect to collections on the Mortgage
Loans that are deposited in the Collection Account in
accordance with the next to last paragraph of Section 3.02(b),
and if this Agreement constitutes the Grant of a Security
Interest in the property described in clause (A) above to the
Trust, the Trust has a first priority perfected Security
Interest in the property, subject to the same limitations. This
Security Interest is enforceable as such against creditors of
and purchasers from the Trust, the Depositor, and each Seller.
(b) If the substance of any representation and warranty in this
Section made to the best of the Sponsor's knowledge or as to which the Sponsor
has no knowledge is inaccurate and the inaccuracy materially and adversely
affects the interest of the Trust, the Noteholders, or the Credit Enhancer in
the related Mortgage Loan then, notwithstanding that the Sponsor did not know
the substance of the representation and warranty was inaccurate at the time
the representation or warranty was made, the inaccuracy shall be a breach of
the applicable representation or warranty.
(c) The representations and warranties in this Section shall survive
delivery of the respective Mortgage Files to the Custodian pursuant to the
Custodial Agreement and the termination of the rights and obligations of the
Master Servicer pursuant to Section 5.04 or 6.02. If the Sponsor, the
Depositor, the Master Servicer, the Credit Enhancer, or a Responsible Officer
of the Indenture Trustee discovers a breach of any of the foregoing
representations and warranties, without regard to any limitation concerning
the knowledge of the Sponsor, that
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materially and adversely affects the interests of the Trust, the Indenture
Trustee under the Indenture, the Noteholders, or the Credit Enhancer in the
Mortgage Loan, the party discovering the breach shall give prompt notice to
the other parties and the Credit Enhancer.
(d) The Sponsor shall use all reasonable efforts to cure in all
material respects any breach of any of the foregoing representations and
warranties (other than a breach of the representation and warranty in Section
2.04 by virtue of the repetition of Section 3.02(a)(5) of the Purchase
Agreement) within 90 days of becoming aware of it or, not later than the
Business Day before the Payment Date in the month following the Collection
Period in which the cure period expired (or any later date that the Indenture
Trustee and the Credit Enhancer consent to), all interest of the Trust in the
Defective Mortgage Loan shall, subject to the satisfaction of the requirements
of Section 2.07, automatically be retransferred without recourse,
representation, or warranty to the Sponsor and the Asset Balance of the
Mortgage Loan shall be deducted from the Loan Balance.
The cure for any breach of a representation and warranty relating to
the characteristics of the Mortgage Loans in the aggregate shall be a
repurchase of or substitution for only the Mortgage Loans necessary to cause
the characteristics to comply with the related representation and warranty.
Subject to the prior satisfaction of the requirements of Section
2.07, the Owner Trustee shall execute any documents of transfer presented by
the Sponsor, without recourse, representation, or warranty, and take any other
actions reasonably requested by the Sponsor to effect the transfer by the
Trust of the Defective Mortgage Loan pursuant to this Section as promptly as
practical.
Promptly following the transfer of any Defective Mortgage Loan from
the Trust pursuant to this Section, the Master Servicer shall amend the
Mortgage Loan Schedule, deliver the amended Mortgage Loan Schedule to the
Indenture Trustee, and make appropriate entries in its general account records
to reflect the transfer. Following the retransfer, the Master Servicer shall
appropriately ▇▇▇▇ its records to indicate that it is no longer servicing the
Mortgage Loan on behalf of the Trust. The Sponsor shall appropriately ▇▇▇▇ its
Electronic Ledger and make appropriate entries in its general account records
to reflect the transfer promptly following the transfer.
(e) The sole remedy of the Secured Parties, the Indenture Trustee on
behalf of Secured Parties, and the Owner Trustee against the Sponsor for the
breach of a representation or warranty (other than the representation and
warranty in Section 2.04(a) by virtue of the repetition of Section 3.02(a)(5)
of the Purchase Agreement) is the Sponsor's obligation to accept a transfer of
a Mortgage Loan as to which a breach has occurred and is continuing and to
make any required deposit in the Collection Account or to substitute an
Eligible Substitute Mortgage Loan.
(f) If the representation and warranty in Section 2.04(a) by virtue
of the repetition of Section 3.02(a)(5) of the Purchase Agreement is breached,
the transfer of the affected Mortgage Loans to the Trust shall be void and the
Sponsor shall pay to the Trust the sum of (i) the amount
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of the related Asset Balances, plus accrued interest on each Asset Balance at
the applicable Loan Rate to the date of payment and (ii) the amount of any
loss or expense incurred by the Transferor, the Noteholders, the Trust, or the
Credit Enhancer with respect to the affected Mortgage Loans. The Indenture
Trustee may enforce the Sponsor's obligations under this Section in its own
right or as the owner of the Trust's right to seek enforcement as the assignee
of the Trust's rights under this Agreement pursuant to the Indenture.
(g) The Sponsor shall defend and indemnify the Indenture Trustee, the
Owner Trustee, and the Secured Parties against all reasonable costs and
expenses, and all losses, damages, claims, and liabilities, including
reasonable fees and expenses of counsel and the amount of any settlement
entered into with the consent of the Sponsor (this consent not to be
unreasonably withheld), that may be asserted against or incurred by any of
them as a result of any third-party action arising out of any breach of a
representation and warranty.
Section 2.05. Covenants of the Depositor.
The Depositor covenants that:
(a) Security Interests. Except for the transfer under this Agreement,
the Depositor will not transfer any Mortgage Loan to any other person, or
create or suffer to exist any Lien on any Mortgage Loan or any interest in
one, whether existing now or in the future; the Depositor will notify the
Indenture Trustee of the existence of any Lien on any Mortgage Loan
immediately on its discovery; and the Depositor will defend the right, title,
and interest of the Trust in the Mortgage Loans, whether existing now or in
the future, against all claims of third parties claiming through the
Depositor. Nothing in this Section shall prohibit the Depositor from suffering
to exist on any Mortgage Loan any Liens for municipal or other local taxes and
other governmental charges if the taxes or governmental charges are not due at
the time or if the Depositor is contesting their validity in good faith by
appropriate proceedings and has set aside on its books adequate reserves with
respect to them.
(b) Negative Pledge. The Depositor shall not transfer or grant a
Security Interest in the Transferor Certificates except in accordance with
Section 3.10 of the Trust Agreement.
(c) Additional Indebtedness. So long as the Notes are outstanding the
Depositor will not incur any debt other than debt that (i) is non-recourse to
the assets of the Depositor other than the mortgage loans specifically pledged
as security for the debt, (ii) is subordinated in right of payment to the
rights of the Noteholders, or (iii) is assigned a rating by each of the Rating
Agencies that is the same as the then current rating of the Notes.
(d) Downgrading. The Depositor will not engage in any activity that
would result in a downgrading of the Notes without regard to the Policy.
(e) Amendment to Certificate of Incorporation. The Depositor will not
amend its Certificate of Incorporation or state of incorporation without prior
notice to the Rating Agencies, the Indenture Trustee, and the Credit Enhancer.
Section 2.06. Transfers of Mortgage Loans at Election of Transferor.
Subject to the conditions below, the Transferor may require the
transfer of Mortgage Loans from the Trust to the Transferor as of the close of
business on a Payment Date (the
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"Transfer Date") in an amount not in excess of Net Draws at the time. In
connection with any transfer, the Transferor Interest shall be reduced by the
aggregate Asset Balances as of the Transfer Date of the Mortgage Loans
transferred. On the fifth Business Day (the "Transfer Notice Date") before the
Transfer Date designated in the notice, the Transferor shall give the Owner
Trustee, the Indenture Trustee, the Master Servicer, and the Credit Enhancer a
notice of the proposed transfer that contains a list of the Mortgage Loans to
be transferred. These transfers of Mortgage Loans shall be permitted if the
following conditions are satisfied:
(i) No Rapid Amortization Event has occurred.
(ii) On the Transfer Date
(A) the Transferor Interest (after giving effect to the
removal of the Mortgage Loans proposed to be transferred)
exceeds
(B) the Required Transferor Subordinated Amount.
(iii) The transfer of any Mortgage Loans on any Transfer Date
during the Managed Amortization Period shall not, in the reasonable
belief of the Transferor, cause a Rapid Amortization Event to occur
or an event that with notice or lapse of time or both would
constitute a Rapid Amortization Event.
(iv) By the Transfer Date, the Transferor shall have delivered
to the Indenture Trustee a revised Mortgage Loan Schedule,
reflecting the proposed transfer and the Transfer Date, and the
Master Servicer shall have marked the Electronic Ledger to show that
the Mortgage Loans transferred to the Transferor are no longer owned
by the Trust.
(v) The Transferor shall represent and warrant that the
Mortgage Loans to be removed from the Trust were selected randomly.
(vi) In connection with each transfer of Mortgage Loans
pursuant to this Section, each Rating Agency and the Credit Enhancer
shall have received by the related Transfer Notice Date notice of
the proposed transfer of Mortgage Loans and, before the Transfer
Date, each Rating Agency shall have notified in writing the
Transferor, the Indenture Trustee, and the Credit Enhancer that the
transfer of Mortgage Loans would not result in a reduction or
withdrawal of its then current rating of the Notes without regard to
the Policy.
(vii) The Transferor shall have delivered to the Owner Trustee,
the Indenture Trustee, and the Credit Enhancer an Officer's
Certificate certifying that the items in subparagraphs (i) through
(vi), inclusive, have been performed or are true, as the case may
be. The Owner Trustee and the Indenture Trustee may conclusively
rely on the Officer's Certificate, shall have no duty to make
inquiries with regard to the matters in it, and shall incur no
liability in so relying.
Upon receiving the requisite information from the Transferor, the
Master Servicer shall perform in a timely manner those acts required of it, as
specified above. Upon satisfaction of the above conditions, on the Transfer
Date the Indenture Trustee shall effect delivery to the
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Transferor the Mortgage File for each Mortgage Loan being so transferred, and
the Indenture Trustee shall execute and deliver to the Transferor any other
documents prepared by the Transferor reasonably necessary to transfer the
Mortgage Loans to the Transferor. This transfer of the Trust's interest in
Mortgage Loans shall be without recourse, representation, or warranty by the
Indenture Trustee or the Trust to the Transferor.
Section 2.07. Retransfers and Transfer Deficiencies.
(a) The Indenture Trustee shall determine if reducing the Loan Pool
Balance by the Asset Balance of any retransferred Mortgage Loan pursuant to
Section 2.02(b) or 2.04(d) would cause a Transfer Deficiency. If so, the
Indenture Trustee shall notify the Sponsor of the deficiency, and the Sponsor
shall transfer to the Trust within five Business Days (but only if the
transfer occurs within two years of the Closing Date) Eligible Substitute
Mortgage Loans or deposit into the Collection Account an amount in immediately
available funds equal to the amount of the Transfer Deficiency reduced by the
Asset Balance of any Eligible Substitute Mortgage Loans transferred to the
Trust (the "Transfer Deposit Amount").
(b) The Sponsor shall deliver to the Indenture Trustee any documents
required to be held by the Indenture Trustee in accordance with Section 2.01
with respect to any Eligible Substitute Mortgage Loans.
(c) All amounts received on Eligible Substitute Mortgage Loans during
the Collection Period in which the circumstances giving rise to their transfer
to the Trust occur shall not be a part of the Trust and shall not be deposited
by the Master Servicer in the Collection Account.
All amounts received on a removed Defective Mortgage Loan during the
Collection Period in which the circumstances giving rise to its transfer to
the Trust occur shall be a part of the Trust and shall be deposited by the
Master Servicer in the Collection Account.
(d) An Eligible Substitute Mortgage Loan will be subject to the terms
of this Agreement in all respects when transferred to the Trust, and the
Sponsor hereby makes the representations, warranties, and covenants in Section
2.04 with respect to the Eligible Substitute Mortgage Loan as of the date of
its transfer to the Trust.
(e) Promptly following the transfer of any Eligible Substitute
Mortgage Loan to the Trust pursuant to this Section, the Master Servicer shall
amend the Mortgage Loan Schedule, deliver the amended Mortgage Loan Schedule
to the Indenture Trustee, and make appropriate entries in its general account
records to reflect the transfer. The Sponsor shall appropriately ▇▇▇▇ its
Electronic Ledger and make appropriate entries in its general account records
to reflect the transfer promptly following the transfer.
Section 2.08. Tax Reporting.
The Administrator pursuant to the Administration Agreement will
prepare and file all tax reports required under this Agreement on behalf of
the Trust, including tax reporting and withholding required by Sections 1445
and 6050J of the Code with respect to foreclosures and abandonments, the tax
reporting required by Section 6050H of the Code with respect to the receipt of
mortgage interest from individuals, and any tax reporting required by Section
6050P of the Code with respect to the cancellation of indebtedness by certain
financial entities, by
16
preparing any tax and information returns required and delivering them to the
Owner Trustee for filing.
Section 2.09. Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Indenture Trustee on
behalf of the Noteholders and the Credit Enhancer as follows:
(i) This Agreement constitutes a valid and legally binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms.
(ii) Immediately before the sale and assignment by the
Depositor to the Trust of each Mortgage Loan, the Depositor was the
sole beneficial owner of each Mortgage Loan (insofar as the title
was conveyed to it by the Sellers) subject to no prior lien, claim,
participation interest, mortgage, Security Interest, pledge, charge,
or other encumbrance or other interest of any nature.
(iii) As of the Closing Date with respect to the Initial
Mortgage Loans, the relevant Subsequent Closing Date with respect to
any Additional Home Equity Loans, or the applicable date of
substitution with respect to any Eligible Substitute Mortgage Loan,
the Depositor has transferred all right, title, and interest in the
Eligible Substitute Mortgage Loan to the Trust.
(iv) The Depositor has not transferred the Mortgage Loans to
the Trust with any intent to hinder, delay, or defraud any of its
creditors.
Section 2.10. Substitution and Repurchase Opinions.
Notwithstanding any contrary provision of this Agreement, with
respect to any Mortgage Loan that is not in default or as to which default is
not imminent, no repurchase or substitution pursuant to Sections 2.02, 2.03,
2.04, or 2.06 shall be made unless the party repurchasing or substituting
delivers to the Indenture Trustee an Opinion of Counsel to the effect that the
repurchase or substitution would not result in the imposition of the tax on
prohibited transactions of the Trust or contributions after the Startup Date,
as defined in Sections 860F(a)(2) and 860G(d) of the Code, respectively or
cause the any REMIC created under the Trust Agreement to fail to qualify as a
REMIC at any time that any Notes or Certificates are outstanding. Any Mortgage
Loan whose repurchase or substitution was delayed pursuant to this Section
shall be repurchased or substituted for upon the earlier of the occurrence of
a default or imminent default with respect to the Mortgage Loan and
satisfaction of the requirements of this Section.
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ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. The Master Servicer.
The Master Servicer shall service and administer the Mortgage Loans
in a manner consistent with the terms of this Agreement and with general
industry practice and shall have full power and authority, acting alone or
through a subservicer,
o to execute and deliver, on behalf of the Secured Parties, the
Trust, and the Indenture Trustee, customary consents or waivers and other
instruments and documents,
o to consent to transfers of any Mortgaged Property and assumptions
of the Mortgage Notes and related Mortgages (but only in the manner
provided in this Agreement),
o to collect any Insurance Proceeds and other Liquidation Proceeds,
and
o to effectuate foreclosure or other conversion of the ownership of
the Mortgaged Property securing any Mortgage Loan.
The Master Servicer shall remain responsible to the parties to this
Agreement and the Credit Enhancer for its obligations under this Agreement.
Any amounts received by any subservicer on a Mortgage Loan shall be considered
to have been received by the Master Servicer whether or not actually received
by it. Without limiting the generality of the foregoing, the Master Servicer
may execute and deliver, on behalf of itself, the Noteholders, and the
Indenture Trustee, or any of them, any instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Mortgage Loans and with respect to
the Mortgaged Properties, in each case to the extent not inconsistent with
this Agreement. Notwithstanding anything herein to the contrary, the Master
Servicer shall not make or permit any modification, waiver, or amendment of
any term of any Mortgage Loan that would cause any REMIC created under the
Trust Agreement to fail to qualify as a REMIC or result in the imposition of
any tax under Section 860F(a) or Section 860G of the Code.
At the request of a Servicing Officer, the Indenture Trustee shall
furnish the Master Servicer with any powers of attorney and other documents
appropriate to enable the Master Servicer to carry out its servicing and
administrative duties under this Agreement. The Master Servicer in this
capacity may also consent to the placing of a lien senior to that of any
mortgage on the related Mortgaged Property, if
(i) the new senior lien secures a mortgage loan that refinances
an existing first mortgage loan; and
(ii) either
(A) the Loan-to-Value Ratio of the new mortgage loan
(without taking into account any closing costs that may be
financed by the new mortgage loan) is equal to or less than the
Loan-to-Value Ratio of the first mortgage loan to be replaced
(for purposes of calculating the Loan-to-Value Ratio, the
Valuation of the Mortgaged Property will be measured by the
lesser of (A) the Valuation of the Mortgaged Property as of the
Cut-off Date and (B) the
18
Valuation of the Mortgaged Property as of the date of the
refinancing referenced in clause (i)) or
(B) the Combined Loan-to-Value Ratio of the new mortgage
loan (without taking into account any closing costs that may be
financed by the new mortgage loan) and the existing Mortgage
Loan is equal to less than 70% (for purposes of calculating the
Combined Loan-to-Value Ratio, the Valuation of the Mortgaged
Property will be measured as the lesser of (A) the Valuation of
the Mortgage Loan as of the Cut-off Date and (B) the Valuation
of the Mortgage Loan as of the date of the refinancing
referenced in clause (i)).
The aggregate Asset Balance of all the Mortgage Loans with respect to which
the senior lien may be so modified may not exceed 50% of the Original Note
Principal Balance.
The Master Servicer may also, without approval from the Rating
Agencies or the Credit Enhancer, increase the Credit Limit on any Mortgage
Loan at any time if
(i) a new appraisal is obtained and the Loan-to-Value Ratio of
the Mortgage Loan after giving effect to the increase is less than
or equal to the Loan-to-Value Ratio of the Mortgage Loan as of the
Cut-off Date
(ii) the increase is consistent with the Master Servicer's
underwriting policies, and
(iii) either:
(A) the Credit Line Agreement allows the mortgagee to
unilaterally increase the Credit Limit;
(B) the Credit Limit increase is made within 90 days of
the Cut-off Date, or
(C) the Sponsor purchases the Mortgage Loan from the Trust
in the manner described below for rate reduction loans.
In addition, the Master Servicer may increase the Credit Limits on
Mortgage Loans having aggregate Asset Balances of up to an additional 5.0% of
the Original Note Principal Balance at any time, if
(i) the increase does not cause the Combined Loan-to-Value
Ratio of the Mortgage Loans to exceed 100%,
(ii) the increase in the Credit Limit of a Mortgage Loan does
not cause the Combined Loan-to-Value Ratio of the Mortgage Loan to
exceed 100%,
(iii) the increase in the Credit Limit of a Mortgage Loan does
not cause the Combined Loan-to-Value Ratio of the Mortgage Loan to
increase by more than 25% (for example, a Combined Loan-to-Value
Ratio of 50% can be increased to 75%, a Combined Loan-to-Value Ratio
of 60% can be increased to 85%, and so forth),
19
(iv) the increase is consistent with the Master Servicer's
underwriting policies, and
(v) either:
(A) the Credit Line Agreement allows the mortgagee to
unilaterally increase the Credit Limit;
(B) the Credit Limit increase is made within 90 days of
the Cut-off Date, or
(C) the Sponsor purchases the Mortgage Loan from the Trust
in the manner described below for rate reduction loans.
Furthermore, the Sponsor, without prior approval from the Rating
Agencies or the Credit Enhancer, may solicit mortgagors for a reduction in
Loan Rates. The Loan Rates of Mortgage Loans in a Loan Group having Asset
Balances at the time of the proposed modification that aggregate over time not
more than 5.0% of the related Original Note Principal Balance may be subject
to reduction. If a mortgagor notifies the Sponsor or the Master Servicer that
it wants a reduction in Loan Rate, the Sponsor shall purchase the Mortgage
Loan from the Trust as described below. Effective immediately on the same
Business Day on which the Sponsor delivers the Purchase Price for the relevant
Mortgage Loan to the Master Servicer, all interest of the Trust in the
relevant Mortgage Loan shall automatically be transferred and assigned to the
Sponsor and all benefits and burdens of ownership of the relevant Mortgage
Loan, including the right to accrued interest on it from the date of purchase
and the risk of default on the Mortgage Loan, shall pass to the Sponsor.
The Master Servicer shall promptly deliver to the Indenture Trustee a
certification signed by a Servicing Officer to the effect that all of the
requirements for a purchase of a Mortgage Loan in connection with a request by
a mortgagor for a reduction in Loan Rate have been satisfied with respect to
the relevant Mortgage Loan. The Sponsor shall deliver the Purchase Price for
the relevant Mortgage Loan to the Master Servicer promptly after a mortgagor
notifies the Sponsor or the Master Servicer that it wants a reduction in Loan
Rate, and the Master Servicer shall deposit the Purchase Price for the
modified Mortgage Loan in the Collection Account pursuant to Section 3.02
within one Business Day after its receipt of the Purchase Price for the
modified Mortgage Loan. Upon receipt by the Indenture Trustee of written
notification of the deposit signed by a Servicing Officer, the Indenture
Trustee shall release to the Sponsor the related Mortgage File and shall
execute and deliver any instruments of transfer or assignment delivered to it
for execution and reasonably acceptable to it, in each case without recourse,
representation, or warranty, necessary to release the Mortgage Loan from the
lien of the Indenture and vest in the Sponsor the Mortgage Loan previously
transferred and assigned pursuant to this provision. The certification and
written notification of the deposit each from a Servicing Officer may be
delivered to the Indenture Trustee electronically, and to the
20
extent the transmission originates on its face from a Servicing Officer, need
not be manually signed.
In addition, the Master Servicer may agree to changes in the terms of
a Mortgage Loan (other than changes referred to above in this section) at the
request of the mortgagor at any time if the changes
o do not materially and adversely affect the interests of the
Secured Parties or the Holders of the Class C Certificates,
o are consistent with prudent and customary business practice as
evidenced by a certificate signed by a Servicing Officer delivered to the
Indenture Trustee and the Credit Enhancer,
o do not extend the maturity date of the Mortgage Loan beyond the
final maturity date of the Notes of the related Class, and
o the Master Servicer has received an Opinion of Counsel to the
effect that such action will not cause any REMIC created under the Trust
Agreement to fail to qualify as a REMIC or result in the imposition of
any tax under Section 860F(a) or Section 860G of the Code.
In addition, the Master Servicer may solicit mortgagors to change any
other terms of the related Mortgage Loans at any time if the changes (i) do
not materially and adversely affect the interests of the Noteholders, the
Transferor, or the Credit Enhancer (ii) are consistent with prudent and
customary business practice as evidenced by a certificate signed by a
Servicing Officer delivered to the Indenture Trustee and the Credit Enhancer
and (iii) the Master Servicer has received an Opinion of Counsel to the effect
that such action will not cause any REMIC created under the Trust Agreement to
fail to qualify as a REMIC or result in the imposition of any tax under
Section 860F(a) or Section 860G of the Code.. Nothing in this Agreement shall
limit the right of the Master Servicer to solicit mortgagors with respect to
new loans (including mortgage loans) that are not Mortgage Loans.
The Master Servicer may register any Mortgage Loan on the MERS(R)
System, or cause the removal from registration of any Mortgage Loan on the
MERS(R) System, and execute and deliver, on behalf of the Owner Trustee, any
instruments of assignment and other comparable instruments with respect to the
assignment or re-recording of a mortgage in the name of MERS, solely as
nominee for the Owner Trustee and its successors and assigns.
For so long as any Mortgage Loan is registered on the MERS(R) System,
the Master Servicer shall maintain in good standing its membership in MERS and
shall comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with
MERS. If any Mortgage Loans are registered on the MERS(R) System, the Master
Servicer may cause MERS to execute and deliver an assignment of mortgage in
recordable form to transfer any of the Mortgage Loans registered on the
MERS(R) System from MERS to the Owner Trustee. The Master Servicer shall
promptly notify MERS of any transfer of beneficial ownership or release of any
Security Interest in any MOM Loan.
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The relationship of the Master Servicer to the Trust and the
Indenture Trustee under this Agreement is intended by the parties to be that
of an independent contractor and not that of a joint venturer, partner, or
agent of the Trust or the Indenture Trustee.
(b) If the rights and obligations of the Master Servicer are
terminated under this Agreement, any successor to the Master Servicer in its
sole discretion may terminate the existing subservicer arrangements with any
subservicer or assume the terminated Master Servicer's rights under those
subservicing arrangements to the extent permitted by applicable law and the
subservicing agreements.
(c) The Sponsor agrees to indemnify the Trust against any liability
for any prohibited transaction taxes and any related interest, additions, and
penalties imposed on the Trust as a result of any modification of a Mortgage
Loan effected pursuant to this Section, the holding of any Mortgage Loan
modified pursuant to this Section by the Trust, any purchase of a modified
Mortgage Loan by the Sponsor pursuant to this Section, or the removal of any
Mortgage Loan pursuant to Section 2.06 (but such obligation shall not prevent
the Sponsor or any other appropriate person from in good faith contesting any
such tax in appropriate proceedings and shall not prevent the Sponsor from
withholding payment of the tax, if permitted by law, pending the outcome of
the proceedings). The Sponsor shall have no right of reimbursement for any
amount paid pursuant to the foregoing indemnification, except to the extent
that the amount of any tax, interest, and penalties, together with interest
thereon, is refunded to the Trust or the Sponsor.
Section 3.02. Collection of Certain Mortgage Loan Payments;
Establishment of Accounts.
(a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the Mortgage Loans, and shall follow the collection
procedures it follows for mortgage loans in its servicing portfolio comparable
to the Mortgage Loans, to the extent consistent with this Agreement.
Consistent with the foregoing, and without limiting the generality of the
foregoing, the Master Servicer may in its discretion (i) waive any late
payment charge or any assumption fees or other fees that may be collected in
the ordinary course of servicing the Mortgage Loans and (ii) arrange with a
mortgagor a schedule for the payment of interest due and unpaid if the
arrangement is consistent with the Master Servicer's policies with respect to
the mortgage loans it owns or services. Notwithstanding any arrangement, the
Mortgage Loans will be included in the information regarding delinquent
Mortgage Loans in the Servicing Certificate and monthly statement to
Noteholders pursuant to Section 7.04 of the Indenture.
(b) The Master Servicer shall establish and maintain a trust account
(the "Collection Account") with the title specified in the Adoption Annex. The
Collection Account shall be an Eligible Account. The Master Servicer or the
Sponsor, as the case may be, shall deposit or cause to be deposited in the
Collection Account within two Business Days following its receipt the
following payments and collections received or made by it (without
duplication):
(1) all collections on the Mortgage Loans;
(2) the amounts deposited to the Collection Account pursuant to
Section 4.03;
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(3) Net Liquidation Proceeds net of any related Foreclosure
Profit;
(4) Insurance Proceeds; and
(5) any amounts required to be deposited pursuant to Section
7.01.
No other amounts are to be deposited to the Collection Account,
including amounts representing Foreclosure Profits, fees (including annual
fees) or late charge penalties payable by mortgagors, or amounts received by
the Master Servicer for the accounts of mortgagors for application towards the
payment of taxes, insurance premiums, assessments, excess pay off amounts, and
similar items. The Master Servicer shall remit all Foreclosure Profits to the
Sponsor. The Master Servicer may retain, from payments of interest on the
Mortgage Loans in each Collection Period, the related Servicing Fee for the
Collection Period and any unreimbursed optional advance made by the Master
Servicer pursuant to Section 4.03.
The Master Servicer may make a net deposit in the Collection Account
of the amounts required by this Section.
On the Business Day before each Payment Date to the extent on deposit
in the Collection Account, the Master Servicer shall withdraw from the
Collection Account and remit to the Indenture Trustee, the amount to be
applied on that Payment Date by the Indenture Trustee pursuant to Section 8.03
of the Indenture, and the Indenture Trustee will deposit that amount in the
Payment Account pursuant to the Indenture.
The Indenture Trustee shall hold amounts deposited in the Payment
Account as trustee for the Noteholders, the Transferor, and the Credit
Enhancer. In addition, the Master Servicer shall notify the Indenture Trustee
and the Credit Enhancer on each Determination Date of the amount of
collections in the Collection Account to be transferred to the Payment Account
and their allocation to Interest Collections and Principal Collections for the
Mortgage Loans for the related Payment Date. Following this notification, the
Master Servicer may withdraw from the Collection Account and retain any
amounts that constitute income realized from the investment of the
collections. The Master Servicer will be entitled to receive, as additional
servicing compensation, income earned on the collections in the Payment
Account.
Amounts on deposit in the Collection Account will be invested in
Eligible Investments maturing no later than the day before the next Payment
Date at the direction of the Master Servicer. All income realized from any
investment in Eligible Investments of funds in the Collection Account shall be
the property of the Master Servicer and may be withdrawn from time to time
from the Collection Account. Any losses incurred on these investments that
reduce their principal amount shall be deposited in the Collection Account by
the Master Servicer out of its own funds immediately as realized.
(c) Upon its receipt of the Officer's Certificate specified in
Section 2.01(b)(ii)(I) confirming satisfaction of the conditions precedent to
subsequent additions in Section 2.01(b)(ii) on a Subsequent Closing Date
designated by the Depositor, the Indenture Trustee shall withdraw from the
applicable Additional Loan Account and set aside for the benefit of the
Depositor for later delivery pursuant to Section 3.02(d) an amount equal to
the
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Cut-off Date Asset Balance in the Transfer Document to purchase the
Additional Home Equity Loans covered by the Transfer Document.
(d) On the date on which the revised Mortgage Loan Schedule
reflecting the addition of the Additional Home Equity Loans covered by a
Transfer Document is delivered to the Indenture Trustee and the Credit
Enhancer along with an opinion of counsel to the effect that a court in a
bankruptcy context addressing the transfer of the Additional Home Equity Loans
would characterize the transfer as a sale rather than as a secured lending,
the Indenture Trustee shall deliver to the order of the Depositor an amount in
cash equal to the actual Cut-off Date Asset Balance of the relevant Additional
Home Equity Loans, and to the Master Servicer any earnings on those funds
since the relevant Subsequent Closing Date. If after that payment any funds
remain from the original set aside with respect to the Transfer Document
pursuant to Section 2.01(b), then they shall be returned to the applicable
Additional Loan Account. If on the Latest Subsequent Closing Date any funds
remain in the Indenture Trustee's possession from any set aside under Section
2.01(b), then they shall be returned to the applicable Additional Loan
Account.
Section 3.03. Deposits to Payment Account.
The Master Servicer shall
(i) on the Business Day before each of the first two Payment
Dates, deposit in the Payment Account any shortfall in the amount
required to pay the Note Interest on those Payment Dates for each
Class of Notes resulting solely from the failure of any Mortgage
Loans to be fully indexed and
(ii) on the Business Day before the first Payment Date, deposit
in the Payment Account
(A) an amount for each Loan Group equal to the excess of
the aggregate amount payable pursuant to Sections 8.03(a)(i)
and (iii) of the Indenture for that Loan Group on the first
Payment Date over what the aggregate Investor Interest
Collections for that Loan Group would be if the Minimum Monthly
Payments on the related Mortgage Loans due during the first
Collection Period were made on each Mortgage Loan and
(B) for each Loan Group any amounts representing payments
on, and any collections in respect of, the Mortgage Loans in
each Loan Group received after the Cut-off Date and before the
Closing Date (exclusive of payments of accrued interest due by
the Cut-off Date).
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses.
The Master Servicer shall cause to be maintained for each Mortgage
Loan hazard insurance naming the Master Servicer or the related subservicer as
loss payee under it providing extended coverage in an amount that is at least
equal to the lesser of (i) the maximum insurable value of the improvements
securing the Mortgage Loan from time to time or (ii) the combined principal
balance owing on the Mortgage Loan and any mortgage loan senior to the
Mortgage Loan from time to time. The Master Servicer shall also maintain on
property acquired through
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foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements that are a part of the
property or (ii) the combined principal balance owing on the Mortgage Loan and
any mortgage loan senior to the Mortgage Loan at the time of the foreclosure
or deed in lieu of foreclosure plus accrued interest and the good-faith
estimate of the Master Servicer of related Liquidation Expenses to be
incurred.
Amounts collected by the Master Servicer under these policies shall
be deposited in the Collection Account to the extent called for by Section
3.02. The hazard insurance to be maintained for the related Mortgage Loan
shall include flood insurance when the Mortgaged Property is located in a
federally designated flood area. The flood insurance shall be in the amount
required under applicable guidelines of the Federal Flood Emergency Act. No
other insurance need be carried on any Mortgaged Properties pursuant to this
Agreement.
Section 3.05. Assumption and Modification Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
mortgagor, the Master Servicer shall exercise its right to accelerate the
maturity of the Mortgage Loan consistent with the then current practice of the
Master Servicer and without regard to the inclusion of the Mortgage Loan in
the Trust. If it elects not to enforce its right to accelerate or if it is
prevented from doing so by applicable law, the Master Servicer (so long as its
action conforms with the underwriting standards generally acceptable in the
industry at the time for new origination) may enter into an assumption and
modification agreement with the person to whom the Mortgaged Property has been
or is about to be conveyed, pursuant to which that person becomes liable under
the Credit Line Agreement and, to the extent permitted by applicable law, the
mortgagor remains liable on it. The Master Servicer shall notify the Indenture
Trustee that any assumption and modification agreement has been completed by
delivering to the Indenture Trustee an Officer's Certificate certifying that
the agreement is in compliance with this Section and by forwarding the
original copy of the assumption and modification agreement to the Indenture
Trustee. Any assumption and modification agreement shall be a part of the
related Mortgage File. No change in the terms of the related Credit Line
Agreement may be made by the Master Servicer in connection with the assumption
to the extent that the change would not be permitted to be made in the
original Credit Line Agreement pursuant to Section 3.01(a). Any fee collected
by the Master Servicer for entering into the assumption and modification
agreement will be retained by the Master Servicer as additional servicing
compensation.
Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase
of Certain Mortgage Loans.
The Master Servicer shall foreclose or otherwise comparably convert
to ownership Mortgaged Properties securing defaulted Mortgage Loans when, in
the opinion of the Master Servicer based on normal and usual practices and
procedures, no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.02. Alternatively, the Master
Servicer may forego foreclosure and charge off a defaulted Mortgage Loan if in
the Master Servicer's opinion the proceeds of foreclosure and liquidation are
likely to produce an amount less than the unpaid principal balance of senior
liens on the Mortgaged Property. If the
25
Master Servicer has actual knowledge or reasonably believes that any Mortgaged
Property is affected by hazardous or toxic wastes or substances and that the
acquisition of the Mortgaged Property would not be commercially reasonable,
then the Master Servicer will not cause the Trust to acquire title to the
Mortgaged Property in a foreclosure or similar proceeding. In connection with
foreclosure or other conversion (or a decision to forego foreclosure and
charge off a defaulted Mortgage Loan), the Master Servicer shall follow the
practices and procedures it deems appropriate and that are normal and usual in
its general mortgage servicing activities, including advancing funds to
correct a default on a related senior mortgage loan. However, the Master
Servicer need not expend its own funds in connection with any foreclosure or
towards the correction of any default on a related senior mortgage loan or
restoration of any property unless it determines, in its sole discretion, that
the expenditure will increase Net Liquidation Proceeds.
If title to any Mortgaged Property is acquired in foreclosure or by
deed in lieu of foreclosure, the deed or certificate of sale shall be issued
to the Indenture Trustee, or to its nominee on behalf of Noteholders. The
Master Servicer shall dispose of the Mortgaged Property as soon as practicable
in a manner that maximizes its Liquidation Proceeds.
The Master Servicer, in its sole discretion, may purchase for its own
account from the Trust any Mortgage Loan that is 151 days or more delinquent.
The price for any Mortgage Loan purchased shall be 100% of its Asset Balance
plus accrued interest on it at the applicable Loan Rate from the date through
which interest was last paid by the related mortgagor to the first day of the
month in which the purchase price is to be distributed to the Noteholders. The
purchase price shall be deposited in the Collection Account. The Master
Servicer may only exercise this right on or before the penultimate day of the
calendar month in which the Mortgage Loan became 151 days delinquent. Any
delinquent Mortgage Loan that becomes current but thereafter again becomes 151
days or more delinquent may be purchased by the Master Servicer pursuant to
this Section.
Upon receipt of a certificate from the Master Servicer in the form of
Exhibit C, the Indenture Trustee shall release to the Master Servicer the
related Mortgage File and shall execute and deliver any instruments of
transfer prepared by the Master Servicer, without recourse, necessary to vest
in the purchaser of the Mortgage Loan any Mortgage Loan released to it and the
Master Servicer shall succeed to all the Trust's interest in the Mortgage Loan
and all related security and documents. This assignment shall be an assignment
outright and not for security. The Master Servicer shall then own the Mortgage
Loan, and all security and documents, free of any further obligation to the
Trust, the Owner Trustee, the Indenture Trustee, the Credit Enhancer, the
Transferor, or the Noteholders with respect to it. The certification by the
Master Servicer may be delivered to the Indenture Trustee electronically, and
if it is, its form may differ from Exhibit C so long as it contains the
information required by Exhibit C (that is, the relevant loan number, at least
one of the five reasons for requesting file as found in Exhibit C, and the
acknowledgment that the Mortgage File will be held in accordance with this
Agreement and will promptly be returned to the Indenture Trustee when the need
for it by the Master Servicer no longer exists unless the Mortgage Loan has
been liquidated or retransferred),
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and to the extent the transmission originates on its face from a Servicing
Officer, need not be manually signed.
If the Trust acquires any Mortgaged Property in connection with a
default or imminent default on a Mortgage Loan, the Master Servicer shall
dispose of the Mortgaged Property as soon as practicable in a manner that
maximizes the liquidation proceeds, but in no event later than three years
after its acquisition by the Trust or, at the expense of the Trust, the Master
Servicer shall request, more than 60 days before the day on which the
three-year period would otherwise expire, an extension of the three-year grace
period. If the Trustee is supplied with an Opinion of Counsel to the effect
that the Trust's holding the Mortgaged Property after the three-year period
will not result in the imposition of taxes on prohibited transactions of the
Trust as defined in section 860F of the Code or cause any REMIC created under
the Trust Agreement to fail to qualify as a REMIC at any time that any Notes
or Certificates are outstanding, and the Trust may continue to hold the
Mortgaged Property (subject to any conditions in the Opinion of Counsel) after
the expiration of the three-year period. Notwithstanding any other provision
of this Agreement, no Mortgaged Property acquired by the Trust shall be rented
(or allowed to continue to be rented) or otherwise used for the production of
income by or on behalf of the Trust in such a manner or pursuant to any terms
that would cause the Mortgaged Property to fail to qualify as foreclosure
property within the meaning of section 860G(a)(8) of the Code or subject the
Trust to the imposition of any federal, state, or local income taxes on the
income earned from the Mortgaged Property under section 860G(c) of the Code or
otherwise, unless the Master Servicer has agreed to indemnify and hold
harmless the Trust with respect to the imposition of any such taxes.
If a default occurs on a Mortgage Loan one or more of whose obligors
is not a United States Person, as defined in Section 7701(a)(30) of the Code,
in connection with any foreclosure of the Mortgage Loan (including the
acquisition of a deed in lieu of foreclosure), the Master Servicer will cause
compliance with the provisions of Treasury Regulation Section 1.1445-2(d)(3)
(or any successor) necessary to assure that no withholding tax obligation
arises with respect to the proceeds of the foreclosure except to the extent
that proceeds of the foreclosure are required to be remitted to the obligors
on the Mortgage Loan.
Section 3.07. Indenture Trustee to Cooperate.
By each Payment Date, the Master Servicer will notify the Indenture
Trustee whenever the Asset Balance of any Mortgage Loan has been paid in full
during the preceding Collection Period. A Servicing Officer shall certify that
the Mortgage Loan has been paid in full and that all amounts received in
connection with the payment that are required to be deposited in the
Collection Account pursuant to Section 3.02 have been so deposited or
credited. Upon payment in full pursuant to Section 3.01, the Master Servicer
is authorized to execute an instrument of satisfaction regarding the related
mortgage, which instrument of satisfaction shall be recorded by the Master
Servicer if required by applicable law and be delivered to the person entitled
to it.
If the mortgage has been registered on the MERS(R) System, the Master
Servicer shall cause the removal of the mortgage from registration on the
MERS(R) System and execute and deliver, on behalf of the Indenture Trustee and
the Noteholders, any instruments of satisfaction
27
or cancellation or of partial or full release. No expenses incurred in
connection with the instrument of satisfaction or transfer shall be reimbursed
from amounts deposited in the Collection Account or the Payment Account.
As appropriate for the servicing or foreclosure of any Mortgage Loan,
or in connection with the payment in full of the Asset Balance of any Mortgage
Loan, upon request of the Master Servicer and delivery to the Indenture
Trustee of a Request for Release substantially in the form of Exhibit C signed
by a Servicing Officer, the Indenture Trustee shall release the related
Mortgage File to the Master Servicer and the Indenture Trustee shall execute
any documents provided by the Master Servicer necessary to the prosecution of
any proceedings or the taking of other servicing actions. The Request for
Release by a Servicing Officer may be delivered to the Indenture Trustee
electronically, and if it is, its form may differ from Exhibit C so long as it
contains the information required by Exhibit C (that is, the relevant loan
number, at least one of the five reasons for requesting file as found in
Exhibit C, and the acknowledgment that the Mortgage File will be held in
accordance with this Agreement and will promptly be returned to the Indenture
Trustee when the need for it by the Master Servicer no longer exists unless
the Mortgage Loan has been liquidated or retransferred), and to the extent the
transmission originates on its face from a Servicing Officer, need not be
manually signed. The Master Servicer shall return the Mortgage File to the
Indenture Trustee when the need for it by the Master Servicer no longer
exists, unless the Mortgage Loan is liquidated, in which case, upon receipt of
a certificate of a Servicing Officer similar to that specified above, the
Request for Release shall be released by the Indenture Trustee to the Master
Servicer.
To facilitate the foreclosure of the mortgage securing any Mortgage
Loan that is in default following recordation of the assignments of mortgage
in accordance with this Agreement, if so requested by the Master Servicer, the
Indenture Trustee shall execute an appropriate assignment in the form provided
to the Indenture Trustee by the Master Servicer to assign the Mortgage Loan
for the purpose of collection to the Master Servicer or a subservicer. The
assignment shall unambiguously indicate that the assignment is for the purpose
of collection only. The Master Servicer will then bring all required actions
in its own name and otherwise enforce the terms of the Mortgage Loan and
deposit the Net Liquidation Proceeds, exclusive of Foreclosure Profits, in the
Collection Account. If all delinquent payments due under the Mortgage Loan are
paid by the mortgagor and any other defaults are cured, then the Master
Servicer shall promptly reassign the Mortgage Loan to the Indenture Trustee
and return the related Mortgage File to the place where it was being
maintained.
Section 3.08. Servicing Compensation; Payment of Certain Expenses
by Master Servicer.
The Master Servicer may retain the Servicing Fee pursuant to Section
3.02 as compensation for its services in servicing the Mortgage Loans.
Moreover, additional servicing compensation in the form of late payment
charges or other receipts not required to be deposited in the Collection
Account (other than Foreclosure Profits) shall be retained by the Master
Servicer. The Master Servicer must pay all expenses incurred by it in
connection with its activities under this Agreement (including payment of all
other fees and expenses not expressly stated under this Agreement to be for
the account of another person) and shall not be entitled to
28
reimbursement under this Agreement except as specifically provided in this
Agreement. Liquidation Expenses are reimbursable to the Master Servicer
First, from related Liquidation Proceeds and
Second, from the Payment Account from funds pursuant to Section
8.03(a)(ix) of the Indenture.
Section 3.09. Annual Statement as to Compliance.
(a) The Master Servicer will deliver to the Indenture Trustee, the
Credit Enhancer, and the Rating Agencies, by the date in each year specified
in the Adoption Annex, beginning on the date specified in the Adoption Annex,
an Officer's Certificate stating that (i) a review of the activities of the
Master Servicer during the preceding fiscal year (or the applicable shorter
period for the first report) and of its performance under this Agreement has
been made under the officer's supervision and (ii) to the best of the
officer's knowledge, based on the review, the Master Servicer has fulfilled
all of its material obligations under this Agreement throughout the fiscal
year, or, if there has been a default in the fulfillment of those obligations,
specifying each default known to the officer and its nature and status.
(b) Within five Business Days after obtaining knowledge of it, the
Master Servicer shall notify the Indenture Trustee, the Credit Enhancer, and
each of the Rating Agencies of any event that with the giving of notice or the
lapse of time would become an Event of Servicing Termination by delivering an
Officer's Certificate describing the event.
Section 3.10. Annual Servicing Report.
By the date in each year specified in the Adoption Annex, beginning
on the date specified in the Adoption Annex, the Master Servicer, at its
expense, shall cause a firm of nationally recognized independent public
accountants (who may also render other services to the Master Servicer) to
furnish a report to the Indenture Trustee, the Credit Enhancer, and each
Rating Agency to the effect that the firm has examined certain documents and
records relating to the servicing of mortgage loans during the most recent
fiscal year then ended under sale and servicing agreements or pooling and
servicing agreements (substantially similar to this Agreement, including this
Agreement), that the examination was conducted substantially in compliance
with the audit guide for audits of non-supervised mortgagees approved by the
Department of Housing and Urban Development for use by independent public
accountants (to the extent that the procedures in the audit guide are
applicable to the servicing obligations in those agreements), and that the
examination has disclosed no items of noncompliance with this Agreement that,
in the opinion of the firm, are material, except for the items of
noncompliance described in the report.
Section 3.11. Access to Certain Documentation and Information
Regarding the Mortgage Loans.
(a) The Master Servicer shall provide to the Indenture Trustee, the
Credit Enhancer, any Noteholders or Note Owners that are federally insured
savings and loan associations, the Office of Thrift Supervision, successor to
the Federal Home Loan Bank Board, the FDIC, and the supervisory agents and
examiners of the Office of Thrift Supervision access to the
29
documentation regarding the Mortgage Loans required by applicable regulations
of the Office of Thrift Supervision and the FDIC (acting as operator of the
Savings Association Insurance Fund or the Bank Insurance Fund). The Master
Servicer will provide access without charge but only after reasonable notice
and during normal business hours at the offices of the Master Servicer.
Nothing in this Section shall derogate from the obligation of the Master
Servicer to observe any applicable law prohibiting disclosure of information
regarding the mortgagors and the failure of the Master Servicer to provide
access as provided in this Section as a result of this obligation shall not
constitute a breach of this Section.
(b) The Master Servicer shall supply the information needed to make
required payments and to furnish required reports to Noteholders and to make
any claim under the Policy, in the form the Indenture Trustee reasonably
requests, to the Indenture Trustee and any Paying Agent by the start of the
Determination Date preceding the related Payment Date.
Section 3.12. Maintenance of Certain Servicing Insurance Policies.
The Master Servicer shall during the term of its service as master
servicer maintain in force (i) policies of insurance covering errors and
omissions in the performance of its obligations as master servicer under this
Agreement and (ii) a fidelity bond covering its officers, employees, or
agents. Each policy and bond together shall comply with the requirements from
time to time of ▇▇▇▇▇▇ ▇▇▇ for persons performing servicing for mortgage loans
purchased by ▇▇▇▇▇▇ Mae.
Section 3.13. Reports to the Securities and Exchange Commission.
The Administrator shall, on behalf of the Trust, effect filing with
the Securities and Exchange Commission of any periodic reports required to be
filed under the Securities Exchange Act of 1934 and the rules and regulations
of the Securities and Exchange Commission under it not covered by Section
3.14. At the request of the Administrator, each of the Sponsor, the Master
Servicer, the Depositor, the Indenture Trustee, and the Transferor shall
cooperate with the Administrator in the preparation of these reports and shall
provide to the Indenture Trustee in a timely manner all information or
documentation the Indenture Trustee reasonably requests in connection with the
performance of its obligations under this Section. The Master Servicer shall
prepare, execute, and deliver all certificates or other documents required to
be delivered by the Trust pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.
Section 3.14. Filing Obligations.
(a) The Master Servicer, the Indenture Trustee, and each Seller shall
reasonably cooperate with the Issuer in connection with the satisfaction of
the Issuer's reporting requirements under the Exchange Act with respect to the
Trust. In addition to the information specified below, if so requested by the
Issuer for the purpose of satisfying its reporting obligation under the
Exchange Act, the Master Servicer, the Indenture Trustee, and each Seller
shall provide the Issuer with
(i) any information available to it without unreasonable effort
or expense and within the timeframe reasonably requested by the
Issuer to comply with the Issuer's reporting obligations under the
Exchange Act and
30
(ii) to the extent it is a party (and the Issuer is not a
party) to any agreement or amendment required to be filed, copies of
the agreement or amendment in ▇▇▇▇▇-compatible form.
(b) In accordance with the Exchange Act, the Indenture Trustee shall
prepare for filing and file within 15 days after each Payment Date (subject to
permitted extensions under the Exchange Act) with the Commission with respect
to the Trust, a Form 10-D with copies of the Monthly Statement and, to the
extent delivered to the Indenture Trustee, no later than 10 days following the
Payment Date, any other information identified by the Issuer or the Master
Servicer, in writing, to be filed with the Commission (the "Additional
Designated Information"). If the Issuer or Master Servicer directs that any
Additional Designated Information is to be filed with any Form 10-D, the
Issuer or Master Servicer, as the case may be, shall specify the Item on Form
10-D to which the information is responsive and, with respect to any Exhibit
to be filed on Form 10-D, the Exhibit number. Any information to be filed on
Form 10-D shall be delivered to the Indenture Trustee in ▇▇▇▇▇-compatible form
or as otherwise agreed upon by the Indenture Trustee and the Issuer or the
Master Servicer, as the case may be, at the Issuer's expense, and any
necessary conversion to ▇▇▇▇▇-compatible format will be at the Issuer's
expense. At the reasonable request of, and in accordance with the reasonable
directions of, the Issuer or the Master Servicer, subject to the two preceding
sentences, the Indenture Trustee shall prepare for filing and file an
amendment to any Form 10-D previously filed with the Commission with respect
to the Trust Fund. The Master Servicer shall sign the Form 10-D filed on
behalf of the Trust.
(c) No later than each Payment Date, each of the Master Servicer and
the Indenture Trustee shall notify the Issuer and the Master Servicer of any
litigation or governmental proceedings material to the Holders of the Notes
pending against it or (to the extent the Master Servicer or the Indenture
Trustee has actual knowledge of any such litigation or governmental
proceedings material to the Holders of the Notes) pending against any of the
Trust, the Depositor, or any subservicer, together with a description of the
item that conforms to Regulation AB. If so requested by the Issuer, each of
the Master Servicer and the Indenture Trustee shall provide any information
that is available to the Master Servicer and the Indenture Trustee, as
applicable, without unreasonable effort or expense regarding the performance
or servicing of the Mortgage Loans (in the case of the Indenture Trustee,
based on the information provided by the Master Servicer) reasonably required
to facilitate preparation of distribution reports in accordance with Item 1121
of Regulation AB. The information shall be provided concurrently with the
Servicing Certificate delivered pursuant to Section 4.01 in the case of the
Master Servicer and the Monthly Statement in the case of the Indenture
Trustee, commencing with the first report due not less than five Business Days
following the request.
(d) If the parties to this Agreement desire to further clarify or
amend any provision of this Section 3.14, this Agreement shall be amended to
reflect the new agreement between the parties covering matters in this Section
3.14 pursuant to Section 8.01, which amendment shall not require any Opinion
of Counsel or satisfaction of the Rating Agency Condition or the consent of
any holder of Certificates or Notes.
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Section 3.15. Tax Treatment.
The Transferor shall treat the Mortgage Loans as its property for all
federal, state, or local tax purposes and shall report all income earned
thereon (including amounts payable as fees to the Master Servicer) as its
income for income tax purposes. The Master Servicer shall prepare all tax
information required by law to be distributed to Noteholders. The Master
Servicer shall not be liable for any liabilities, costs, or expenses of the
Trust, the Noteholders, the Transferor, or the Note Owners arising under any
tax law, including federal, state, or local income and franchise or excise
taxes or any other tax imposed on or measured by income (or any interest or
penalty with respect to any tax or arising from a failure to comply with any
tax requirement).
ARTICLE IV
Servicing Certificate
Section 4.01. Servicing Certificate.
Not later than each Determination Date, the Master Servicer shall
deliver (a) to the Indenture Trustee, the data necessary to prepare the items
below and the statement for Noteholders required to be prepared pursuant to
Section 4.04 and (b) to the Indenture Trustee, the Owner Trustee, the Sponsor,
the Depositor, the Paying Agent, the Credit Enhancer, and each Rating Agency a
Servicing Certificate (in written form or the form of computer readable media
or such other form as may be agreed to by the Indenture Trustee and the Master
Servicer), together with an Officer's Certificate to the effect that the
Servicing Certificate is correct in all material respects, stating the related
Collection Period, Payment Date, the series number of the Notes, the date of
this Agreement, and:
(i) the aggregate amount of collections received on the
Mortgage Loans by the Determination Date for the related Collection
Period;
(ii) the aggregate amount of (a) Interest Collections for the
related Collection Period and (b) Principal Collections for the
related Collection Period;
(iii) the Investor Floating Allocation Percentage and the
Investor Fixed Allocation Percentage for the related Collection
Period;
(iv) the Investor Interest Collections and Investor Principal
Collections for the related Collection Period;
(v) the Interest Collections that are not Investor Interest
Collections and Transferor Principal Collections for the related
Collection Period;
(vi) the Note Interest and the applicable Note Rate for each
Class of Notes for the related Interest Period;
(vii) the amount of the Note Interest that is not payable to
the Holders of each Class of Notes because of insufficient Investor
Interest Collections;
(viii) the Unpaid Investor Interest Shortfall for each Class of
Notes and the amount of interest on the shortfall at the applicable
Note Rate for each Class of Notes
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applicable from time to time (separately stated) to be distributed
on the related Payment Date;
(ix) the remaining Unpaid Investor Interest Shortfall for each
Class of Notes after the distribution on the related Payment Date;
(x) the amount of any Basis Risk Carryforward for each Class of
Notes in the distribution;
(xi) the amount of the remaining Basis Risk Carryforward for
each Class of Notes after giving effect to the related distribution;
(xii) the Accelerated Principal Payment Amount and the portion
of it that will be distributed pursuant to Section 8.03(a)(vii) of
the Indenture;
(xiii) the Scheduled Principal Collections Payment Amount,
separately stating its components;
(xiv) the amount of any Transfer Deposit Amount paid by the
Sponsor or the Depositor pursuant to Section 2.07;
(xv) any accrued Servicing Fees for the Mortgage Loans for
previous Collection Periods and the Servicing Fee for the related
Collection Period;
(xvi) the Investor Loss Amount for the related Collection
Period;
(xvii) the aggregate amount of Investor Loss Reduction Amounts
for previous Payment Dates that have not been previously reimbursed
to the Holders of each Class of Notes pursuant to Section 8.03(a)(v)
or Section 8.03(c) of the Indenture;
(xviii) the aggregate Asset Balance of the Mortgage Loans as of
the end of the preceding Collection Period and as of the end of the
second preceding Collection Period;
(xix) the Note Principal Balance for each Class of Notes and
loan factor after giving effect to the payment on each Class of
Notes on the related Payment Date and to any reduction because of
the Investor Loss Amount and the allocation of Applied Realized Loss
Amounts for that Payment Date;
(xx) the Transferor Interest and the Available Transferor
Subordinated Amount after giving effect to the distribution on the
Payment Date;
(xxi) the aggregate amount of Additional Balances created on
the Mortgage Loans during the previous Collection Period;
(xxii) the number and aggregate Asset Balances of Mortgage
Loans (x) as to which the Minimum Monthly Payment is delinquent for
30-59 days, 60-89 days, and 90 or more days, respectively and (y)
that have become REO, in each case as of the end of the preceding
Collection Period;
(xxiii) whether a Rapid Amortization Event has occurred since
the prior Determination Date, specifying the Rapid Amortization
Event if one has occurred;
(xxiv) whether an Event of Servicing Termination has occurred
since the prior Determination Date, specifying the Event of
Servicing Termination if one has occurred;
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(xxv) the amount to be distributed to the Credit Enhancer
pursuant to Section 8.03(a)(vi) and Section 8.03(a)(viii) of the
Indenture, stated separately;
(xxvi) the Guaranteed Principal Payment Amount for each Class
of Notes for the Payment Date;
(xxvii) the Credit Enhancement Draw Amount for each Class of
Notes for the related Payment Date;
(xxviii) the amount to be distributed on the Mortgage Loans to
the Transferor pursuant to Section 8.03(a)(xi) of the Indenture;
(xxix) the amount to be paid to the Master Servicer pursuant to
Section 8.03(a)(ix) of the Indenture;
(xxx) the Maximum Rate for the related Collection Period and
the Weighted Average Net Loan Rate for the Mortgage Loans;
(xxxi) the expected amount of any optional advances pursuant to
Section 4.03 by the Master Servicer on the Mortgage Loans included
in the distribution on the related Payment Date and the aggregate
expected amount of optional advances pursuant to Section 4.03 by the
Master Servicer outstanding on the Mortgage Loans as of the close of
business on the related Payment Date;
(xxxii) the number and principal balances of any Mortgage Loans
transferred to the Transferor pursuant to Section 2.06; and
(xxxiii) in the Servicing Certificates for the first and second
Payment Dates, the number and Cut-off Date Asset Balance of Mortgage
Loans for which the Mortgage Loan File was not delivered to the
Indenture Trustee within 30 days of the Closing Date.
(xxxiv) the number and aggregate Asset Balances of Mortgage
Loans as to which the Minimum Monthly Payment is delinquent for 180
or more days;
(xxxv) the number and aggregate Asset Balances of Mortgage
Loans that are in foreclosure;
(xxxvi) the number and aggregate Asset Balances of Mortgage
Loans for which the Master Servicer has received a written notice of
the filing of bankruptcy or insolvency proceedings with respect to
the mortgagor; and
(xxxvii) the sum of the Asset Balances for the three largest
outstanding Mortgage Loans.
The Indenture Trustee and the Owner Trustee shall conclusively rely
on the information in a Servicing Certificate for purposes of making
distributions pursuant to Section 8.03 of the
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Indenture or distributions on the Transferor Certificates, shall have no duty
to inquire into this information, and shall have no liability in so relying.
The format and content of the Servicing Certificate may be modified by the
mutual agreement of the Master Servicer, the Indenture Trustee, and the Credit
Enhancer. The Master Servicer shall give notice of any changes to the Rating
Agencies.
Section 4.02. Acknowledgement and Cooperation.
The Depositor, the Master Servicer, and the Indenture Trustee
acknowledge that without the need for any further action on the part of the
Credit Enhancer, the Depositor, the Master Servicer, the Indenture Trustee, or
the Note Registrar (a) to the extent the Credit Enhancer makes payments,
directly or indirectly, on account of principal of or interest or other
amounts on any Insured Notes to the Holders of the Insured Notes, the Credit
Enhancer will be fully subrogated to the rights of these Holders to receive
the principal and interest from the Trust and (b) the Credit Enhancer shall be
paid the principal and interest or other amounts but only from the sources and
in the manner provided in this Agreement for the payment of the principal and
interest or other amounts. The Indenture Trustee and the Master Servicer shall
cooperate in all respects with any reasonable request by the Credit Enhancer
for action to preserve or enforce the Credit Enhancer's rights or interests
under this Agreement and the Indenture without limiting the rights or
affecting the interests of the Holders as otherwise stated in this Agreement
and the Indenture.
Section 4.03. Optional Advances of the Master Servicer.
The Master Servicer, in its sole discretion, may advance the interest
component of any delinquent Minimum Monthly Payment (or any portion of it) by
depositing the amount into the Collection Account by the related Determination
Date.
Section 4.04. Statements to Noteholders.
Concurrently with each payment to Noteholders, the Master Servicer
shall deliver to the Indenture Trustee the data necessary to prepare a
statement (the "Monthly Statement") for each Payment Date with the following
information:
(i) the Investor Floating Allocation Percentage for the
preceding Collection Period; (ii) the aggregate amount to be paid to
the Classes of Noteholders;
(iii) the amount of Note Interest in the payment related to
each Class of Notes and the applicable Note Rate;
(iv) the amount of any related Unpaid Investor Interest
Shortfall in the payment;
(v) the amount of the remaining related Unpaid Investor
Interest Shortfall after giving effect to the payment;
(vi) the amount of principal in the payment, separately stating
its components;
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(vii) the amount of the reimbursement of previous Investor Loss
Amounts in the payment;
(viii) the amount of the aggregate of unreimbursed Investor
Loss Reduction Amounts after giving effect to the payment;
(ix) the amount of any Basis Risk Carryforward in the payment;
(x) the amount of the remaining Basis Risk Carryforward after
giving effect to the payment;
(xi) the Servicing Fee for the Payment Date;
(xii) the Note Principal Balance or Notional Balance of the
Classes of Notes and the factor to seven decimal places obtained by
dividing the Note Principal Balance of the Class of Notes for the
Payment Date by the Original Note Principal Balance of the Class of
Principal Amount Notes after giving effect to the payment and the
allocation of Applied Realized Loss Amounts for that Payment Date;
(xiii) the Loan Pool Balance as of the end of the preceding
Collection Period;
(xiv) any Credit Enhancement Draw Amount for the Class of
Principal Amount Notes;
(xv) the number and aggregate Asset Balances of Mortgage Loans
as to which the Minimum Monthly Payment is delinquent for 30-59
days, 60-89 days, and 90 or more days, respectively, as of the end
of the preceding Collection Period;
(xvi) the book value (within the meaning of 12 C.F.R. ss.
571.13 or comparable provision) of any real estate acquired through
foreclosure or grant of a deed in lieu of foreclosure;
(xvii) the amount of any optional advances on the Mortgage
Loans pursuant to Section 4.03 by the Master Servicer included in
the payment on the Payment Date and the aggregate amount of optional
advances pursuant to Section 4.03 on Mortgage Loans by the Master
Servicer outstanding as of the close of business on the Payment
Date;
(xviii) the number and principal balances of any Mortgage Loans
retransferred to the Transferor pursuant to each of Section 2.04 and
Section 2.06;
(xix) the amount of Subordinated Transferor Collections for the
Mortgage Loans included in the payment;
(xx) the amount of Excess Overcollateralization Amount for the
related Payment Date;
(xxi) the Available Transferor Subordinated Amount for the
Payment Date;
(xxii) for the first Payment Date, the number and Cut-off Date
Asset Balance of Mortgage Loans for which the Mortgage Loan File was
not delivered to the
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Indenture Trustee within 30 days of the Closing Date or Subsequent
Closing Date, as applicable;
(xxiii) the amount being paid to the Class R-1 Certificates;
and
(xxiv) the Net Draws and in the aggregate.
The amounts furnished pursuant to clauses (ii), (iii) (for Note
Interest), (iv), (v), (vi), (vii), and (viii) above shall be expressed as a
dollar amount per $1,000 increment of Notes.
If the Monthly Statement is not accessible to any of the Noteholders,
the Master Servicer, the Credit Enhancer, or either Rating Agency on the
Indenture Trustee's internet website, the Indenture Trustee shall forward a
hard copy of it to each Noteholder, the Master Servicer, the Credit Enhancer,
and each Rating Agency immediately after the Indenture Trustee becomes aware
that the Monthly Statement is not accessible to any of them via the Indenture
Trustee's internet website. The address of the Indenture Trustee's internet
website where the Monthly Statement will be accessible is
▇▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇. Assistance in using the Indenture Trustee's
internet website may be obtained by calling the Indenture Trustee's customer
service desk at (▇▇▇) ▇▇▇-▇▇▇▇. The Indenture Trustee shall notify each
Noteholder, the Master Servicer, the Credit Enhancer, and each Rating Agency
in writing of any change in the address or means of access to the internet
website where the Monthly Statement is accessible.
Within 60 days after the end of each calendar year, the Master
Servicer shall prepare and forward to the Indenture Trustee the information in
clauses (iii) and (vi) above aggregated for the calendar year. This
requirement of the Master Servicer shall be satisfied if substantially
comparable information is provided by the Master Servicer or a Paying Agent
pursuant to any requirements of the Code.
The Indenture Trustee shall prepare (in a manner consistent with the
treatment of the Notes as indebtedness of the Transferor, or as may be
otherwise required by Section 3.14) Internal Revenue Service Form 1099 (or any
successor form) and any other tax forms required to be filed or furnished to
Noteholders for payments by the Indenture Trustee (or the Paying Agent) on the
Notes and shall file and distribute such forms as required by law.
ARTICLE V
The Master Servicer, the Sponsor, and the Depositor
Section 5.01. Liability of the Sponsor, the Master Servicer, and
the Depositor.
The Sponsor, the Depositor, and the Master Servicer shall be liable
only for their express agreements under this Agreement.
Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Master Servicer or the Depositor.
Any corporation into which the Master Servicer or the Depositor may
be merged or consolidated, or any corporation resulting from any merger,
conversion, or consolidation to
37
which the Master Servicer or the Depositor is a party, or any corporation
succeeding to the business of the Master Servicer or the Depositor, shall be
the successor of the Master Servicer or the Depositor, as the case may be,
under this Agreement, without the execution or filing of any paper or any
further act on the part of any of the parties to this Agreement,
notwithstanding anything in this Agreement to the contrary.
Section 5.03. Limitation on Liability of the Master Servicer and
Others.
Neither the Master Servicer nor any of its directors, officers,
employees, or agents is liable to the Trust, the Owner Trustee, the
Transferor, or the Noteholders for the Master Servicer's taking any action or
refraining from taking any action in good faith pursuant to this Agreement, or
for errors in judgment. This provision shall not protect the Master Servicer
or any of its directors, officers, employees, or agents against any liability
that would otherwise be imposed for misfeasance, bad faith, or gross
negligence in the performance of the duties of the Master Servicer or for
reckless disregard of the obligations of the Master Servicer. The Master
Servicer and any of its directors, officers, employees, or agents may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any person about anything arising under this Agreement.
The Master Servicer and each of its directors, officers, employees,
and agents shall be indemnified by the Trust (but only from funds available)
and held harmless against any loss, liability, or expense incurred in
connection with any legal action relating to this Agreement, the Transferor
Certificates, or the Notes, other than any loss, liability, or expense related
to any specific Mortgage Loan that is otherwise not reimbursable pursuant to
this Agreement and any loss, liability, or expense incurred due to its willful
misfeasance, bad faith, or gross negligence in the performance of duties under
this Agreement or due to its reckless disregard of its obligations under this
Agreement.
The Master Servicer need not appear in, prosecute, or defend any
legal action that is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement, and that in its opinion may involve
it in any expense or liability. The Master Servicer may in its sole discretion
undertake any action that it deems appropriate with respect to this Agreement
and the interests of the Noteholders. If so, the reasonable legal expenses and
costs of the action and any resulting liability shall be expenses, costs, and
liabilities of the Trust, and the Master Servicer shall only be entitled to be
reimbursed pursuant to Section 8.03(a)(ix) of the Indenture (but only from
funds available). The Master Servicer's right to indemnity or reimbursement
pursuant to this Section shall survive any resignation or termination of the
Master Servicer pursuant to Section 5.04 or 6.01 with respect to any losses,
expenses, costs, or liabilities arising before its resignation or termination
(or arising from events that occurred before its resignation or termination).
Section 5.04. Master Servicer Not to Resign.
Subject to Section 5.02, the Master Servicer shall not resign as
Master Servicer under this Agreement except
(i) if the performance of its obligations under this Agreement
are no longer permissible under applicable law or due to applicable
law are in material conflict with
38
any other activities carried on by it or its subsidiaries or
Affiliates that are of a type and nature carried on by the Master
Servicer or its subsidiaries or Affiliates at the date of this
Agreement or
(ii) if
(a) the Master Servicer has proposed a successor Master
Servicer to the Indenture Trustee and the proposed successor
Master Servicer is reasonably acceptable to the Indenture
Trustee;
(b) each Rating Agency has delivered a letter to the
Indenture Trustee before the appointment of the successor
Master Servicer stating that the proposed appointment of the
successor Master Servicer as Master Servicer under this
Agreement will not result in the reduction or withdrawal of the
then current rating of the Notes without regard to the Policy;
and
(c) the proposed successor Master Servicer is reasonably
acceptable to the Credit Enhancer in its sole discretion, as
evidenced by a letter to the Indenture Trustee.
No resignation by the Master Servicer shall become effective until
the Indenture Trustee or successor Master Servicer designated by the Master
Servicer has assumed the Master Servicer's obligations under this Agreement or
the Indenture Trustee has designated a successor Master Servicer in accordance
with Section 6.02. Any resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in Sections 6.01 and 6.02
as obligations that survive the resignation or termination of the Master
Servicer. Any determination permitting the resignation of the Master Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to
that effect delivered to the Indenture Trustee and the Credit Enhancer. The
Master Servicer shall have no claim (whether by subrogation or otherwise) or
other action against the Transferor, any Noteholder, or the Credit Enhancer
for any amounts paid by the Master Servicer pursuant to any provision of this
Agreement.
Section 5.05. Delegation of Duties.
In the ordinary course of business, the Master Servicer may delegate
any of its duties under this Agreement at any time to any person who agrees to
act in accordance with standards comparable to those with which the Master
Servicer complies pursuant to Section 3.01, including any of its Affiliates or
any subservicer referred to in Section 3.01. This delegation shall not relieve
the Master Servicer of its obligations under this Agreement and shall not
constitute a resignation within the meaning of Section 5.04.
Section 5.06. Indemnification by the Master Servicer.
The Master Servicer shall indemnify the Trust, the Owner Trustee, and
the Indenture Trustee against any loss, liability, expense, damage, or injury
suffered or sustained due to the Master Servicer's actions or omissions in
servicing or administering the Mortgage Loans that are not in accordance with
this Agreement, including any judgment, award, settlement, reasonable
attorneys' fees, and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding, or claim. This
indemnification is not payable
39
from the assets of the Trust. This indemnity shall run directly to and be
enforceable by an injured party subject to any applicable limitations.
The Indenture Trustee and any director, officer, employee, or agent
of the Indenture Trustee shall be indemnified by the Master Servicer and held
harmless against any loss, liability or expense (i) incurred in connection
with any legal action relating to this Agreement, the Indenture, the Custodial
Agreement, the Administration Agreement, the Notes, or the Transferor
Certificates, or in connection with the performance of any of the Indenture
Trustee's duties thereunder, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of any of the Indenture Trustee's duties under this Agreement, the
Indenture, or the Custodial Agreement or by reason of reckless disregard of
the Indenture Trustee's obligations and duties under this Agreement.
The indemnity provisions of this Section shall survive the
termination of this Agreement or the resignation or removal of the Indenture
Trustee under the Indenture.
Section 5.07. Credit Enhancer's Rights Regarding Actions,
Proceedings, or Investigations.
Until the Insured Notes have been paid in full, all amounts owed to
the Credit Enhancer have been paid in full, the Insurance Agreement has
terminated, and the Policy has been returned to the Credit Enhancer for
cancellation, notwithstanding anything contained in this Agreement or in the
other Transaction Documents to the contrary, the Credit Enhancer shall have
the right to participate in, to direct the enforcement or defense of, and, at
the Credit Enhancer's sole option, to institute or assume the defense of, any
action, proceeding, or investigation (other than foreclosure proceedings
involving the Mortgage Loans and other actions constituting ordinary servicing
activities) that could adversely affect the Collateral, the Issuer, or the
rights or obligations of the Credit Enhancer under the Policy or the
Transaction Documents, including any insolvency or bankruptcy proceeding in
respect of the Master Servicer, the Sponsor, the Depositor, the Issuer, or any
affiliate of any of them. Following notice to the Owner Trustee and the
Indenture Trustee, the Credit Enhancer shall have exclusive right to
determine, in its sole discretion, the actions necessary to preserve and
protect the Collateral and the Issuer. All costs and expenses of the Credit
Enhancer in connection with such action, proceeding, or investigation,
including any judgment or settlement entered into affecting the Credit
Enhancer or the Credit Enhancer's interests, shall be included in
reimbursement amount owed to the Credit Enhancer under Section 8.03(a)(ix) and
Section 8.03(a)(xi) of the Indenture.
ARTICLE VI
Servicing Termination
Section 6.01. Events of Servicing Termination.
If any one of the following events ("Events of Servicing
Termination") shall occur and be continuing:
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(i) any failure by the Master Servicer to deposit in the
Collection Account any deposit required to be made under this
Agreement or to remit to the Indenture Trustee amounts required to
be deposited to the Payment Account that continues unremedied either
beyond the relevant Payment Date or for five Business Days after the
date when notice of the failure has been given to the Master
Servicer by the Indenture Trustee or to the Master Servicer and the
Indenture Trustee by the Credit Enhancer or Holders of Notes
representing not less than 25% of the Outstanding Amount of all
Classes of Notes; or
(ii) failure by the Master Servicer duly to observe or perform
in any material respect any other covenants or agreements of the
Master Servicer in the Notes or in this Agreement that materially
and adversely affects the interests of the Noteholders or the Credit
Enhancer and continues unremedied for 60 days after the date on
which notice of the failure, requiring it to be remedied, and
stating that the notice is a "Notice of Default" under this
Agreement, has been given to the Master Servicer by the Indenture
Trustee or to the Master Servicer and the Indenture Trustee by the
Credit Enhancer or the Holders of Notes representing not less than
25% of the Outstanding Amount of all Classes of Notes; or
(iii) an Insolvency Event occurs with respect to the Master
Servicer;
then, until the Event of Servicing Termination has been remedied by the Master
Servicer, either the Indenture Trustee (with the consent of the Credit
Enhancer), the Credit Enhancer, or the Holders of Notes representing not less
than 51% of the Outstanding Amount of all Classes of Notes with the consent of
the Credit Enhancer by notice then given to the Master Servicer (and to the
Indenture Trustee if given by the Credit Enhancer or the Holders of Notes) may
terminate all of the rights and obligations of the Master Servicer as servicer
under this Agreement. This notice to the Master Servicer shall also be given
to each Rating Agency and the Credit Enhancer.
From the receipt by the Master Servicer of the notice, all the rights
and obligations of the Master Servicer under this Agreement, whether with
respect to the Notes or the Mortgage Loans or otherwise, shall pass to and be
vested in the Indenture Trustee pursuant to this Section; and the Indenture
Trustee is authorized to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any documents, and to do anything
else appropriate to effect the purposes of the notice of termination, whether
to complete the transfer and endorsement of each Mortgage Loan and related
documents, or otherwise. The Master Servicer agrees to cooperate with the
Indenture Trustee in effecting the termination of the rights and obligations
of the Master Servicer under this Agreement, including the transfer to the
Indenture Trustee for the administration by it of all cash amounts that are
held by the Master Servicer and are to be deposited by it in the Collection
Account, or that have been deposited by the Master Servicer in the Collection
Account or are subsequently received by the Master Servicer with respect to
the Mortgage Loans. All reasonable costs and expenses (including attorneys'
fees) incurred in connection with transferring the Mortgage Files to the
successor Master Servicer and amending this Agreement to reflect the
succession as Master Servicer pursuant to this Section shall be
41
paid by the predecessor Master Servicer (or if the predecessor Master Servicer
is the Indenture Trustee, the initial Master Servicer) on presentation of
reasonable documentation of the costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 6.01(i) for five or more Business Days or under Section 6.01(ii)
for 60 or more days, shall not constitute an Event of Servicing Termination if
the delay or failure could not be prevented by the exercise of reasonable
diligence by the Master Servicer and the delay or failure was caused by an act
of God or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods, or similar causes. The preceding sentence
shall not relieve the Master Servicer from using its best efforts to perform
its obligations in a timely manner in accordance with the terms of this
Agreement, and the Master Servicer shall provide the Indenture Trustee, the
Depositor, the Transferor, the Credit Enhancer, and the Noteholders with an
Officers' Certificate giving prompt notice of its failure or delay, together
with a description of its efforts to perform its obligations. The Master
Servicer shall immediately notify the Indenture Trustee of any Events of
Servicing Termination.
In connection with the termination of the Master Servicer if any
mortgage is registered on the MERS(R) System, then, either (i) the successor
Master Servicer, including the Indenture Trustee if the Indenture Trustee is
acting as successor Master Servicer, shall represent and warrant that it is a
member of MERS in good standing and shall agree to comply in all material
respects with the rules and procedures of MERS in connection with the
servicing of the Mortgage Loans that are registered with MERS, or (ii) the
predecessor Master Servicer shall cooperate with the successor Master Servicer
in causing MERS to execute and deliver an assignment of mortgage in recordable
form to transfer all the mortgages registered on the MERS(R) System from MERS
to the Indenture Trustee and to execute and deliver any other notices and
documents appropriate to effect a transfer of those mortgages or the servicing
of the Mortgage Loan on the MERS(R) System to the successor Master Servicer.
The predecessor Master Servicer shall file the assignment in the appropriate
recording office. The successor Master Servicer shall deliver the assignment
to the Indenture Trustee promptly upon receipt of the original with evidence
of recording on it or a copy certified by the public recording office in which
the assignment was recorded.
Section 6.02. Indenture Trustee to Act; Appointment of Successor.
(a) From the time the Master Servicer receives a notice of
termination pursuant to Section 6.01 or resigns pursuant to Section 5.04, the
Indenture Trustee shall be the successor in all respects to the Master
Servicer in its capacity as Master Servicer under this Agreement and the
transactions contemplated by this Agreement and shall be subject to all the
obligations of the Master Servicer under this Agreement except (i) the
obligation to repurchase or substitute for any Mortgage Loan, (ii) with
respect to any representation or warranty of the Master Servicer, or (iii) for
any act or omission of either a predecessor or successor Master Servicer other
than the Indenture Trustee. As its compensation under this Agreement, the
Indenture Trustee shall be entitled to the compensation the Master Servicer
would have been entitled to under this Agreement if no notice of termination
had been given. In addition, the Indenture
42
Trustee will be entitled to compensation with respect to its expenses in
connection with conversion of certain information, documents, and record
keeping, as provided in Section 6.01.
Notwithstanding the above, (i) if the Indenture Trustee is unwilling
to act as successor Master Servicer, or (ii) if the Indenture Trustee is
legally unable to so act, the Indenture Trustee may (in the situation
described in clause (i)) or shall (in the situation described in clause (ii))
appoint, or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution, bank, or other mortgage loan
or home equity loan servicer having a net worth of not less than $15,000,000
as the successor to the Master Servicer under this Agreement to assume of any
obligations of the Master Servicer under this Agreement. The successor Master
Servicer must be acceptable to the Credit Enhancer in its sole discretion, as
evidenced by the Credit Enhancer's prior consent, as applicable, which consent
shall not be unreasonably withheld. The appointment of the successor Master
Servicer must not result in the qualification, reduction, or withdrawal of the
ratings assigned to the Notes by the Rating Agencies without regard to the
Policy.
Pending appointment of a successor to the Master Servicer, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act as Master Servicer. In connection with this appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation that the
Master Servicer would otherwise have received pursuant to Section 3.08 (or any
lesser compensation the Indenture Trustee and the successor agree to). The
Indenture Trustee and the successor shall take any action, consistent with
this Agreement, necessary to effectuate the succession.
(b) The appointment of a successor Master Servicer shall not affect
any liability of the predecessor Master Servicer that may have arisen under
this Agreement before its termination as Master Servicer (including any
deductible under an insurance policy pursuant to Section 3.04), nor shall any
successor Master Servicer be liable for any acts or omissions of the
predecessor Master Servicer or for any breach by the predecessor Master
Servicer of any of its representations or warranties in this Agreement. Except
for any compensation agreement with the Indenture Trustee, any successor
Master Servicer shall be subject to all the terms of this Agreement from the
time that it accepts its appointment to the same extent as if it were
originally named as Master Servicer.
Section 6.03. Notification to Noteholders and the Transferor.
Upon any termination or appointment of a successor to the Master
Servicer pursuant to this Article or Section 5.04, the Indenture Trustee shall
give prompt notice of it to the Noteholders at their respective addresses
appearing in the Note Register, the Transferor, the Credit Enhancer, and each
Rating Agency.
43
ARTICLE VII
Termination
Section 7.01. Termination.
(a) The respective obligations and responsibilities of the Sponsor,
the Master Servicer, the Depositor, the Trust, and the Indenture Trustee
created by this Agreement (other than the obligation of the Master Servicer to
send certain notices) shall terminate on the earlier of
(i) the transfer of all the Mortgage Loans pursuant to Section
7.01(b),
(ii) the termination of the Trust Agreement or the Indenture,
and
(iii) the final payment or other liquidation of the last
Mortgage Loan remaining in the Trust or the disposition of all
property acquired in foreclosure or by deed in lieu of foreclosure
of any Mortgage Loan.
Upon termination in accordance with this Section, the Indenture
Trustee shall execute any documents and instruments of transfer presented by
the Transferor, in each case without recourse, representation, or warranty,
and take any other actions the Transferor reasonably requests to effect the
transfer of the Mortgage Loans to the Transferor. Notwithstanding the
termination of this Agreement, the Master Servicer shall comply with this
Agreement in winding up activities under this Agreement after termination if
necessary.
(b) With the consent of the Credit Enhancer, the Master Servicer may
effect the transfer of all the Mortgage Loans at their termination purchase
price on any Payment Date from the Payment Date immediately before which the
aggregate Note Principal Balance of the Principal Amount Notes is less than or
equal to 10% of the aggregate Original Note Principal Balance of the Principal
Amount Notes and require the Trust to redeem the Notes pursuant to Section
10.01 of the Indenture with the proceeds. The termination purchase price is
the sum of:
(i) the aggregate Note Principal Balance for the Principal
Amount Notes,
(ii) accrued aggregate Note Interest through the day preceding
the final Payment Date, and
(iii) interest accrued on any aggregate Unpaid Investor
Interest Shortfall, to the extent legally permissible.
(c) The Master Servicer must notify the Credit Enhancer, the Trust,
and the Indenture Trustee of any election to effect the transfer of the
Mortgage Loans pursuant to Section 7.01(b) no later than the first day of the
month before the month in which the transfer is to occur. The proceeds from
the purchase of the Mortgage Loans, for purposes of payments on the Notes,
shall be considered to have been received in the Collection Period before the
Collection Period in which the Payment Date on which the purchase takes place
occurs.
Section 7.02. Additional Termination Requirements.
If the Master Servicer exercises its redemption option in Section
7.01(b), the Mortgage Loans then remaining in the Trust shall be liquidated in
accordance with the following additional requirements, unless the Indenture
Trustee has been supplied with an Opinion of Counsel to the effect that the
failure to comply with the requirements of this Section will not
44
result in the imposition of taxes on prohibited transactions on any REMIC as
defined in Section 860F of the Code, or cause any REMIC created under the
Trust Agreement to fail to qualify as a REMIC at any time that any
Certificates are outstanding:
(a) Within 90 days before the final Payment Date in the notice given
by the Indenture Trustee under Section 10.01(b) of the Indenture, the Master
Servicer shall prepare and the Indenture Trustee, at the expense of the tax
matters person, shall adopt a plan of complete liquidation within the meaning
of Section 860F(a)(4) of the Code that, as evidenced by an Opinion of Counsel,
meets the requirements of a qualified liquidation; and
(b) Within 90 days after the time of adoption of a plan of complete
liquidation, the Issuer shall sell all of the assets of the Trust to the
Master Servicer for cash greater than or equal to the sum of:
(i) 100% of the principal balance of each Mortgage Loan plus
one month's accrued interest thereon at the applicable Loan Rate,
(ii) for each such property, the lesser of the appraised value
of any Mortgaged Property that has been acquired by the Trust in
foreclosure or by deed in lieu of foreclosure as determined by the
higher of two appraisals completed by two independent appraisers
selected by the Master Servicer at the expense of the Master
Servicer and the principal balance of the related Mortgage Loan, and
(iii) any remaining unpaid costs and damages incurred by the
Trust that arise out of an actual violation of any predatory or
abusive lending law that also constitutes an actual breach of a
representation and warranty in Section 2.04, in all cases plus
accrued and unpaid interest thereon at the applicable Loan Rate.
The Indenture Trustee as agent for any REMIC created under the Trust
Agreement shall adopt and sign such a plan of complete liquidation upon the
written request of the Master Servicer and the receipt of the Opinion of
Counsel referred to in Section 7.02(a) and take any other action in connection
therewith reasonably requested by the Master Servicer.
ARTICLE VIII
Miscellaneous Provisions
Section 8.01. Amendment.
This Agreement may be amended from time to time by the Sponsor, the
Master Servicer, the Depositor, the Credit Enhancer, the Owner Trustee, and
the Indenture Trustee, if the Rating Agency Condition is satisfied (in
connection with which the consent of the Credit Enhancer shall not be
unreasonably withheld). However, no amendment that significantly changes the
permitted activities of the Trust may be promulgated without the consent of a
majority of the aggregate Outstanding Amount of the Notes. For this purpose no
Notes owned by the Sponsor or any of its affiliates may vote, nor shall their
Notes be considered outstanding. This Agreement may also be amended from time
to time by the Sponsor, the Master Servicer,
45
the Depositor, the Owner Trustee, and the Indenture Trustee, with the consent
of the Credit Enhancer (which consent shall not be unreasonably withheld) and
Holders of not less than 66-2/3% of the aggregate Outstanding Amount of the
Notes.
The Indenture Trustee may enter into any amendment of this Agreement
as to which the Rating Agency Condition is satisfied, and when so requested by
an Issuer Request, the Indenture Trustee shall enter into any amendment of
this Agreement
(i) that does not impose further obligations or liabilities on
the Indenture Trustee, and
(ii) as to which either the Rating Agency Condition is
satisfied or Holders of not less than 66-2/3% of the aggregate
Outstanding Amount of the Notes and the Credit Enhancer have
consented.
Following the execution and delivery of any amendment to this
Agreement or to the Policy to which the Credit Enhancer was required to
consent, either the Transferor, if the Transferor requested the amendment, or
the Master Servicer, if the Master Servicer requested the amendment, shall
reimburse the Credit Enhancer for the reasonable out-of-pocket costs and
expenses incurred by them in connection with the amendment.
Before the execution of the amendment, the party to this Agreement
requesting the amendment shall notify each Rating Agency of the substance of
the amendment. The Indenture Trustee shall deliver fully executed original
counterparts of the instruments effecting the amendment to the Credit
Enhancer.
Section 8.02. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without reference to its provisions that
would result in the application of the laws of another State.
Section 8.03. Notices.
All notices, demands, instructions, consents, and other
communications required or permitted under this Agreement shall be in writing
and signed by the party giving the same and shall be personally delivered or
sent by first class or express mail (postage prepaid), national overnight
courier service, or by facsimile transmission or other electronic
communication device capable of transmitting or creating a written record
(confirmed by first class mail) and shall be considered to be given for
purposes of this Agreement on the day that the writing is delivered when
personally delivered or sent by facsimile or overnight courier or three
Business Days after it was sent to its intended recipient if sent by first
class mail. A facsimile has been delivered when the sending machine issues an
electronic confirmation of transmission. Unless otherwise specified in a
notice sent or delivered in accordance with the provisions of this Section,
notices, demands, instructions, consents, and other communications in writing
shall be given to or made on the respective parties at their respective
addresses indicated below:
46
if to the Trust at:
CWHEQ Revolving Home Equity Loan Trust, Series 2005-M
Wilmington Trust Company, as Owner Trustee
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Depositor at:
CWHEQ, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Master Servicer at:
Countrywide Home Loans, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department,
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Indenture Trustee at:
the Corporate Trust Office
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Credit Enhancer at:
MBIA Insurance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Insured Portfolio Management-Structured
Finance ("IPM-SF")
(CWHEQ Revolving Home Equity Loan Trust,
Series 2005-M)
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇▇▇'▇ at:
Residential Loan Monitoring Group, 4th Floor
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
47
and if to Standard & Poor's at:
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Whenever a notice or other communication to the Credit Enhancer
refers to an Event of Servicing Termination or with respect to which failure
on the part of the Credit Enhancer to respond would constitute consent or
acceptance, then a copy of the notice or other communication shall also be
sent to the attention of the General Counsel of the Credit Enhancer and shall
be marked to indicate "URGENT MATERIAL ENCLOSED."
Section 8.04. Severability of Provisions.
Any provisions of this Agreement that are held invalid for any reason
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of the invalidity or unenforceability without
invalidating the remaining provisions of this Agreement, and the prohibition
or unenforceability in a jurisdiction shall not invalidate or render
unenforceable that provision in any other jurisdiction.
Section 8.05. Assignment.
Except as provided in Sections 5.02 and 5.04, this Agreement may not
be assigned by the Depositor or the Master Servicer without the prior consent
of the Credit Enhancer.
Section 8.06. Third-Party Beneficiaries.
This Agreement will be binding on the parties to this Agreement, and
inure to the benefit of the parties to this Agreement, the Noteholders, the
Transferor, the Note Owners, the Owner Trustee, and the Credit Enhancer and
their respective successors and permitted assigns. The Credit Enhancer is a
third party beneficiary of this Agreement. No other person will have any
rights under this Agreement.
Section 8.07. Counterparts; Electronic Delivery.
This Agreement may be executed in any number of copies, and by the
different parties on the same or separate counterparts, each of which shall be
considered to be an original instrument. Any signature page to this Agreement
containing a manual signature may be delivered by facsimile transmission or
other electronic communication device capable of transmitting or creating a
printable written record, and when so delivered shall have the effect of
delivery of an original manually signed signature page.
Section 8.08. Effect of Headings and Table of Contents.
The Article and Section headings in this Agreement and the Table of
Contents are for convenience only and shall not affect the construction of
this Agreement.
48
In Witness Whereof, the Depositor, the Sponsor and Master Servicer,
the Trust, and the Indenture Trustee have caused this Agreement to be duly
executed by their respective officers all as of the day and year first above
written.
CWHEQ, Inc.
Depositor
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
Title: Vice President
Countrywide Home Loans, Inc.
Sponsor and Master Servicer
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
Title: Senior Vice President
JPMorgan Chase Bank, N.A.,
Indenture Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Attorney-In-Fact
49
CWHEQ Revolving Home Equity Loan Trust, Series
2005-M
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
50
State of CALIFORNIA )
) ss.:
County of LOS ANGELES )
On the 29th day of December, 2005 before me, a notary public in and
for the State of California, personally appeared ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇., known to
me who, being by me duly sworn, did depose and say that he resides at
Calabasas, California; that he is the Vice President of CWHEQ, Inc. a Delaware
corporation, one of the parties that executed the foregoing instrument; that
he signed his name thereto by order of the Board of Directors of said
corporation.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Notary Public
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Commission # 1609859
Notary Public - California
Los Angeles County
My Comm. Expires October 15, 2009.
51
State of CALIFORNIA )
) ss.:
County of LOS ANGELES )
On the 29th day of December, 2005 before me, a notary public in and
for the State of California, personally appeared ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇., known to
me who, being by me duly sworn, did depose and say that he resides at
Calabasas, California; that he is the Senior Vice President of Countrywide
Home Loans, Inc., a New York corporation, one of the parties that executed the
foregoing instrument; and that he signed his name thereto by order of the
Board of Directors of said corporation.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Notary Public
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Commission # 1609859
Notary Public - California
Los Angeles County
My Comm. Expires October 15, 2009.
52
State of ILLINOIS )
) ss.:
County of ▇▇▇▇ )
On the 29th day of December, 2005 before me, a notary public in and
for the State of Illinois, personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, known to
me who, being by me duly sworn, did depose and say that he resides at
Plainfield, Illinois; that he is the Attorney-In-Fact of JPMorgan Chase Bank,
N.A., a national banking association, one of the parties that executed the
foregoing instrument; that he signed his name thereto by order of the Board of
Directors of said corporation.
/s/ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Notary Public
OFFICIAL ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Notary Public, State of Illinois
My Commission Expires: 02/03/06
53
State of DELAWARE )
) ss.:
County of NEW CASTLE )
On the 27th day of December, 2005 before me, a notary public in and
for the State of Delaware, personally appeared ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, known to me
who, being by me duly sworn, did depose and say that she resides at
Wilmington, Delaware; that she is a Vice President of Wilmington Trust
Company, not in its individual capacity but in its capacity as Owner Trustee
of CWHEQ Revolving Home Equity Loan Trust, Series 2005-M, one of the parties
that executed the foregoing instrument; that she signed her name thereto by
order of the Board of Directors of said corporation.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Notary Public
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Notary Public - State of Delaware
My Commission Expires Oct. 20, 2007
54
Exhibit A
MORTGAGE LOAN SCHEDULE
[Delivered to Indenture Trustee Only]
A-1
Exhibit B
FORM OF LETTER OF REPRESENTATIONS
B-1
Exhibit C
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
JPMorgan Chase Bank, N.A.
as Indenture Trustee
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Worldwide Securities Services/Global Debt,
Countrywide HEL CWHEQ 2005-M
Attn: Corporate Trust Services Division
Re: CWHEQ, Inc. Revolving Home Equity Loan
Asset Backed Notes, Series 2005-M
--------------------------------------
Gentlemen:
In connection with the administration of the Mortgage Loans held by
you as Indenture Trustee under the Sale and Servicing Agreement, dated as of
December 29, 2005, among CWHEQ, Inc. as Depositor, Countrywide Home Loans,
Inc., as Sponsor and Master Servicer, CWHEQ Revolving Home Equity Loan Trust,
Series 2005-M and you, as Indenture Trustee (the "Agreement"), we hereby
request a release of the Mortgage File held by you as Indenture Trustee with
respect to the following described Mortgage Loan for the reason indicated
below.
Loan No.:
--------
[MIN No.]
-------
Reason for requesting file:
--------------------------
1. Mortgage Loan paid in full. (The Master
--------------------- Servicer hereby certifies that all
amounts received in connection with the
payment in full of the Mortgage Loan
which are required to be deposited in the
Collection Account pursuant to Section
3.02 of the Agreement have been so
deposited).
2. Retransfer of Mortgage Loan. (The Master
--------------------- Servicer hereby certifies that the
Transfer Deposit Amount has been
deposited in the Collection Account
pursuant to the Agreement).
3. The Mortgage Loan is being foreclosed.
---------------------
4. The Mortgage Loan is being re-financed by
--------------------- another depository institution. (The
Master Servicer hereby certifies that all
amounts received in connection with the
payment in full of the Mortgage Loan
which are required to be deposited in the
Collection Account pursuant to Section
3.02 of the Agreement have been so
deposited).
--------------------- 5. Other (Describe).
The undersigned acknowledges that the above Mortgage File will be
held by the undersigned in accordance with the provisions of the Agreement and
will promptly be returned
C-1
to the Indenture Trustee when the need therefor by the Master Servicer no
longer exists unless the Mortgage Loan has been liquidated or retransferred.
Capitalized terms used herein shall have the meanings ascribed to
them in the Agreement.
COUNTRYWIDE HOME LOANS, INC.
By:_______________________________
Name:
Title: Servicing Officer
C-2
Exhibit D
FORM OF TRANSFER DOCUMENT
The Sponsor hereby transfers to the Depositor, and the Depositor
hereby transfers to the Owner Trustee for the benefit of CWHEQ Revolving Home
Equity Loan Trust, Series 2005-M the below identified Additional Home Equity
Loans.
Subsequent Closing Date: _________________
Subsequent Cut-off Date: __________________
Cut-off Date Asset Balance: $ ______________
Additional Home Equity Loans:
[Each of the Sponsor's funded Mortgage Loans owned by it for
securitization on the above referenced Subsequent Cut-off Date sequentially by
date beginning with the earliest date on which any of them were funded, and
within a date alphabetically, are hereby transferred to the Trust until either
their aggregate Cut-off Date Asset Balance is as close as possible to equal to
the Cut-off Date Asset Balance indicated above without exceeding it or all of
the loans through the Subsequent Cut-off Date have been transferred.]
This Transfer Document is delivered pursuant to the Purchase
Agreement and the Sale and Servicing Agreement, dated as of December 29, 2005,
among CWHEQ, Inc., Countrywide Home Loans, Inc., CWHEQ Revolving Home Equity
Loan Trust, Series 2005-M, and JPMorgan Chase Bank, N.A., and the capitalized
terms used in this document have the meanings given to them in those
agreements.
Dated: __________ , 2006.
Countrywide Home Loans, Inc. CWHEQ, Inc.
By : ___________________ By : ________________________
Name: Name:
Title: Title:
D-1
Annex 1
Definitions
"Adoption Annex" means Annex 2 to this Agreement.
"Affiliate" of any person means any other person controlling,
controlled by or under common control with the person. For purposes of this
definition, "control" means the power to direct the management and policies of
a person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise and "controlling" and "controlled" shall
have meanings correlative to the foregoing.
"Agreement" means this Sale and Servicing Agreement.
"Appraised Value" for any Mortgaged Property means the value
established by any of the following: (i) with respect to Credit Line
Agreements with Credit Limits greater than $100,000, by a full appraisal, (ii)
with respect to Credit Line Agreements with Credit Limits equal to or less
than $100,000, by either a drive by inspection or electronic appraisal of the
Mortgaged Property made to establish compliance with the underwriting criteria
then in effect in connection with the application for the Mortgage Loan
secured by the Mortgaged Property, and (iii) with respect to any Mortgage Loan
as to which the Servicer consents to a new senior lien pursuant to Section
3.01(a), in compliance with the underwriting criteria then in effect in
connection with the application for the related senior mortgage loan.
"Collection Account" means the Eligible Account or Eligible Accounts
created and maintained for the benefit of the Transferor and the Secured
Parties pursuant to Section 3.02(b).
"Combined Loan-to-Value Ratio" for any Mortgage Loan as of any date
means a fraction
o whose numerator is the sum of (i) the Credit Limit and (ii) the
outstanding principal balance as of the date of execution of the related
original Credit Line Agreement (or any subsequent date as of which the
outstanding principal balance may be determined in connection with an
increase in the Credit Limit for the Mortgage Loan) of any mortgage loans
that are senior or equal in priority to the Mortgage Loan and that are
secured by the same Mortgaged Property and
o whose denominator is the Valuation of the related Mortgaged
Property.
"Credit Limit Utilization Rate" for any Mortgage Loan means a
fraction whose numerator is the Cut-off Date Asset Balance for the Mortgage
Loan and whose denominator is the related Credit Limit.
"Cut-off Date Loan Balance" means the Loan Balance calculated as of
the Cut-off Date.
"Defective Mortgage Loan" means a Mortgage Loan subject to retransfer
pursuant to Section 2.02(b) or 2.04(d).
"Delay Delivery Certification" has the meaning given to it in the
Custodial Agreement.
"Depositor" means CWHEQ, Inc., a Delaware corporation, or its
successor in interest.
▇▇▇-1-1
"Due Date" for any Mortgage Loan means the fifteenth day of the
month.
"Electronic Ledger" means the electronic master record of home equity
credit line mortgage loans maintained by the Master Servicer or by the
Sponsor, as appropriate.
"Eligible Substitute Mortgage Loan" means a Mortgage Loan transferred
to the Trust by the Sponsor in connection with the retransfer of a Defective
Mortgage Loan that must, on the date of its transfer to the Trust,
(i) have an outstanding Asset Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage
Loan, an aggregate Asset Balance) not greater than the Transfer
Deficiency relating to the Defective Mortgage Loan;
(ii) have a Loan Rate not less than the Loan Rate of the
Defective Mortgage Loan and not more than 1.000% in excess of the
Loan Rate of the Defective Mortgage Loan;
(iii) have a Loan Rate based on the same Index with adjustments
to the Loan Rate made on the same Interest Rate Adjustment Date as
that of the Defective Mortgage Loan;
(iv) have a FICO score not less than the FICO score of the
Defective Mortgage Loan and not more than 50 points higher than the
Defective Mortgage Loan;
(v) have a Gross Margin that is not less than the Gross Margin
of the Defective Mortgage Loan and not more than 100 basis points
higher than the Gross Margin for the Defective Mortgage Loan;
(vi) have a mortgage of the same or higher level of priority as
the mortgage relating to the Defective Mortgage Loan at the time the
mortgage was transferred to the Trust;
(vii) have a remaining term to maturity not more than six
months earlier than the remaining term to maturity of the Defective
Mortgage Loan, not later than the maturity date of the Principal
Amount Notes, and not more than 60 months later than the remaining
term to maturity of the Defective Mortgage Loan;
(viii) comply with each representation and warranty in Section
2.04 (to be made as of the date of transfer to the Trust); and
(ix) have an original Combined Loan-to-Value Ratio not greater
than that of the Defective Mortgage Loan.
More than one Eligible Substitute Mortgage Loan may be substituted for a
Defective Mortgage Loan if the Eligible Substitute Mortgage Loans meet the
foregoing attributes in the aggregate and the substitution is approved in
advance by the Credit Enhancer. The procedures applied by the Sponsor in
selecting each Eligible Substitute Mortgage Loan shall not be materially
adverse to the interests of the Indenture Trustee, the Transferor, the
Noteholders, or the Credit Enhancer.
"Event of Servicing Termination" has the meaning given to it in
Section 6.01.
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"FDIC" means the Federal Deposit Insurance Corporation or any
successor to it.
"Foreclosure Profit" on a Liquidated Mortgage Loan means the excess of
(i) the aggregate of its Net Liquidation Proceeds over
(ii) the related Asset Balance (plus accrued and unpaid
interest on it at the applicable Loan Rate from the date interest
was last paid to the end of the Collection Period during which the
Mortgage Loan became a Liquidated Mortgage Loan) of the Liquidated
Mortgage Loan immediately before the final recovery of its
Liquidation Proceeds.
"Gross Margin" for any Mortgage Loan means the percentage shown as
the "Gross Margin" for the Mortgage Loan on Exhibit A.
"Indenture" means the indenture of even date with this Agreement
between the Trust and the Indenture Trustee.
"Indenture Trustee Fee" means a fee that is separately agreed to
between the Master Servicer and the Indenture Trustee.
"Indenture Trustee Fee Rate" means the per annum rate at which the
Indenture Trustee Fee is calculated.
"Index" for each Interest Rate Adjustment Date for a Mortgage Loan
means the highest "prime rate" as published in the "Money Rates" table of The
Wall Street Journal as of the first business day of the calendar month.
"Initial Mortgage Loans" means the Mortgage Loans acquired by the
Trust on the Closing Date identified on Exhibit A.
"Insurance Proceeds" means proceeds paid by any insurer (other than
the Credit Enhancer under the Policy) pursuant to any insurance policy
covering a Mortgage Loan net of any amount (i) covering any expenses of the
Master Servicer in connection with obtaining the proceeds, (ii) applied to the
restoration or repair of the related Mortgaged Property, (iii) released to the
mortgagor in accordance with the Master Servicer's normal servicing
procedures, or (iv) required to be paid to any holder of a mortgage senior to
the Mortgage Loan.
"Interest Rate Adjustment Date" for each Mortgage Loan means any date
on which the Loan Rate is adjusted in accordance with the related Credit Line
Agreement.
"Latest Subsequent Closing Date" means the date specified in the
Adoption Annex.
"Lien" means any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance,
lien (statutory or other), preference, priority right, or interest or other
Security Agreement or preferential arrangement of any kind or nature
whatsoever, including any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of
the foregoing, and the filing of any Financing Statement under the UCC (other
than any Financing Statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing except
that any assignment pursuant to Section 5.02 is not a Lien.
▇▇▇-1-3
"Lifetime Rate Cap" for each Mortgage Loan whose related Mortgage
Note provides for a lifetime rate cap means the maximum Loan Rate permitted
over the life of the Mortgage Loan under the terms of the related Credit Line
Agreement, as shown on the Mortgage Loan Schedule.
"Liquidated Mortgage Loan" for any Payment Date means any Mortgage
Loan in respect of which the Master Servicer has determined, in accordance
with the servicing procedures specified in this Agreement, as of the end of
the related Collection Period, that all Liquidation Proceeds which it expects
to recover with respect to the disposition of the Mortgage Loan or the related
REO have been recovered.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of
overhead) that are incurred by the Master Servicer in connection with the
liquidation of any Mortgage Loan and not recovered under any insurance policy,
including legal fees and expenses, any unreimbursed amount expended pursuant
to Section 3.06 (including amounts advanced to correct defaults on any
mortgage loan which is senior to the Mortgage Loan and amounts advanced to
keep current or pay off a mortgage loan that is senior to the Mortgage Loan)
respecting the related Mortgage Loan and any related and unreimbursed
expenditures with respect to real estate property taxes, water or sewer taxes,
condominium association dues, property restoration or preservation or
insurance against casualty, loss or damage.
"Liquidation Proceeds" means proceeds (including Insurance Proceeds
but not including amounts drawn under the Policy) received in connection with
the liquidation of any Mortgage Loan or related REO, whether through trustee's
sale, foreclosure sale or otherwise.
"Loan Rate Cap" for each Mortgage Loan means the lesser of (i) the
Lifetime Rate Cap or (ii) the applicable state usury ceiling.
"Loan-to-Value Ratio" for any date of determination for any mortgage
loan means a fraction whose numerator is the outstanding principal balance of
the mortgage loan as of the date of determination and whose denominator is the
Valuation of the related Mortgaged Property.
"Master Servicer" means Countrywide Home Loans, Inc., a New York
corporation and any successor to it and any successor under this Agreement.
"Minimum Monthly Payment" for any Mortgage Loan and any month means
the minimum amount required to be paid by the related mortgagor in that month.
"Net Liquidation Proceeds" for any Liquidated Mortgage Loan means
Liquidation Proceeds net of Liquidation Expenses.
"Officer's Certificate" means a certificate (i) signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, a
Managing Director, a Vice President (however denominated), an Assistant Vice
President, the Treasurer, the Secretary, or one of the Assistant Treasurers or
Assistant Secretaries of the Depositor, the Sponsor, the Transferor, or the
Master Servicer, or (ii), if provided for in this Agreement, signed by a
Servicing Officer.
"Opinion Delivery Date" means the date specified in the Adoption
Annex.
▇▇▇-1-4
"Opinion of Counsel" means a written opinion of counsel acceptable to
the Indenture Trustee, who may be in-house counsel for the Depositor, the
Sponsor, the Master Servicer, or the Transferor (except that any opinion
pursuant to Section 5.04 or relating to taxation must be an opinion of
independent outside counsel) and who, in the case of opinions delivered to the
Credit Enhancer or the Rating Agency, is reasonably acceptable to it. In
connection with any opinion of counsel concerning the interpretation or
application of the REMIC Provisions, the counsel must in fact be independent
of the Depositor and the Master Servicer, not have any direct financial
interest in the Depositor or the Master Servicer or in any affiliate of
either, and not be connected with the Depositor or the Master Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director, or
person performing similar functions.
"Purchase Price" with respect to any Mortgage Loan required to be
purchased by the Sponsor pursuant to Section 2.03 or 2.04 or purchased at the
option of the Master Servicer pursuant to Section 3.01 or 3.06 means an amount
equal to the sum of
(i) 100% of the unpaid principal balance of the Mortgage
Loan on the date of such purchase,
(ii) accrued interest on the Mortgage Loan at the applicable
Mortgage Rate (or at the applicable Adjusted Mortgage Rate if (x) the
purchaser is the Master Servicer or (y) if the purchaser is
Countrywide and Countrywide is an affiliate of the Master Servicer)
from the date through which interest was last paid by the Mortgagor
to the Due Date in the month in which the Purchase Price is to be
distributed to Noteholders, and
(iii) in the case of any Mortgage Loan required to be
purchased by the Sponsor because of, or that arises out of, a
violation of any predatory or abusive lending law with respect to the
related Mortgage Loan, any costs and damages incurred by the Trust
relating to such violation of any predatory or abusive lending law
with respect to the related Mortgage Loan.
"REMIC Provisions" means sections 860A through 860G of the Code and
related provisions, and regulations and rulings promulgated under those
sections.
"REO" means a Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
"Seller" means any Seller of Mortgage Loans pursuant to the Purchase
Agreement.
"Servicing Certificate" means a certificate completed and executed by
a Servicing Officer in accordance with Section 4.01.
"Servicing Officer" means any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Mortgage Loans
whose name and specimen signature appear on a list of servicing officers
furnished to the Indenture Trustee (with a copy to the Credit Enhancer) by the
Master Servicer on the Closing Date, as the list may be amended from time to
time.
▇▇▇-1-5
"Sponsor" means Countrywide Home Loans, Inc., a New York corporation
and any successor to it.
"Subsequent Closing Date" means any date designated by the Depositor
on which the Trust acquires Additional Home Equity Loans pursuant to Section
2.01(b).
"Subsequent Cut-off Date" means the cut-off date designated by the
Depositor in a Transfer Document in connection with the acquisition of
Additional Home Equity Loans by the Trust pursuant to Section 2.01(b).
"Transfer Date" has the meaning given to it in Section 2.06.
"Transfer Deficiency" means that the excess of the Loan Pool Balance
over the Note Principal Balance after a retransfer of a Mortgage Loan pursuant
to Section 2.02(b) or 2.04(d) would be less than the Required Transferor
Subordinated Amount.
The amount of any Transfer Deficiency is the lesser of
o the Asset Balance of the Defective Mortgage Loan and
o the excess of
o the Required Transferor Subordinated Amount over
o the Transferor Interest.
In any computation involving a Mortgage Loan required to be purchased
by the Sponsor because of, or arising out of, a violation of any predatory or
abusive lending law with respect to the Mortgage Loan, the Transferor Interest
shall be reduced for any costs and damages incurred by the Trust relating to
the violation of any predatory or abusive lending law with respect to the
Mortgage Loan.
"Transfer Deposit Amount" has the meaning given to it in Section
2.07.
"Transfer Document" means a document substantially in the form of
Exhibit D.
"Transfer Notice Date" has the meaning given to it in Section 2.06.
"Valuation" of any Mortgaged Property means the lesser of (i) the
Appraised Value of the Mortgaged Property and (ii) in the case of a Mortgaged
Property purchased within one year of the origination of the related Mortgage
Loan, the purchase price of the Mortgaged Property.
▇▇▇-1-6
The following have the meanings given to them in the Indenture:
Accelerated Principal Payment Amount
Additional Balance
Additional Home Equity Loans
Additional Loan Account
Asset Balance
Assignment of Mortgage
Available Transferor Subordinated Amount
Basis Risk Carryforward
Business Day
Closing Date
Code
Collection Period
Corporate Trust Office
Credit Enhancement Draw Amount
Credit Enhancer
Credit Enhancer Default
Credit Limit
Credit Line Agreement
Custodial Agreement
Cut-off Date
Cut-off Date Asset Balance
Determination Date
Eligible Account
Eligible Investments
Guaranteed Principal Payment Amount
Indenture Trustee
Initial Mortgage File
Insolvency Event
Insurance Agreement
Interest Collections
Interest Formula Rate
Interest Period
Investor Fixed Allocation Percentage
Investor Floating Allocation Percentage
Investor Interest Collections
Investor Loss Amount
Investor Loss Reduction Amount
Investor Principal Collections
Issuer Request
Loan Pool Balance
Loan Rate
Managed Amortization Period
Maximum Rate
MERS
MERS(R) System
MIN
Minimum Transferor Interest
MOM Loan
▇▇▇▇▇'▇
Mortgage File
Mortgage Loan
Mortgage Loan Schedule
Mortgage Note
Mortgaged Property
Net Draws
Note
Note Rate
Note Interest
Note Principal Balance
Noteholder or Holder
Note Owner
Note Register and Note Registrar
Original Note Principal Balance
Outstanding Amount
Paying Agent
Payment Date
Policy
Principal Collections
Purchase Agreement
Rapid Amortization Event
Rating Agency
Rating Agency Condition
Required Transferor Subordinated Amount
Responsible Officer
Scheduled Principal Collections Payment Amount
Secured Parties
Servicing Fee
Standard & Poor's
Transferor
Transferor Certificates
Transferor Interest
Transferor Principal Collections
Trust
Trust Agreement
▇▇▇-1-7
UCC
Unpaid Investor Interest Shortfall
Weighted Average Net Loan Rate
▇▇▇-1-8
Annex 2
Adoption Annex
The initial aggregate principal amount of the Class A-1 is
$500,000,000, the initial aggregate principal amount of the Class A-2 is
$899,198,000, the initial aggregate principal amount of the Class A-3 is
$307,961,000 and the initial aggregate principal amount of the Class A-4 is
$302,841,000.
The title of the Collection Account is "JPMorgan Chase Bank, N.A. as
Indenture Trustee, Collection Account in trust for the registered holders of
Revolving Home Equity Loan Asset Backed Notes, Series 2005-M and MBIA
Insurance Corporation."
The date on which the Master Servicer delivers the Officer's
Certificate in each year is March 15, and the first Officer's Certificate
pursuant to Section 3.09 is March 15, 2006.
The date on which the Master Servicer delivers the annual servicing
report in each year is March 15, and the first annual servicing report
pursuant to Section 3.10 is March 15, 2006.
The Latest Subsequent Closing Date is the earlier of January 31, 2006
and the date the amount in both Additional Loan Accounts is less than $40,000.
The Opinion Delivery Date is February 7, 2006.
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