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RESIDENTIAL FUNDING CORPORATION,
as Master Servicer
HOME LOAN TRUST 2004-HI3,
as Issuer
and
JPMORGAN CHASE BANK
as Indenture Trustee
______________________
SERVICING AGREEMENT
Dated as of September 29, 2004
______________________
Home Loans
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions
Section 1.01. Definitions...................................................................1
Section 1.02. Other Definitional Provisions.................................................1
Section 1.03. Interest Calculations.........................................................2
ARTICLE II
Representations and Warranties
Section 2.01. Representations and Warranties Regarding the Master Servicer..................2
Section 2.02. Representations and Warranties of the Issuer..................................3
Section 2.03. Enforcement of Representations and Warranties.................................4
ARTICLE III
Administration and Servicing of Home Loans
Section 3.01. The Master Servicer...........................................................5
Section 3.02. Collection of Certain Home Loan Payments......................................7
Section 3.03. Withdrawals from the Custodial Account.......................................10
Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses................11
Section 3.05. Modification Agreements; Release or Substitution of Lien.....................12
Section 3.06. Trust Estate; Related Documents..............................................14
Section 3.07. Realization Upon Defaulted Home Loans; Loss Mitigation.......................15
Section 3.08. Issuer and Indenture Trustee to Cooperate....................................16
Section 3.09. Servicing Compensation; Payment of Certain Expenses by Master Servicer.......17
Section 3.10. Annual Statement as to Compliance............................................18
Section 3.11. Annual Independent Public Accountants' Servicing Report......................18
Section 3.12. Access to Certain Documentation and Information Regarding the Home Loans.....19
Section 3.13. Maintenance of Certain Servicing Insurance Policies..........................19
Section 3.14. Information Required by the Internal Revenue Service and Reports of
Foreclosures and Abandonments of Mortgaged Property..........................19
Section 3.15. Optional Repurchase of Defaulted Home Loans..................................19
Section 3.16. Limited Home Loan Repurchase Right...........................................20
ARTICLE IV
Servicing Certificate
Section 4.01. Statements to Securityholders................................................20
Section 4.02. Tax Reporting................................................................22
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Section 4.03. Calculation of Adjusted Issue Price..........................................23
Section 4.04. Exchange Act Reporting.......................................................23
ARTICLE V
Payment Account
Section 5.01. Payment Account..............................................................23
ARTICLE VI
The Master Servicer
Section 6.01. Liability of the Master Servicer.............................................24
Section 6.02. Merger or Consolidation of, or Assumption of the Obligations of, the Master
Servicer.....................................................................24
Section 6.03. Limitation on Liability of the Master Servicer and Others....................24
Section 6.04. Master Servicer Not to Resign................................................25
Section 6.05. Delegation of Duties.........................................................25
Section 6.06. Master Servicer to Pay Indenture Trustee's and Owner Trustee's Fees and
Expenses; Indemnification....................................................26
ARTICLE VII
Default
Section 7.01. Servicing Default............................................................27
Section 7.02. Indenture Trustee to Act; Appointment of Successor...........................29
Section 7.03. Notification to Securityholders..............................................30
Section 7.04. Servicing Trigger; Removal of Master Servicer................................30
ARTICLE VIII
Miscellaneous Provisions
Section 8.01. Amendment....................................................................31
Section 8.02. GOVERNING LAW................................................................31
Section 8.03. Notices......................................................................31
Section 8.04. Severability of Provisions...................................................32
Section 8.05. Third-Party Beneficiaries....................................................32
Section 8.06. Counterparts.................................................................32
Section 8.07. Effect of Headings and Table of Contents.....................................32
Section 8.08. Termination Upon Purchase by the Master Servicer or Liquidation of All Home
Loans; Partial Redemption....................................................32
Section 8.09. Certain Matters Affecting the Indenture Trustee..............................33
Section 8.10. Owner Trustee Not Liable for Related Documents...............................33
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EXHIBIT A - HOME LOANS ....................................................................A-1
EXHIBIT B - POWER OF ATTORNEY..............................................................B-1
EXHIBIT C - FORM OF REQUEST FOR RELEASE ...................................................C-1
EXHIBIT D - FORM OF FORM 10-K CERTIFICATE .................................................D-1
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This is a Servicing Agreement, dated as of September 29, 2004
(the "Servicing Agreement"), among Residential Funding Corporation (the "Master
Servicer"), the Home Loan Trust 2004-HI3 (the "Issuer") and JPMorgan Chase Bank
(the "Indenture Trustee").
W I T N E S S E T H T H A T:
WHEREAS, pursuant to the terms of the Home Loan Purchase
Agreement, Residential Funding Corporation (in its capacity as Seller) will sell
to the Depositor the Home Loans together with the Related Documents on the
Closing Date;
WHEREAS, the Depositor will sell the Home Loans and all of its
rights under the Home Loan Purchase Agreement to the Issuer, together with the
Related Documents on the Closing Date;
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer
will issue and transfer to or at the direction of the Depositor, the
Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer will
issue and transfer to or at the direction of the Depositor, the Notes; and
WHEREAS, pursuant to the terms of this Servicing Agreement, the
Master Servicer will service the Home Loans directly or through one or more
Subservicers;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. For all purposes of this Servicing Agreement, except
as otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions contained in Appendix A to the Indenture dated
September 29, 2004 (the "Indenture"), between Home Loan Trust 2004-HI3, as
issuer, and JPMorgan Chase Bank, as indenture trustee, which is incorporated by
reference herein. All other capitalized terms used herein shall have the
meanings specified herein.
Section 1.02. Other Definitional Provisions. (a) All terms defined in this
Servicing Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto unless otherwise defined
therein.
(b) As used in this Servicing Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Servicing Agreement or in any such certificate or other document, and
accounting terms partly defined in this Servicing Agreement or in any such
certificate or other document, to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Servicing Agreement or in any such certificate or other document are
inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Servicing Agreement or in any such
certificate or other document shall control.
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(c) The words "hereof," "herein," "hereunder" and words of similar import when
used in this Servicing Agreement shall refer to this Servicing Agreement as a
whole and not to any particular provision of this Servicing Agreement; Section
and Exhibit references contained in this Servicing Agreement are references to
Sections and Exhibits in or to this Servicing Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation".
(d) The definitions contained in this Servicing Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such agreement,
instrument or statute as from time to time amended, modified or supplemented and
includes (in the case of agreements or instruments) references to all
attachments thereto and instruments incorporated therein; references to a Person
are also to its permitted successors and assigns.
Section 1.03. Interest Calculations. All calculations of interest hereunder that
are made in respect of the Loan Balance of a Home Loan shall be made in
accordance with the Mortgage Note. All calculations of interest on the
Securities (other than the Class A-1 Notes) shall be made on the basis of a
30-day month and a year assumed to consist of 360 days. Calculation of interest
on the Class A-1 Notes shall be made on the basis of the actual number of days
in the Interest Accrual Period and a year assumed to consist of 360 days. The
calculation of the Servicing Fee shall be made on the basis of a 30-day month
and a year assumed to consist of 360 days. All dollar amounts calculated
hereunder shall be rounded to the nearest ▇▇▇▇▇ with one-half of one ▇▇▇▇▇ being
rounded up.
ARTICLE II
Representations and Warranties
Section 2.01. Representations and Warranties Regarding the Master Servicer. The
Master Servicer represents and warrants to the Issuer and for the benefit of the
Indenture Trustee, as pledgee of the Home Loans, as of the Cut-off Date:
(i) The Master Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware 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 the business transacted by it or properties owned or leased by it
requires such qualification and in which the failure to so qualify would have a
material adverse effect on the business, properties, assets, or condition
(financial or other) of the Master Servicer;
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(ii) The Master Servicer has the power and authority to make,
execute, deliver and perform this Servicing Agreement and all of the
transactions contemplated under this Servicing Agreement, and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Servicing Agreement. When executed and delivered, this Servicing
Agreement will constitute the legal, valid and binding obligation of the Master
Servicer enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and by the availability of equitable
remedies;
(iii) The Master Servicer is not required to obtain the consent
of any other Person 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 Servicing Agreement, except for such consent, license,
approval or authorization, or registration or declaration, as shall have been
obtained or filed, as the case may be;
(iv) The execution and delivery of this Servicing Agreement and
the performance of the transactions contemplated hereby by the Master Servicer
will not violate any provision of any existing law or regulation or any order or
decree of any court applicable to the Master Servicer or any provision of 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; and
(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 Servicing Agreement or the Securities which
in the opinion of the Master Servicer has a reasonable likelihood of resulting
in a material adverse effect on the transactions contemplated by this Servicing
Agreement.
The foregoing representations and warranties shall survive any
termination of the Master Servicer hereunder.
Section 2.02. Representations and Warranties of the Issuer. The Issuer hereby
represents and warrants to the Master Servicer and for the benefit of the
Indenture Trustee, as pledgee of the Home Loans, as of the Cut-off Date:
(i) The Issuer is a statutory trust duly formed and in good
standing under the laws of the State of Delaware and has full power, authority
and legal right to execute and deliver this Servicing Agreement and to perform
its obligations under this Servicing Agreement, and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Servicing Agreement; and
(ii) The execution and delivery by the Issuer of this Servicing
Agreement and the performance by the Issuer of its obligations under this
Servicing Agreement will not violate any provision of any law or regulation
governing the Issuer or any order, writ, judgment or decree of any court,
arbitrator or governmental authority or agency applicable to the Issuer or any
of its assets. Such execution, delivery, authentication and performance will not
conflict with, or result in a breach or violation of, any mortgage, deed of
trust, lease or other agreement or instrument to which the Issuer is bound.
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Section 2.03. Enforcement of Representations and Warranties. The Master
Servicer, on behalf of and subject to the direction of the Indenture Trustee, as
pledgee of the Home Loans, or the Issuer, shall enforce the representations and
warranties of the Seller pursuant to the Home Loan Purchase Agreement. Upon the
discovery by the Seller, the Depositor, the Master Servicer, the Indenture
Trustee, the Credit Enhancer, the Issuer, or any Custodian of a breach of any of
the representations and warranties made in the Home Loan Purchase Agreement or
of the existence of a Repurchase Event, in respect of any Home Loan which
materially and adversely affects the interests of the Securityholders or the
Credit Enhancer, the party discovering such breach or existence shall give
prompt written notice to the other parties. The Master Servicer shall promptly
notify the Seller of such breach or existence and request that, pursuant to the
terms of the Home Loan Purchase Agreement, the Seller either (i) cure such
breach or Repurchase Event in all material respects within 45 days (with respect
to a breach of the representations and warranties contained in Section 3.1(a) of
the Home Loan Purchase Agreement or Repurchase Event) or 90 days (with respect
to a breach of the representations and warranties contained in Section 3.1(b) of
the Home Loan Purchase Agreement) from the date the Seller was notified of such
breach or Repurchase Event or (ii) purchase such Home Loan from the Issuer at
the price and in the manner set forth in Section 3.1(c) of the Home Loan
Purchase Agreement; provided that the Seller shall, subject to compliance with
all the conditions set forth in the Home Loan Purchase Agreement, have the
option to substitute an Eligible Substitute Loan or Loans for such Home Loan. In
the event that the Seller elects to substitute one or more Eligible Substitute
Loans pursuant to Section 3.1(c) of the Home Loan Purchase Agreement, the Seller
shall deliver to the Issuer with respect to such Eligible Substitute Loans, the
original Mortgage Note, the Mortgage, and such other documents and agreements as
are required by the Home Loan Purchase Agreement. Payments due with respect to
Eligible Substitute Loans in the month of substitution shall not be transferred
to the Issuer and will be retained by the Master Servicer and remitted by the
Master Servicer to the Seller on the next succeeding Payment Date provided a
payment at least equal to the applicable Monthly Payment has been received by
the Issuer for such month in respect of the Home Loan to be removed. The Master
Servicer shall amend or cause to be amended the Home Loan Schedule to reflect
the removal of such Home Loan and the substitution of the Eligible Substitute
Loans and the Master Servicer shall promptly deliver the amended Home Loan
Schedule to the Owner Trustee and the Indenture Trustee.
It is understood and agreed that the obligation of the Seller to
cure such breach or purchase or substitute for such Home Loan as to which such a
breach has occurred and is continuing shall constitute the sole remedy
respecting such breach available to the Issuer and the Indenture Trustee, as
pledgee of the Home Loans, against the Seller. In connection with the purchase
of or substitution for any such Home Loan by the Seller, the Issuer shall assign
to the Seller all of its right, title and interest in respect of the Home Loan
Purchase Agreement applicable to such Home Loan. Upon receipt of the ▇▇▇▇▇▇▇▇▇▇
▇
Price, or upon completion of such substitution, the Master Servicer shall notify
the Custodian and then the Custodian shall deliver the Mortgage Files to the
Master Servicer, together with all relevant endorsements and assignments
prepared by the Master Servicer which the Indenture Trustee shall execute.
ARTICLE III
Administration and Servicing
of Home Loans
Section 3.01. The Master Servicer. (a) The Master Servicer shall service and
administer the Home Loans in accordance with the terms of this Servicing
Agreement, following such procedures as it would employ in its good faith
business judgment and which are normal and usual in its general mortgage
servicing activities, and shall have full power and authority, acting alone or
through a subservicer, to do any and all things in connection with such
servicing and administration which it may deem necessary or desirable, it being
understood, however, that the Master Servicer shall at all times remain
responsible to the Issuer and the Indenture Trustee for the performance of its
duties and obligations hereunder in accordance with the terms hereof. Without
limiting the generality of the foregoing, the Master Servicer shall continue,
and is hereby authorized and empowered by the Issuer and the Indenture Trustee,
as pledgee of the Home Loans, to execute and deliver, on behalf of itself, the
Issuer, the Indenture Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, or of
consent to modification in connection with a proposed conveyance, or of
assignment of any Mortgage and Mortgage Note in connection with the repurchase
of a Home Loan and all other comparable instruments with respect to the Home
Loans and with respect to the Mortgaged Properties, or with respect to the
modification or re-recording of a Mortgage for the purpose of correcting the
Mortgage, the subordination of the lien of the Mortgage in favor of a public
utility company or government agency or unit with powers of eminent domain, the
taking of a deed in lieu of foreclosure, the commencement, prosecution or
completion of judicial or non-judicial foreclosure, the acquisition of any
property acquired by foreclosure or deed in lieu of foreclosure, or the
management, marketing and conveyance of any property acquired by foreclosure or
deed in lieu of foreclosure. The Issuer, the Indenture Trustee and the
Custodian, as applicable, shall furnish the Master Servicer with any powers of
attorney and other documents necessary or appropriate to enable the Master
Servicer to carry out its servicing and administrative duties hereunder. In
addition, the Master Servicer may, at its own discretion and on behalf of the
Indenture Trustee, obtain credit information in the form of a Credit Score from
a credit repository. On the Closing Date, the Indenture Trustee shall deliver to
the Master Servicer a limited power of attorney substantially in the form of
Exhibit B hereto.
If the Mortgage relating to a Home Loan did not have a lien
senior to the Home Loan on the related Mortgaged Property as of the Cut-off
Date, then the Master Servicer, in such capacity, may not consent to the placing
of a lien senior to that of the Mortgage on the related Mortgaged Property. If
the Mortgage relating to a Home Loan had a lien senior to the Home Loan on the
related Mortgaged Property as of the Cut-off Date, then the Master Servicer, in
such capacity, may consent to the refinancing of the prior senior lien, provided
that the following requirements are met:
(i) (A) the Mortgagor's debt-to-income ratio resulting from such
refinancing is less than the original debt-to-income ratio as set forth on the
Mortgage Loan Schedule and, in the event that the resulting Combined
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Loan-to-Value Ratio ("Combined Loan-to-Value Ratio") of such Home Loan increases
by more than 10% above the Combined Loan-to-Value Ratio prior to such
refinancing, the Master Servicer shall obtain the prior consent of the Credit
Enhancer, which consent shall not be unreasonably withheld; provided, however,
that in no instance shall the resulting Combined Loan-to-Value Ratio of such
Home Loan be higher than that permitted by the Program Guide; or
(B) the resulting Combined Loan-to-Value Ratio of such Home Loan
is no higher than the Combined Loan-to-Value Ratio prior to such refinancing;
provided, however, if such refinanced mortgage loan is a "rate and term"
mortgage loan (meaning, the Mortgagor does not receive any cash from the
refinancing), the Combined Loan-to-Value Ratio may increase to the extent of
either (a) the reasonable closing costs of such refinancing or (b) any decrease
in the value of the related Mortgaged Property, if the Mortgagor is in good
standing as defined by the Program Guide;
(ii) the interest rate, or, in the case of an adjustable rate
existing senior lien, the maximum interest rate, for the loan evidencing the
refinanced senior lien is no more than 2.0% higher than the interest rate or the
maximum interest rate, as the case may be, on the loan evidencing the existing
senior lien immediately prior to the date of such refinancing; provided, however
(a) if the loan evidencing the existing senior lien prior to the date of
refinancing has an adjustable rate and the loan evidencing the refinanced senior
lien has a fixed rate, then the current interest rate on the loan evidencing the
refinanced senior lien may be up to 2.0% higher than the then-current loan rate
of the loan evidencing the existing senior lien and (b) if the loan evidencing
the existing senior lien prior to the date of refinancing has a fixed rate and
the loan evidencing the refinanced senior lien has an adjustable rate, then the
maximum interest rate on the loan evidencing the refinanced senior lien shall be
less than or equal to (x) the interest rate on the loan evidencing the existing
senior lien prior to the date of refinancing plus (y) 2.0%; and
(iii) the loan evidencing the refinanced senior lien is not subject to
negative amortization.
The relationship of the Master Servicer (and of any successor to
the Master Servicer as servicer under this Servicing Agreement) to the Issuer
under this Servicing Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer, partner or agent.
(b) The Master Servicer may continue in effect Subservicing
Agreements entered into by Residential Funding and Subservicers prior to the
execution and delivery of this Servicing Agreement, and may enter into
Subservicing Agreements with Subservicers for the servicing and administration
of certain of the Home Loans. Each Subservicer of a Home Loan shall be entitled
to receive and retain, as provided in the related Subservicing Agreement and in
Section 3.02, the related Subservicing Fee from payments of interest received on
such Home Loan after payment of all amounts required to be remitted to the
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Master Servicer in respect of such Home Loan. For any Home Loan not subject to a
Subservicing Agreement, the Master Servicer shall be entitled to receive and
retain an amount equal to the Subservicing Fee from payments of interest.
References in this Servicing Agreement to actions taken or to be taken by the
Master Servicer in servicing the Home Loans include actions taken or to be taken
by a Subservicer on behalf of the Master Servicer. Each Subservicing Agreement
will be upon such terms and conditions as are not inconsistent with this
Servicing Agreement and as the Master Servicer and the Subservicer have agreed.
With the approval of the Master Servicer, a Subservicer may delegate its
servicing obligations to third-party servicers, but such Subservicers will
remain obligated under the related Subservicing Agreements. The Master Servicer
and the Subservicer may enter into amendments to the related Subservicing
Agreements; provided, however, that any such amendments shall not cause the Home
Loans to be serviced in a manner that would be materially inconsistent with the
standards set forth in this Servicing Agreement. The Master Servicer shall be
entitled to terminate any Subservicing Agreement in accordance with the terms
and conditions thereof and without any limitation by virtue of this Servicing
Agreement; provided, however, that in the event of termination of any
Subservicing Agreement by the Master Servicer or the Subservicer, the Master
Servicer shall either act as servicer of the related Home Loan or enter into a
Subservicing Agreement with a successor Subservicer which will be bound by the
terms of the related Subservicing Agreement. The Master Servicer shall be
entitled to enter into any agreement with a Subservicer for indemnification of
the Master Servicer and nothing contained in this Servicing Agreement shall be
deemed to limit or modify such indemnification. The Program Guide and any other
Subservicing Agreement entered into between the Master Servicer and any
Subservicer shall require the Subservicer to accurately and fully report its
borrower credit files to each of the Credit Repositories in a timely manner.
In the event that the rights, duties and obligations of the
Master Servicer are terminated hereunder, any successor to the Master Servicer
in its sole discretion may, to the extent permitted by applicable law, terminate
the existing Subservicing Agreement with any Subservicer in accordance with the
terms of the applicable Subservicing Agreement or assume the terminated Master
Servicer's rights and obligations under such subservicing arrangements which
termination or assumption will not violate the terms of such arrangements.
As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Securityholders and the Credit Enhancer, shall
use reasonable efforts to enforce the obligations of each Subservicer under the
related Subservicing Agreement, to the extent that the non-performance of any
such obligation would have a material adverse effect on a Home Loan. Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Subservicing Agreements and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the Master Servicer would employ in its good faith business judgment and
which are normal and usual in its general mortgage servicing activities. The
Master Servicer shall pay the costs of such enforcement at its own expense, and
shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement to the extent, if any, that such recovery exceeds all amounts
due in respect of the related Home Loan or (ii) from a specific recovery of
costs, expenses or attorneys fees against the party against whom such
enforcement is directed.
Section 3.02. Collection of Certain Home Loan Payments. (a) The Master Servicer
shall make reasonable efforts to collect all payments called for under the terms
and provisions of the Home Loans, and shall, to the extent such procedures shall
be consistent with this Servicing Agreement and generally consistent with any
related insurance policy, follow such collection procedures as it would employ
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in its good faith business judgment and which are normal and usual in its
general mortgage servicing activities. Consistent with the foregoing, and
without limiting the generality of the foregoing, the Master Servicer may in its
discretion waive any late payment charge, prepayment charge or penalty interest
or other fees which may be collected in the ordinary course of servicing such
Home Loan. The Master Servicer may also extend the Due Date for payment due on a
Home Loan in accordance with the Program Guide, provided, however, that the
Master Servicer shall first determine that any such waiver or extension will not
impair the coverage of any related insurance policy or materially adversely
affect the lien of the related Mortgage (except as described below) or the
interests of the Securityholders and the Credit Enhancer. Notwithstanding
anything in this Section to the contrary, the Master Servicer or any Subservicer
shall not enforce any prepayment charge to the extent that such enforcement
would violate any applicable law. Consistent with the terms of this Servicing
Agreement, the Master Servicer may also:
(i) waive, modify or vary any term of any Home Loan;
(ii) consent to the postponement of strict compliance with any
such term or in any manner grant indulgence to any Mortgagor;
(iii) arrange with a Mortgagor a schedule for the payment of
principal and interest due and unpaid;
(iv) forgive any portion of the amounts contractually owed under
the Home Loan;
(v) capitalize past due amounts owed under the Home Loan by
adding any amounts in arrearage to the existing principal balance
of the Home Loan (a "Capitalization Workout") of which will
result in an increased Monthly Payment amount, provided that: (A)
the amount added to the existing principal balance of the Home
Loan (the "Capitalized Amount") shall be no greater than five
times the Mortgagor's current Monthly Payment amount; and (B) the
Master Servicer shall not enter into a Capitalization Workout
unless the Combined Loan-to-Value Ratio of the Home Loan prior to
the Capitalization Workout equals or exceeds 80% and the
Mortgagor has qualified for the Capitalization Workout under the
Master Servicer's servicing guidelines;
(vi) reset the due date for the Home Loan, or any combination of
the foregoing;
if in the Master Servicer's determination such waiver, modification,
postponement or indulgence, arrangement or other action referred to above is not
materially adverse to the interests of the Securityholders or the Credit
Enhancer and is generally consistent with the Master Servicer's policies with
respect to mortgage loans similar to those in the Home Loan Pool (meaning,
mortgage loans used for home improvement or debt consolidation); provided,
however, that the Master Servicer may not modify or permit any Subservicer to
modify any Home Loan (including without limitation any modification that would
change the Loan Rate, forgive the payment of any principal or interest (unless
in connection with the liquidation of the related Home Loan) or extend the final
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maturity date of such Home Loan) unless such Home Loan is in default or, in the
judgment of the Master Servicer, such default is reasonably foreseeable. The
general terms of any waiver, modification, postponement or indulgence with
respect to any of the Home Loans will be included in the Servicing Certificate,
and such Home Loans will not be considered "delinquent" for the purposes of the
Basic Documents so long as the Mortgagor complies with the terms of such waiver,
modification, postponement or indulgence.
(b) The Master Servicer shall establish a Custodial Account, which shall be
an Eligible Account in which the Master Servicer shall deposit or cause
to be deposited any amounts representing payments and collections in
respect of the Home Loans received by it subsequent to the Cut-off Date
(other than in respect of the payments referred to in the following
paragraph) within one Business Day following receipt thereof (or
otherwise on or prior to the Closing Date), including the following
payments and collections received or made by it (without duplication):
(i) all payments of principal or interest on the Home Loans received by the
Master Servicer from the respective Subservicer, net of any portion of
the interest thereof retained by the Subservicer as Subservicing Fees;
(ii) the aggregate Repurchase Price of the Home Loans purchased by the Master
Servicer pursuant to Section 3.15 or by the Limited Repurchase Price
Holder pursuant to Section 3.16;
(iii) Net Liquidation Proceeds net of any related Foreclosure Profit;
(iv) all proceeds of any Home Loans repurchased by the Seller pursuant to the
Home Loan Purchase Agreement, and all Substitution Adjustment Amounts
required to be deposited in connection with the substitution of an
Eligible Substitute Loan pursuant to the Home Loan Purchase Agreement;
(v) Insurance Proceeds, other than Net Liquidation Proceeds, resulting from
any insurance policy maintained on a Mortgaged Property; and
(vi) amounts required to be paid by the Master Servicer pursuant to Sections
3.04 and 8.08 and any prepayments or collections constituting prepayment
charges.
provided, however, that with respect to each Collection Period, the Master
Servicer shall be permitted to retain from payments in respect of interest on
the Home Loans, the Master Servicing Fee for such Collection Period. The
foregoing requirements respecting deposits to the Custodial Account are
exclusive, it being understood that, without limiting the generality of the
foregoing, the Master Servicer need not deposit in the Custodial Account amounts
representing Foreclosure Profits, fees (including annual fees) or late charge
penalties payable by Mortgagors (such amounts to be retained as additional
servicing compensation in accordance with Section 3.09 hereof), or amounts
received by the Master Servicer for the accounts of Mortgagors for application
towards the payment of taxes, insurance premiums, assessments and similar items.
In the event any amount not required to be deposited in the Custodial Account is
so deposited, the Master Servicer may at any time withdraw such amount from the
Custodial Account, any provision herein to the contrary notwithstanding. The
Custodial Account may contain funds that belong to one or more trust funds
9
created for the notes or certificates of other series and may contain other
funds respecting payments on other mortgage loans belonging to the Master
Servicer or serviced or master serviced by it on behalf of others.
Notwithstanding such commingling of funds, the Master Servicer shall keep
records that accurately reflect the funds on deposit in the Custodial Account
that have been identified by it as being attributable to the Home Loans and
shall hold all collections in the Custodial Account to the extent they represent
collections on the Home Loans for the benefit of the Trust, the Securityholders
and the Indenture Trustee, as their interests may appear. The Master Servicer
shall retain all Foreclosure Profits as additional servicing compensation.
The Master Servicer may cause the institution maintaining the
Custodial Account to invest any funds in the Custodial Account in Permitted
Investments (including obligations of the Master Servicer or any of its
Affiliates, if such obligations otherwise qualify as Permitted Investments),
which shall mature not later than the Business Day preceding the next Payment
Date and which shall not be sold or disposed of prior to its maturity. Except as
provided above, all income and gain realized from any such investment shall
inure to the benefit of the Master Servicer and shall be subject to its
withdrawal or order from time to time. The amount of any losses incurred in
respect of the principal amount of any such investments shall be deposited in
the Custodial Account by the Master Servicer out of its own funds immediately as
realized.
(c) The Master Servicer will require each Subservicer to hold all funds
constituting collections on the Home Loans, pending remittance thereof to the
Master Servicer, in one or more accounts meeting the requirements of an Eligible
Account, and invested in Permitted Investments.
Section 3.03. Withdrawals from the Custodial Account. The Master Servicer shall,
from time to time as provided herein, make withdrawals from the Custodial
Account of amounts on deposit therein pursuant to Section 3.02 that are
attributable to the Home Loans for the following purposes:
(i) to remit to the Paying Agent for deposit in the Payment Account, on the
Business Day prior to each Payment Date, an amount equal to the Interest
Collections and Principal Collections required to be distributed on such
Payment Date and any payments or collections constituting prepayment
charges received during the related Prepayment Period;
(ii) to the extent deposited to the Custodial Account, to reimburse itself or
the related Subservicer for previously unreimbursed expenses incurred in
maintaining individual insurance policies pursuant to Section 3.04, or
Liquidation Expenses, paid pursuant to Section 3.07 or otherwise
reimbursable pursuant to the terms of this Servicing Agreement (to the
extent not payable pursuant to Section 3.09), such withdrawal right
being limited to amounts received on particular Home Loans (other than
any Repurchase Price in respect thereof) which represent late recoveries
of the payments for which such advances were made, or from related
Liquidation Proceeds or the proceeds of the purchase of such Home Loan;
(iii) to pay to itself out of each payment received on account of interest on
a Home Loan as contemplated by Section 3.09, an amount equal to the
related Master Servicing Fee (to the extent not retained pursuant to
Section 3.02), and to pay to any Subservicer any Subservicing Fees not
previously withheld by the Subservicer;
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(iv) to the extent deposited in the Custodial Account to pay to itself as
additional servicing compensation any interest or investment income
earned on funds deposited in the Custodial Account and Payment Account
that it is entitled to withdraw pursuant to Sections 3.02(b) and 5.01;
(v) to the extent deposited in the Custodial Account, to pay to itself as
additional servicing compensation any Foreclosure Profits;
(vi) to pay to itself or the Seller, with respect to any Home Loan or
property acquired in respect thereof that has been purchased or
otherwise transferred to the Seller, the Master Servicer, the Limited
Repurchase Right Holder or other entity, all amounts received thereon
and not required to be distributed to Securityholders as of the date on
which the related Purchase Price or Repurchase Price is determined;
(vii) to clear and terminate the Custodial Account upon the termination of
this Agreement; and
(viii) to withdraw any other amount deposited in the Custodial Account that was
not required to be deposited therein pursuant to Section 3.02.
Since, in connection with withdrawals pursuant to clauses (ii),
(iii), (v) and (vi), the Master Servicer's entitlement thereto is limited to
collections or other recoveries on the related Home Loan, the Master Servicer
shall keep and maintain separate accounting, on a Home Loan by Home Loan basis,
for the purpose of justifying any withdrawal from the Custodial Account pursuant
to such clauses. Notwithstanding any other provision of this Servicing
Agreement, the Master Servicer shall be entitled to reimburse itself for any
previously unreimbursed expenses incurred pursuant to Section 3.07 or otherwise
reimbursable pursuant to the terms of this Servicing Agreement that the Master
Servicer determines to be otherwise nonrecoverable (except with respect to any
Home Loan as to which the Repurchase Price has been paid), by withdrawal from
the Custodial Account of amounts on deposit therein attributable to the Home
Loans on any Business Day prior to the Payment Date succeeding the date of such
determination.
Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses. The
Master Servicer shall cause to be maintained for each Home Loan hazard insurance
naming the Master Servicer or related Subservicer as loss payee thereunder
providing extended coverage in an amount which is at least equal to at least
100% of the insurable value of the improvements (guaranteed replacement) or the
sum of the unpaid principal balance of the first mortgage loan and the Home Loan
amount. The Master Servicer shall also cause to be maintained on property
acquired upon foreclosure, or deed in lieu of foreclosure, of any Home Loan,
fire insurance with extended coverage in an amount which is at least equal to
the amount necessary to avoid the application of any coinsurance clause
contained in the related hazard insurance policy. Amounts collected by the
Master Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures) shall be deposited in the Custodial
Account to the extent called for by Section 3.02. In cases in which any
Mortgaged Property is located at any time during the life of a Home Loan in a
federally designated flood area, the hazard insurance to be maintained for the
related Home Loan shall include flood insurance (to the extent available). All
such flood insurance shall be in amounts equal to the lesser of (i) the amount
required to compensate for any loss or damage to the Mortgaged Property on a
replacement cost basis and (ii) the maximum amount of such insurance available
11
for the related Mortgaged Property under the national flood insurance program
(assuming that the area in which such Mortgaged Property is located is
participating in such program). The Master Servicer shall be under no obligation
to require that any Mortgagor maintain earthquake or other additional insurance
and shall be under no obligation itself to maintain any such additional
insurance on property acquired in respect of a Home Loan, other than pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. If the Master Servicer shall obtain and
maintain a blanket policy consistent with its general mortgage servicing
activities insuring against hazard losses on all of the Home Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 3.04, it being understood and agreed that such
blanket policy may contain a deductible clause, in which case the Master
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with the first sentence of this
Section 3.04 and there shall have been a loss which would have been covered by
such policy, deposit in the Custodial Account the amount not otherwise payable
under the blanket policy because of such deductible clause. Any such deposit by
the Master Servicer shall be made on the last Business Day of the Collection
Period in the month in which payments under any such policy would have been
deposited in the Custodial Account. In connection with its activities as
servicer of the Home Loans, the Master Servicer agrees to present, on behalf of
itself, the Issuer and the Indenture Trustee, claims under any such blanket
policy.
Section 3.05. Modification Agreements; Release or Substitution of Lien. (a) The
Master Servicer or the related Subservicer, as the case may be, shall be
entitled to (A) execute assumption agreements, modification agreements,
substitution agreements, and instruments of satisfaction or cancellation or of
partial or full release or discharge, or any other document contemplated by this
Servicing Agreement and other comparable instruments with respect to the Home
Loans and with respect to the Mortgaged Properties subject to the Mortgages (and
the Issuer and the Indenture Trustee each shall promptly execute any such
documents on request of the Master Servicer) and (B) approve the granting of an
easement thereon in favor of another Person, any alteration or demolition of the
related Mortgaged Property or other similar matters, in each case if it has
determined, exercising its good faith business judgment in the same manner as it
would if it were the owner of the related Home Loan, that the security for, and
the timely and full collectability of, such Home Loan would not be adversely
affected thereby. A partial release pursuant to this Section 3.05 shall be
permitted only if the Combined Loan-to-Value Ratio for such Home Loan after such
partial release does not exceed the Combined Loan-to-Value Ratio for such Home
Loan as of the Cut-off Date. Any fee collected by the Master Servicer or the
related Subservicer for processing such request will be retained by the Master
Servicer or such Subservicer as additional servicing compensation.
(b) The Master Servicer may enter into an agreement with a Mortgagor to
release the lien on the Mortgaged Property relating to a Home Loan (the
"Existing Lien"), if at the time of such agreement the Home Loan is
current in payment of principal and interest, under any of the following
circumstances:
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(i) in any case in which, simultaneously with the release of the Existing
Lien, the Mortgagor executes and delivers to the Master Servicer a
Mortgage on a substitute Mortgaged Property, provided that the Combined
Loan-to-Value Ratio of the Home Loan (calculated based on the Appraised
Value of the substitute Mortgaged Property) is not greater than the
Combined Loan-to-Value Ratio prior to releasing the Existing Lien;
(ii) in any case in which, simultaneously with the release of the Existing
Lien, the Mortgagor executes and delivers to the Master Servicer a
Mortgage on a substitute Mortgaged Property, provided that: (A) the
Combined Loan-to-Value Ratio of the Home Loan (calculated based on the
Appraised Value of the substitute Mortgaged Property) is not greater
than the lesser of (1) 125% and (2) 105% of the Combined Loan-to-Value
Ratio prior to releasing the Existing Lien; and (B) the Master Servicer
determines that at least two appropriate compensating factors are
present (compensating factors may include, without limitation, an
increase in the Mortgagor's monthly cash flow after debt service, the
Mortgagor's debt-to-income ratio has not increased since origination, or
an increase in the Mortgagor's credit score); or
(iii) in any case in which, at the time of release of the Existing Lien, the
Mortgagor does not provide the Master Servicer with a Mortgage on a
substitute Mortgaged Property (any Home Loan that becomes and remains
unsecured in accordance with this subsection, an "Unsecured Loan"),
provided that: (A) the Mortgagor, in addition to being current in
payment of principal and interest on the related Home Loan, is current
in payment of principal and interest on any loan senior to the Home
Loan; (B) the Mortgagor's Credit Score, as determined by the Master
Servicer at the time of the request for release of lien, is not less
than 640; (C) the Mortgagor makes a cash contribution in reduction of
the outstanding principal balance of the Home Loan, which may include
any net proceeds from the sale of the original Mortgaged Property, of
not less than 20% of the unpaid principal balance of the Home Loan; and
(D) the Mortgagor signs a reaffirmation agreement acknowledging that
they must continue to pay in accordance with the terms of the original
Mortgage Note;
(iv) If the above conditions (iii)(A) through (iii)(D) are not met, the
Master Servicer may still enter into an agreement to release the
Existing Lien, provided that: (A) the Master Servicer shall not permit
the release of an Existing Lien under this clause (iv) as to more than
200 Home Loans in any calendar year; (B) at no time shall the aggregate
Principal Balance of Unsecured Loans exceed 5% of the then Pool Balance;
(C) the Mortgagor agrees to an automatic debit payment plan; and (D) the
Master Servicer shall provide notice to each Rating Agency that has
requested notice of such releases.
In connection with any Unsecured Loan, the Master Servicer may
require the Mortgagor to enter into an agreement under which: (i) the Loan Rate
may be increased effective until a substitute Mortgage meeting the criteria
under (i) or (ii) above is provided; or (ii) any other provision may be made
which the Master Servicer considers to be appropriate. Thereafter, the Master
Servicer shall determine in its discretion whether to accept any proposed
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Mortgage on any substitute Mortgaged Property as security for the Home Loan, and
the Master Servicer may require the Mortgagor to agree to any further conditions
which the Master Servicer considers appropriate in connection with such
substitution, which may include a reduction of the Loan Rate (but not below the
Loan Rate in effect at the Closing Date). Any Home Loan as to which a Mortgage
on a substitute Mortgaged Property is provided in accordance with the preceding
sentence shall no longer be deemed to be an Unsecured Loan.
Section 3.06. Trust Estate; Related Documents. (a) When required by the
provisions of this Servicing Agreement, the Issuer or the Indenture Trustee
shall execute instruments to release property from the terms of the Trust
Agreement, Indenture or Custodial Agreement, as applicable, or convey the
Issuer's or the Indenture Trustee's interest in the same, in a manner and under
circumstances which are not inconsistent with the provisions of this Servicing
Agreement. No party relying upon an instrument executed by the Issuer or the
Indenture Trustee as provided in this Section 3.06 shall be bound to ascertain
the Issuer's or the Indenture Trustee's authority, inquire into the satisfaction
of any conditions precedent or see to the application of any monies.
(b) If from time to time the Master Servicer shall deliver to the
Custodian copies of any written assurance, assumption agreement or substitution
agreement or other similar agreement pursuant to Section 3.05, the Custodian
shall check that each of such documents purports to be an original executed copy
(or a copy of the original executed document if the original executed copy has
been submitted for recording and has not yet been returned) and, if so, shall
file such documents, and upon receipt of the original executed copy from the
applicable recording office or receipt of a copy thereof certified by the
applicable recording office shall file such originals or certified copies with
the Related Documents. If any such documents submitted by the Master Servicer do
not meet the above qualifications, such documents shall promptly be returned by
the Custodian to the Master Servicer pursuant to the related Custodial
Agreement, with a direction to the Master Servicer to forward the correct
documentation.
(c) Upon receipt of a Request for Release from the Master Servicer, to
the effect that a Home Loan has been the subject of a final payment or a
prepayment in full and the related Home Loan has been terminated or that
substantially all Liquidation Proceeds which have been determined by the Master
Servicer in its reasonable judgment to be finally recoverable have been
recovered, and upon deposit to the Custodial Account of such final monthly
payment, prepayment in full together with accrued and unpaid interest to the
date of such payment with respect to such Home Loan or, if applicable,
Liquidation Proceeds, the Custodian shall promptly release the Related Documents
to the Master Servicer pursuant to the related Custodial Agreement, which the
Indenture Trustee shall execute, along with such documents as the Master
Servicer or the Mortgagor may request to evidence satisfaction and discharge of
such Home Loan, upon request of the Master Servicer. If from time to time and as
appropriate for the servicing or foreclosure of any Home Loan, the Master
Servicer requests the Custodian to
14
release the Related Documents and delivers to the Custodian a trust receipt
reasonably satisfactory to the Custodian and signed by a Responsible Officer of
the Master Servicer, the Custodian shall release the Related Documents to the
Master Servicer pursuant to the related Custodial Agreement. If such Home Loans
shall be liquidated and the Custodian receives a certificate from the Master
Servicer as provided above, then, upon request of the Master Servicer, the
Custodian shall release the trust receipt to the Master Servicer pursuant to the
related Custodial Agreement.
Section 3.07. Realization Upon Defaulted Home Loans; Loss Mitigation.
With respect to such of the Home Loans as come into and continue in default, the
Master Servicer will decide whether to (i) foreclose upon the Mortgaged
Properties securing such Home Loans, (ii) write off the unpaid principal balance
of the Home Loans as bad debt, (iii) take a deed in lieu of foreclosure, (iv)
accept a short sale (a payoff of the Home Loan for an amount less than the total
amount contractually owed in order to facilitate a sale of the Mortgaged
Property by the Mortgagor) or permit a short refinancing (a payoff of the Home
Loan for an amount less than the total amount contractually owed in order to
facilitate refinancing transactions by the Mortgagor not involving a sale of the
Mortgaged Property), (v) arrange for a repayment plan, (vi) agree to a
modification in accordance with this Servicing Agreement, or (vii) take an
unsecured note, in connection with a negotiated release of the lien of the
Mortgage in order to facilitate a settlement with the Mortgagor; in each case
subject to the rights of any related first lien holder; provided that in
connection with the foregoing if the Master Servicer has actual knowledge that
any Mortgaged Property is affected by hazardous or toxic wastes or substances
and that the acquisition of such Mortgaged Property would not be commercially
reasonable, then the Master Servicer will not cause the Issuer or the Indenture
Trustee to acquire title to such Mortgaged Property in a foreclosure or similar
proceeding. In connection with such decision, the Master Servicer shall follow
such practices (including, in the case of any default on a related senior
mortgage loan, the advancing of funds to correct such default if deemed to be
appropriate by the Master Servicer) and procedures as it shall deem necessary or
advisable and as shall be normal and usual in its general mortgage servicing
activities and as shall be required or permitted by the Program Guide; provided
that the Master Servicer shall not be liable in any respect hereunder if the
Master Servicer is acting in connection with any such foreclosure or attempted
foreclosure which is not completed or other conversion in a manner that is
consistent with the provisions of this Servicing Agreement. The foregoing is
subject to the proviso that the Master Servicer shall not be required to expend
its own funds in connection with any foreclosure or attempted foreclosure which
is not completed or towards the correction of any default on a related senior
mortgage loan or restoration of any property unless it shall determine that such
expenditure will increase Net Liquidation Proceeds. In the event of a
determination by the Master Servicer that any such expenditure previously made
pursuant to this Section 3.07 will not be reimbursable from Net Liquidation
Proceeds, the Master Servicer shall be entitled to reimbursement of its funds so
expended pursuant to Section 3.03.
Notwithstanding any provision of this Servicing Agreement, a Home
Loan may be deemed to be finally liquidated if substantially all amounts
expected by the Master Servicer to be received in connection with the related
defaulted Home Loan have been received; provided, however, the Master Servicer
shall treat any Home Loan that is 180 days or more delinquent as having been
finally liquidated. Any subsequent collections with respect to any such Home
Loan shall be deposited to the Custodial Account. For purposes of determining
the amount of any Liquidation Proceeds or Insurance Proceeds, or other
unscheduled collections, the Master Servicer may take into account minimal
amounts of additional receipts expected to be received or any estimated
additional liquidation expenses expected to be incurred in connection with the
related defaulted Home Loan.
15
In the event that 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, who shall hold the same on behalf of
the Issuer in accordance with Section 3.13 of the Indenture. Notwithstanding any
such acquisition of title and cancellation of the related Home Loan, such
Mortgaged Property shall (except as otherwise expressly provided herein) be
considered to be an outstanding Home Loan held as an asset of the Issuer until
such time as such property shall be sold.
Any proceeds from the purchase or repurchase that occurs prior to
the Home Loan becoming a Liquidated Home Loan of any Home Loan pursuant to the
terms of this Servicing Agreement (including without limitation Sections 2.03,
3.15 and 3.16) will be applied in the following order of priority: first, to the
Master Servicer or the related Subservicer, all Servicing Fees payable therefrom
to the Payment Date on which such amounts are to be deposited in the Payment
Account; second, as Interest Collections, accrued and unpaid interest on the
related Home Loan, at the Net Loan Rate to the Payment Date on which such
amounts are to be deposited in the Payment Account; and third, as Principal
Collections, as a recovery of principal on the Home Loan.
Liquidation Proceeds with respect to a Liquidated Home Loan will
be applied in the following order of priority: first, to reimburse the Master
Servicer or the related Subservicer in accordance with this Section 3.07 for any
Liquidation Expenses; second, to the Master Servicer or the related Subservicer,
all unpaid Servicing Fees through the date of receipt of the final Liquidation
Proceeds; third, as Principal Collections, as a recovery of principal on the
Home Loan, up to an amount equal to the Loan Balance of the related Home Loan
immediately prior to the date it became a Liquidated Home Loan; fourth, as
Interest Collections, accrued and unpaid interest on the related Home Loan at
the Net Loan Rate through the date of receipt of the final Liquidation Proceeds;
and fifth, to Foreclosure Profits.
Proceeds and other recoveries from a Home Loan after it becomes a
Liquidated Home Loan will be applied in the following order of priority: first,
to reimburse the Master Servicer or the related Subservicer in accordance with
this Section 3.07 for any expenses previously unreimbursed from Liquidation
Proceeds or otherwise; second, to the Master Servicer or the related
Subservicer, all unpaid Servicing Fees payable thereto through the date of
receipt of the proceeds previously unreimbursed from Liquidation Proceeds or
otherwise; third, as Interest Collections, up to an amount equal to the sum of
(a) the Loan Balance of the related Home Loan immediately prior to the date it
became a Liquidated Home Loan, less any Net Liquidation Proceeds previously
received with respect to such Home Loan and applied as a recovery of principal,
and (b) accrued and unpaid interest on the related Home Loan at the Net Loan
Rate through the date it became a Liquidation Home Loan; and fourth, to
Foreclosure Profits.
Section 3.08. Issuer and Indenture Trustee to Cooperate. On or before
each Payment Date, the Master Servicer will notify the Indenture Trustee or the
Custodian, with a copy to the Issuer, of the termination of or the payment in
full and the termination of any Home Loan during the preceding Collection
Period. Upon receipt of payment in full, the Master Servicer is authorized to
execute, pursuant to the authorization contained in Section 3.01, if the
assignments of Mortgage have been recorded if required under the Home Loan
Purchase Agreement, 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
thereto. It is understood and agreed that any expenses incurred in connection
with such instrument of satisfaction or transfer shall be reimbursed from
amounts deposited in the Custodial Account. From time to time and as appropriate
for the servicing or foreclosure of any Home Loan, the Indenture Trustee or the
16
Custodian shall, upon request of the Master Servicer and delivery to the
Indenture Trustee or Custodian, with a copy to the Issuer, of a Request for
Release, signed by a Servicing Officer, release or cause to be released the
related Mortgage File to the Master Servicer and the Issuer or Indenture Trustee
shall promptly execute such documents, in the forms provided by the Master
Servicer, as shall be necessary for the prosecution of any such proceedings or
the taking of other servicing actions. Such trust receipt shall obligate the
Master Servicer to return the Mortgage File to the Indenture Trustee or the
Custodian (as specified in such receipt) when the need therefor by the Master
Servicer no longer exists unless the Home Loan shall be liquidated, in which
case, upon receipt of a certificate of a Servicing Officer similar to that
hereinabove specified, the trust receipt shall be released to the Master
Servicer.
In order to facilitate the foreclosure of the Mortgage securing
any Home Loan that is in default following recordation of the assignments of
Mortgage in accordance with the provisions of the Home Loan Purchase Agreement,
the Indenture Trustee or the Issuer shall, if so requested in writing by the
Master Servicer, promptly execute an appropriate assignment in the form provided
by the Master Servicer to assign such Home Loan for the purpose of collection to
the Master Servicer (any such assignment shall unambiguously indicate that the
assignment is for the purpose of collection only), and, upon such assignment,
such assignee for collection will thereupon bring all required actions in its
own name and otherwise enforce the terms of the Home Loan and deposit or credit
the Net Liquidation Proceeds, exclusive of Foreclosure Profits, received with
respect thereto in the Custodial Account. In the event that all delinquent
payments due under any such Home Loan are paid by the Mortgagor and any other
defaults are cured, then the assignee for collection shall promptly reassign
such Home Loan to the Indenture Trustee and return all Related Documents to the
place where the related Mortgage File was being maintained.
In connection with the Issuer's obligation to cooperate as
provided in this Section 3.08 and all other provisions of this Servicing
Agreement requiring the Issuer to authorize or permit any actions to be taken
with respect to the Home Loans, the Indenture Trustee, as pledgee of the Home
Loans and as assignee of record of the Home Loans on behalf of the Issuer
pursuant to Section 3.13 of the Indenture, expressly agrees, on behalf of the
Issuer, to take all such actions on behalf of the Issuer and to promptly execute
and return all instruments reasonably required by the Master Servicer in
connection therewith; provided that if the Master Servicer shall request a
signature of the Indenture Trustee, on behalf of the Issuer, the Master Servicer
will deliver to the Indenture Trustee an Officer's Certificate stating that such
signature is necessary or appropriate to enable the Master Servicer to carry out
its servicing and administrative duties under this Servicing Agreement.
Section 3.09. Servicing Compensation; Payment of Certain Expenses by
Master Servicer. The Master Servicer shall be entitled to receive the Master
Servicing Fee in accordance with Sections 3.02 and 3.03 as compensation for its
services in connection with servicing the Home Loans. Moreover, additional
servicing compensation in the form of late payment charges, investment income on
amounts in the Custodial Account or the Payment Account and other receipts not
17
required to be deposited in the Custodial Account as specified in Section 3.02
shall be retained by the Master Servicer. The Master Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder
(including payment of all other fees and expenses not expressly stated hereunder
to be for the account of the Securityholders, including, without limitation, the
fees and expenses of the Owner Trustee, Indenture Trustee and any Custodian) and
shall not be entitled to reimbursement therefor.
Section 3.10. Annual Statement as to Compliance.
(a) The Master Servicer will deliver to the Depositor, the Indenture
Trustee and the Credit Enhancer on or before the earlier of (a) March 31 of each
year, beginning with the first March 31 that occurs at least six months after
the Cut-off Date, or (b) with respect to any calendar year during which the
Depositor's annual report on Form 10-K is required to be filed in accordance
with the Exchange Act and the rules and regulations of the Commission, the date
on which the Depositor's annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations of the Commission
(or, in each case, if such day is not a Business Day, the immediately preceding
Business Day), an Officers' Certificate stating, as to each signer thereof, that
(i) a review of the activities of the Master Servicer during the preceding
calendar year related to its servicing of mortgage loans and of its performance
under servicing agreements, including this Servicing Agreement, has been made
under such officers' supervision, (ii) to the best of such officers' knowledge,
based on such review, the Master Servicer has complied in all material respects
with the minimum servicing standards set forth in the Uniform Single Attestation
Program for Mortgage Bankers and has fulfilled all of its material obligations
in all material respects throughout such year, or, if there has been material
noncompliance with such servicing standards or a default in the fulfillment in
all material respects of any such obligation relating to this Servicing
Agreement, such statement shall include a description of such noncompliance or
specify each such default, as the case may be, known to such officer and the
nature and status thereof.
(b) The Master Servicer shall deliver to the Issuer and the Indenture
Trustee, with a copy to the Credit Enhancer, promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter,
written notice by means of an Officer's Certificate of any event which with the
giving of notice or the lapse of time or both, would become a Servicing Default.
Section 3.11. Annual Independent Public Accountants' Servicing Report.
On or before the earlier of (a) March 31 of each year, beginning
with the first March 31 that occurs at least six months after the Cut-off Date,
or (b) with respect to any calendar year during which the Depositor's annual
report on Form 10-K is required to be filed in accordance with the Exchange Act
and the rules and regulations of the Commission, the date on which the
Depositor's annual report on Form 10-K is required to be filed in accordance
with the Exchange Act and the rules and regulations of the Commission (or, in
each case, if such day is not a Business Day, the immediately preceding Business
Day), the Master Servicer at its expense shall cause a firm of independent
public accountants which shall be members of the American Institute of Certified
Public Accountants to furnish a report to the Depositor, the Credit Enhancer and
the Indenture Trustee stating its opinion that, on the basis of an examination
conducted by such firm substantially in accordance with standards established by
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the American Institute of Certified Public Accountants, the assertions made
pursuant to Section 3.10 regarding compliance with the minimum servicing
standards set forth in the Uniform Single Attestation Program for Mortgage
Bankers during the preceding calendar year are fairly stated in all material
respects, subject to such exceptions and other qualifications that, in the
opinion of such firm, such accounting standards require it to report. In
rendering such statement, such firm may rely, as to matters relating to the
direct servicing of mortgage loans by Subservicers, upon comparable statements
for examinations conducted by independent public accountants substantially in
accordance with standards established by the American Institute of Certified
Public Accountants (rendered within one year of such statement) with respect to
such Subservicers.
Section 3.12. Access to Certain Documentation and Information Regarding
the Home Loans. Whenever required by statute or regulation, the Master Servicer
shall provide to the Credit Enhancer, any Securityholder upon reasonable request
(or a regulator for a Securityholder) or the Indenture Trustee, reasonable
access to the documentation regarding the Home Loans such access being afforded
without charge but only upon reasonable request and during normal business hours
at the offices of the Master Servicer. Nothing in this Section 3.12 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
3.12 as a result of such obligation shall not constitute a breach of this
Section 3.12.
Section 3.13. Maintenance of Certain Servicing Insurance Policies. The
Master Servicer shall during the term of its service as servicer maintain in
force (i) a policy or policies of insurance covering errors and omissions in the
performance of its obligations as master servicer hereunder and (ii) a fidelity
bond in respect of its officers, employees or agents. Each such policy or
policies and bond shall be at least equal to the coverage that would be required
by FNMA or FHLMC, whichever is greater, for Persons performing servicing for
loans similar to the Home Loans purchased by such entity.
Section 3.14. Information Required by the Internal Revenue Service and
Reports of Foreclosures and Abandonments of Mortgaged Property. The Master
Servicer shall prepare and deliver all federal and state information reports
when and as required by all applicable state and federal income tax laws. In
particular, with respect to the requirement under Section 6050J of the Code to
the effect that the Master Servicer or Subservicer shall make reports of
foreclosures and abandonments of any mortgaged property for each year beginning
in 2005, the Master Servicer or Subservicer shall file reports relating to each
instance occurring during the previous calendar year in which the Master
Servicer (i) on behalf of the Issuer, acquires an interest in any Mortgaged
Property through foreclosure or other comparable conversion in full or partial
satisfaction of a Home Loan, or (ii) knows or has reason to know that any
Mortgaged Property has been abandoned. The reports from the Master Servicer or
Subservicer shall be in form and substance sufficient to meet the reporting
requirements imposed by Section 6050J and Section 6050H (reports relating to
mortgage interest received) of the Code.
Section 3.15. Optional Repurchase of Defaulted Home Loans.
Notwithstanding any provision in Section 3.07 to the contrary, the Master
Servicer, at its option and in its sole discretion, may repurchase any Home Loan
delinquent in payment for a period of 90 days or longer for a price equal to the
Repurchase Price.
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Section 3.16. Limited Home Loan Repurchase Right.
The Limited Repurchase Right Holder will have the irrevocable
option at any time to purchase any of the Home Loans at the Repurchase Price, up
to a maximum of five Home Loans. In the event that this option is exercised as
to any five Home Loans in the aggregate, this option will thereupon terminate.
If at any time the Limited Repurchase Right Holder makes a payment to the
Custodial Account covering the amount of the Repurchase Price for such a Home
Loan, and the Limited Repurchase Right Holder provides to the Indenture Trustee
a certification signed by a Servicing Officer stating that the amount of such
payment has been deposited in the Custodial Account, then, at the request of the
Limited Repurchase Right Holder, the Indenture Trustee shall execute the
assignment of such Home Loan, without recourse, to the Limited Repurchase Right
Holder which shall succeed to all the Indenture Trustee's right, title and
interest in and to such Home Loan, and all security and documents relative
thereto. Such assignment shall be an assignment outright and not for security.
The Limited Repurchase Right Holder will thereupon own such Mortgage, and all
such security and documents, free of any further obligation to the Indenture
Trustee with respect thereto.
ARTICLE IV
Servicing Certificate
Section 4.01. Statements to Securityholders. (a) With respect to each
Payment Date, on the Business Day following the related Determination Date (or
with respect to any Payment Date for which a Credit Enhancement Draw Amount or
Dissolution Draw will occur, no later than 12:00 P.M. New York City time, on the
second Business Day prior to the applicable Payment Date), the Master Servicer
shall forward to the Indenture Trustee and the Indenture Trustee pursuant to
Section 3.26 of the Indenture shall forward or cause to be forwarded by mail or
otherwise make available electronically at ▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇ to each
Certificateholder, Noteholder, the Credit Enhancer, the Depositor, the Owner
Trustee, the Certificate Paying Agent and each Rating Agency, a statement
setting forth the following information (the "Servicing Certificate") as to the
Notes and Certificates, to the extent applicable:
(i) the aggregate amount of (a) Interest Collections, (b) Principal
Collections and (c) Substitution Adjustment Amounts;
(ii) the amount of such distribution as principal to the Noteholders;
(iii) the amount of such distribution as interest to the Noteholders,
separately stating the portion thereof in respect of overdue accrued
interest;
(iv) the number and Pool Balance of the Home Loans as of the end of the
related Collection Period;
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(v) the amount of any Credit Enhancement Draw Amount or Dissolution Draw, if
any, for such Payment Date and the aggregate amount of prior draws
thereunder not yet reimbursed;
(vi) the number and aggregate Loan Balances of Home Loans (a) as to which the
Monthly Payment is Delinquent for 30-59 days, 60-89 days and 90 or more
days, respectively, (b) that are foreclosed, (c) that have become REO,
and (d) that have been finally liquidated due to being 180 days or more
delinquent, in each case as of the end of the related Collection Period;
provided, however, that such information will not be provided on the
statements relating to the first Payment Date;
(vii) the weighted average Loan Rate for the related Collection Period;
(viii) the aggregate Liquidation Loss Amounts with respect to the related
Collection Period, the amount of any Liquidation Loss Distribution
Amounts with respect to the Notes, and the aggregate of the Liquidation
Loss Amounts from all Collection Periods to date expressed as dollars
and as a percentage of the aggregate Cut-off Date Loan Balance;
(ix) the aggregate Excess Loss Amounts with respect to the related Collection
Period and the aggregate of the Excess Loss Amounts from all Collection
Periods to date;
(x) the Note Balance of the Notes and the Certificate Principal Balance of
the Certificates after giving effect to the distribution of principal on
such Payment Date;
(xi) the aggregate Servicing Fees for the related Collection Period;
(xii) the Outstanding Reserve Amount and the Reserve Amount Target immediately
following such Payment Date;
(xiii) (a) the number and principal amount of release agreements pursuant to
Section 3.05(b)(iv) entered into during the calendar year and since the
Closing Date, stated separately, for the Home Loans and, the aggregate
outstanding principal amount of such release agreements expressed as a
percentage of the Pool Balance with information provided separately with
respect to all Unsecured Loans and (b) the number and principal amount
of Capitalization Workouts pursuant to Section 3.02(a)(v) entered into
since the Closing Date;
(xiv) the aggregate amount recovered during the related Collection Period
consisting of all subsequent recoveries on any Home Loan that was 180
days or more delinquent;
(xv) the amount, if any, to be paid by a Derivative Counterparty under a
Derivative Contract; and
(xvi) whether or not a Servicing Trigger has occurred.
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In the case of information furnished pursuant to clauses (ii) and
(iii) above, the amounts shall be expressed as an aggregate dollar amount per
Note or Certificate, as applicable, with a $1,000 denomination.
(b) In addition, with respect to each Payment Date, on the Business Day
following the related Determination Date, the Master Servicer shall
forward to the Credit Enhancer and the Rating Agencies the following
information for each Capitalization Workout entered into during the
related Collection Period:
(i) the original Home Loan amount;
(ii) the Home Loan amount after the Capitalization Workout;
(iii) the original Monthly Payment amount;
(iv) the Monthly Payment amount after the Capitalization Workout;
(v) the Capitalized Amount as defined in Section 3.02(a)(v) herein;
(vi) the Combined Loan-to-Value Ratio prior to the Capitalization Workout;
(vii) the Combined Loan-to-Value Ratio after the Capitalization Workout; and
(viii) if an appraisal was used in determining the Combined Loan-to-Value Ratio
referred to in (vii) above, the type and date of appraisal.
The Master Servicer shall also forward to the Indenture Trustee
any other information reasonably requested by the Indenture Trustee necessary to
make distributions pursuant to Section 3.05 of the Indenture. Prior to the close
of business on the Business Day next succeeding each Determination Date, the
Master Servicer shall furnish a written statement to the Certificate Paying
Agent and the Indenture Trustee setting forth the aggregate amounts required to
be withdrawn from the Custodial Account and deposited into the Payment Account
on the Business Day preceding the related Payment Date pursuant to Section 3.03.
The determination by the Master Servicer of such amounts shall, in the absence
of obvious error, be presumptively deemed to be correct for all purposes
hereunder and the Owner Trustee and Indenture Trustee shall be protected in
relying upon the same without any independent check or verification. In
addition, upon the Issuer's written request, the Master Servicer shall promptly
furnish information reasonably requested by the Issuer that is reasonably
available to the Master Servicer to enable the Issuer to perform its federal and
state income tax reporting obligations.
The Master Servicer shall also forward to the Credit Enhancer
and/or its designees any additional information, including without limitation,
loss and delinquency information requested by the Credit Enhancer, with respect
to the Home Loans.
Section 4.02. Tax Reporting. So long as 100% of the Certificates are owned by
the same person, then no separate federal and state income tax returns and
information returns or reports will be filed with respect to the Issuer, and the
Issuer will be treated as an entity disregarded from the 100% Certificateholder.
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Section 4.03. Calculation of Adjusted Issue Price. The Master Servicer shall
calculate the Adjusted Issue Price for purposes of calculating the Termination
Price.
Section 4.04. Exchange Act Reporting. The Master Servicer shall, on behalf of
the Depositor and in respect of the Trust Estate, prepare, sign and cause to be
filed with the Commission any periodic reports required to be filed under the
provisions of the Exchange Act, and the rules and regulations of the Commission
thereunder. Neither the Master Servicer nor the Indenture Trustee shall have any
liability with respect to the Master Servicer's failure to properly prepare or
file such periodic reports resulting from or relating to the Master Servicer's
inability or failure to obtain any information not resulting from the Master
Servicer's own negligence or willful misconduct. Any Form 10-K filed with the
Commission in connection with this Section 4.04 shall include a certification,
signed by the senior officer in charge of the servicing functions of the Master
Servicer, in the form attached as Exhibit D hereto or such other form as may be
required or permitted by the Commission (the "Form 10-K Certification"), in
compliance with Rule 13a-14 and 15d-14 under the Exchange Act and any additional
directives of the Commission. This Section 4.04 may be amended in accordance
with the provisions of this Servicing Agreement without the consent of the
Securityholders.
ARTICLE V
Payment Account
Section 5.01. Payment Account. The Indenture Trustee shall establish and
maintain a Payment Account titled "JPMorgan Chase Bank, as Indenture Trustee,
for the benefit of the Securityholders, the Certificate Paying Agent and the
Credit Enhancer pursuant to the Indenture, dated as of September 29, 2004,
between Home Loan Trust 2004-HI3 and JPMorgan Chase Bank". The Payment Account
shall be an Eligible Account. On each Payment Date, amounts on deposit in the
Payment Account will be distributed by the Indenture Trustee in accordance with
Section 3.05 of the Indenture. The Indenture Trustee shall, upon written request
from the Master Servicer, invest or cause the institution maintaining the
Payment Account to invest the funds in the Payment Account in Permitted
Investments designated in the name of the Indenture Trustee, which shall mature
not later than the Business Day next preceding the Payment Date next following
the date of such investment (except that (i) any investment in the institution
with which the Payment Account is maintained or a fund for which such
institution serves as custodian may mature on such Payment Date and (ii) any
other investment may mature on such Payment Date if the Indenture Trustee shall
advance funds on such Payment Date to the Payment Account in the amount payable
on such investment on such Payment Date, pending receipt thereof to the extent
necessary to make distributions on the Securities) and shall not be sold or
disposed of prior to maturity. All income and gain realized from any such
investment shall be for the benefit of the Master Servicer and shall be subject
to its withdrawal or order from time to time. The amount of any losses incurred
in respect of any such investments shall be deposited in the Payment Account by
the Master Servicer out of its own funds immediately as realized.
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ARTICLE VI
The Master Servicer
Section 6.01. Liability of the Master Servicer. The Master Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed upon and undertaken by the Master Servicer herein.
Section 6.02. Merger or Consolidation of, or Assumption of the Obligations of,
the Master Servicer. Any corporation into which the Master Servicer may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Master
Servicer shall be a party, or any corporation succeeding to the business of the
Master Servicer, shall be the successor of the Master Servicer, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
The Master Servicer may assign its rights and delegate its duties
and obligations under this Servicing Agreement; provided that the Person
accepting such assignment or delegation shall be a Person which is qualified to
service mortgage loans similar to those in the Trust Estate (meaning, mortgage
loans used for home improvement or debt consolidation), is reasonably
satisfactory to the Indenture Trustee (as pledgee of the Home Loans), the Issuer
and the Credit Enhancer, is willing to service the Home Loans and executes and
delivers to the Indenture Trustee and the Issuer an agreement, in form and
substance reasonably satisfactory to the Credit Enhancer, the Indenture Trustee
and the Issuer, which contains an assumption by such Person of the due and
punctual performance and observance of each covenant and condition to be
performed or observed by the Master Servicer under this Servicing Agreement;
provided further that each Rating Agency's rating of the Securities in effect
immediately prior to such assignment and delegation will not be qualified,
reduced, or withdrawn as a result of such assignment and delegation (as
evidenced by a letter to such effect from each Rating Agency), if determined
without regard to the Credit Enhancement Instrument; and provided further that
the Owner Trustee receives an Opinion of Counsel to the effect that such
assignment or delegation shall not cause the Owner Trust to be treated as a
corporation for federal or state income tax purposes.
Section 6.03. Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of the directors or officers or employees or
agents of the Master Servicer shall be under any liability to the Issuer, the
Owner Trustee, the Indenture Trustee or the Securityholders for any action taken
or for refraining from the taking of any action in good faith pursuant to this
Servicing Agreement, provided, however, that this provision shall not protect
the Master Servicer or any such Person against any liability which would
otherwise be imposed by reason of its willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder or by reason of its
reckless disregard of its obligations and duties hereunder. The Master Servicer
and any director or officer or employee or agent of the Master Servicer may rely
in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Master
Servicer and any director or officer or employee or agent of the Master Servicer
shall be indemnified by the Issuer and held harmless against any loss, liability
or expense incurred in connection with any legal action relating to this
Servicing Agreement or the Securities, including any amount paid to the Owner
Trustee or the Indenture Trustee pursuant to Section 6.06(b), other than any
loss, liability or expense incurred by reason of its willful misfeasance, bad
faith or gross negligence in the performance of its duties hereunder or by
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reason of its reckless disregard of its obligations and duties hereunder. The
Master Servicer shall not be under any obligation to appear in, prosecute or
defend any legal action which is not incidental to its duties to service the
Home Loans in accordance with this Servicing Agreement, and which in its opinion
may involve it in any expense or liability; provided, however, that the Master
Servicer may in its sole discretion undertake any such action which it may deem
necessary or desirable in respect of this Servicing Agreement, and the rights
and duties of the parties hereto and the interests of the Securityholders. In
such event, the reasonable legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Issuer, and the Master Servicer shall be entitled to be reimbursed therefor. The
Master Servicer's right to indemnity or reimbursement pursuant to this Section
6.03 shall survive any resignation or termination of the Master Servicer
pursuant to Section 6.04 or 7.01 with respect to any losses, expenses, costs or
liabilities arising prior to such resignation or termination (or arising from
events that occurred prior to such resignation or termination).
Section 6.04. Master Servicer Not to Resign. Subject to the provisions of
Section 6.02, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that the performance
of its obligations or duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master Servicer or its subsidiaries or Affiliates at
the date of this Servicing Agreement or (ii) upon satisfaction of the following
conditions: (a) the Master Servicer has proposed a successor servicer to the
Issuer and the Indenture Trustee in writing and such proposed successor servicer
is reasonably acceptable to the Issuer, the Indenture Trustee and the Credit
Enhancer; (b) each Rating Agency shall have delivered a letter to the Issuer,
the Credit Enhancer and the Indenture Trustee prior to the appointment of the
successor servicer stating that the proposed appointment of such successor
servicer as Master Servicer hereunder will not result in the reduction or
withdrawal of the then current rating of the Securities, if determined without
regard to the Credit Enhancement Instrument; and (c) such proposed successor
servicer is reasonably acceptable to the Credit Enhancer, as evidenced by a
letter to the Issuer and the Indenture Trustee; provided, however, that no such
resignation by the Master Servicer shall become effective until such successor
servicer or, in the case of (i) above, the Indenture Trustee, as pledgee of the
Home Loans, shall have assumed the Master Servicer's responsibilities and
obligations hereunder or the Indenture Trustee, as pledgee of the Home Loans,
shall have designated a successor servicer in accordance with Section 7.02. Any
such resignation shall not relieve the Master Servicer of responsibility for any
of the obligations specified in Sections 7.01 and 7.02 as obligations that
survive the resignation or termination of the Master Servicer. Any such
determination permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Indenture
Trustee and the Credit Enhancer.
Section 6.05. Delegation of Duties. In the ordinary course of business, the
Master Servicer at any time may delegate any of its duties hereunder to any
Person, including any of its Affiliates, who agrees to conduct such duties in
accordance with standards comparable to those with which the Master Servicer
complies pursuant to Section 3.01. Such delegation shall not relieve the Master
Servicer of its liabilities and responsibilities with respect to such duties and
shall not constitute a resignation within the meaning of Section 6.04.
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Section 6.06. Master Servicer to Pay Indenture Trustee's and Owner
Trustee's Fees and Expenses; Indemnification. (a) The Master Servicer covenants
and agrees to pay to the Owner Trustee, the Indenture Trustee and any co-trustee
of the Indenture Trustee or the Owner Trustee from time to time, and the Owner
Trustee, the Indenture Trustee and any such co-trustee shall be entitled to,
reasonable compensation (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust) for all services
rendered by each of them in the execution of the trusts created under the Trust
Agreement and the Indenture and in the exercise and performance of any of the
powers and duties under the Trust Agreement or the Indenture, as the case may
be, of the Owner Trustee, the Indenture Trustee and any co-trustee, and the
Master Servicer will pay or reimburse the Indenture Trustee and any co-trustee
upon request for all reasonable expenses, disbursements and advances incurred or
made by the Indenture Trustee or any co-trustee in accordance with any of the
provisions of this Servicing Agreement except any such expense, disbursement or
advance as may arise from its negligence, wilful misfeasance or bad faith.
(b) The Master Servicer agrees to indemnify the Indenture Trustee and
the Owner Trustee for, and to hold the Indenture Trustee and the Owner Trustee,
as the case may be, harmless against, any loss, liability or expense incurred
without negligence, bad faith or willful misconduct on the part of the Indenture
Trustee or the Owner Trustee, as the case may be, arising out of, or in
connection with, the acceptance and administration of the Issuer and the assets
thereof, including the costs and expenses (including reasonable legal fees and
expenses) of defending the Indenture Trustee or the Owner Trustee, as the case
may be, against any claim in connection with the exercise or performance of any
of its powers or duties under any Basic Document (including, without limitation,
any claim against the Indenture Trustee or the Owner Trustee alleging a
violation of the Homeownership and Equity Protection Act of 1994, as amended),
provided that:
(i) with respect to any such claim, the Indenture Trustee or Owner Trustee,
as the case may be, shall have given the Master Servicer written notice
thereof promptly after the Indenture Trustee or Owner Trustee, as the
case may be, shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the Issuer, the
Indenture Trustee or Owner Trustee, as the case may be, shall cooperate
and consult fully with the Master Servicer in preparing such defense;
and
(iii) notwithstanding anything in this Servicing Agreement to the contrary,
the Master Servicer shall not be liable for settlement of any claim by
the Indenture Trustee or the Owner Trustee, as the case may be, entered
into without the prior consent of the Master Servicer.
No termination of this Servicing Agreement shall affect the obligations created
by this Section 6.06 of the Master Servicer to indemnify the Indenture Trustee
and the Owner Trustee under the conditions and to the extent set forth herein.
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Notwithstanding the foregoing, the indemnification provided by
the Master Servicer in this Section 6.06(b) shall not pertain to any loss,
liability or expense of the Indenture Trustee or the Owner Trustee, including
the costs and expenses of defending itself against any claim, incurred in
connection with any actions taken by the Indenture Trustee or the Owner Trustee
at the direction of the Noteholders or Certificateholders, as the case may be,
pursuant to the terms of this Servicing Agreement.
ARTICLE VII
Default
Section 7.01. Servicing Default. If any one of the following events
("Servicing Default") shall occur and be continuing:
(i) Any failure by the Master Servicer to deposit in the Custodial Account
or to remit to the Paying Agent for deposit in the Payment Account any
deposit required to be made under the terms of this Servicing Agreement
which continues unremedied for a period of five Business Days after the
date upon which written notice of such failure shall have been given to
the Master Servicer by the Issuer or the Indenture Trustee, or to the
Master Servicer, the Issuer and the Indenture Trustee by the Credit
Enhancer; or
(ii) Failure on the part of the Master Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Master
Servicer set forth in the Securities or in this Servicing Agreement,
which failure, in each case, materially and adversely affects the
interests of Securityholders or the Credit Enhancer and which continues
unremedied for a period of 45 days after the date on which written
notice of such failure, requiring the same to be remedied, and stating
that such notice is a "Notice of Default" hereunder, shall have been
given to the Master Servicer by the Issuer or the Indenture Trustee, or
to the Master Servicer, the Issuer and the Indenture Trustee by the
Credit Enhancer; or
(iii) The entry against the Master Servicer of a decree or order by a court or
agency or supervisory authority having jurisdiction in the premises for
the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, conservatorship, receivership, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of its affairs, and the continuance of any
such decree or order undischarged or unstayed and in effect for a period
of 60 consecutive days; or
(iv) The Master Servicer shall voluntarily go into liquidation, consent to
the appointment of a conservator, receiver, liquidator or similar person
in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Master Servicer
or of or relating to all or substantially all of its property, or a
decree or order of a court, agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator,
receiver, liquidator or similar person in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings,
or for the winding-up or liquidation of its affairs, shall have been
27
entered against the Master Servicer and such decree or order shall have
remained in force undischarged, unbonded or unstayed for a period of 60
days; or the Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations.
Then, and in every such case, so long as a Servicing Default shall not have been
remedied by the Master Servicer, either the Issuer or the Indenture Trustee,
with the consent of the Credit Enhancer, or the Credit Enhancer, by notice then
given in writing to the Master Servicer (and to the Issuer and the Indenture
Trustee if given by the Credit Enhancer) may terminate all of the rights and
obligations of the Master Servicer as servicer under this Servicing Agreement
other than its right to receive servicing compensation and expenses for
servicing the Home Loans hereunder during any period prior to the date of such
termination and the Issuer or the Indenture Trustee, with the consent of the
Credit Enhancer, or the Credit Enhancer may exercise any and all other remedies
available at law or equity. Any such notice to the Master Servicer shall also be
given to each Rating Agency, the Credit Enhancer and the Issuer. On or after the
receipt by the Master Servicer of such written notice, all authority and power
of the Master Servicer under this Servicing Agreement, whether with respect to
the Securities or the Home Loans or otherwise, shall pass to and be vested in
the Indenture Trustee as successor Master Servicer, pursuant to and under this
Section 7.01; and, without limitation, the Indenture Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Home Loan and related documents,
or otherwise. The Master Servicer agrees to cooperate with the Indenture Trustee
in effecting the termination of the responsibilities and rights of the Master
Servicer hereunder, including, without limitation, the transfer to the Indenture
Trustee for the administration by it of all cash amounts relating to the Home
Loans that shall at the time be held by the Master Servicer and to be deposited
by it in the Custodial Account, or that have been deposited by the Master
Servicer in the Custodial Account or thereafter received by the Master Servicer
with respect to the Home Loans. All reasonable costs and expenses (including,
but not limited to, attorneys' fees) incurred in connection with amending this
Servicing Agreement to reflect such succession as Master Servicer pursuant to
this Section 7.01 shall be paid by the predecessor Master Servicer (or if the
predecessor Master Servicer is the Indenture Trustee, the initial Master
Servicer) upon presentation of reasonable documentation of such costs and
expenses.
Notwithstanding any termination of the activities of the Master
Servicer hereunder, the Master Servicer shall be entitled to receive, out of any
late collection of a payment on a Home Loan which was due prior to the notice
terminating the Master Servicer's rights and obligations hereunder and received
after such notice, that portion to which the Master Servicer would have been
entitled pursuant to Sections 3.03 and 3.09 as well as its Master Servicing Fee
in respect thereof, and any other amounts payable to the Master Servicer
hereunder the entitlement to which arose prior to the termination of its
activities hereunder.
Notwithstanding the foregoing, a delay in or failure of
performance under Section 7.01(i) or under Section 7.01(ii) after the applicable
grace periods specified in such Sections, shall not constitute a Servicing
Default if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Master Servicer and such delay or failure was caused
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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 reasonable efforts to perform its
respective obligations in a timely manner in accordance with the terms of this
Servicing Agreement and the Master Servicer shall provide the Indenture Trustee,
the Credit Enhancer and the Securityholders with notice of such failure or delay
by it, together with a description of its efforts to so perform its obligations.
The Master Servicer shall immediately notify the Indenture Trustee, the Credit
Enhancer and the Owner Trustee in writing of any Servicing Default.
Section 7.02. Indenture Trustee to Act; Appointment of Successor. (a) On
and after the time the Master Servicer receives a notice of termination pursuant
to Section 7.01 or sends a notice pursuant to Section 6.04, the Indenture
Trustee shall be the successor in all respects to the Master Servicer in its
capacity as servicer under this Servicing Agreement and the transactions set
forth or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof. Nothing in this Servicing Agreement or in the Trust
Agreement shall be construed to permit or require the Indenture Trustee to (i)
succeed to the responsibilities, duties and liabilities of the initial Master
Servicer in its capacity as Seller under the Home Loan Purchase Agreement, (ii)
be responsible or accountable for any act or omission of the Master Servicer
prior to the issuance of a notice of termination hereunder, (iii) require or
obligate the Indenture Trustee, in its capacity as successor Master Servicer, to
purchase, repurchase or substitute any Home Loan, (iv) fund any losses on any
Permitted Investment directed by any other Master Servicer or (v) be responsible
for the representations and warranties of the Master Servicer. As compensation
therefor, the Indenture Trustee shall be entitled to such compensation as the
Master Servicer would have been entitled to hereunder if no such notice of
termination had been given. 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 so to 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
$10,000,000 as the successor to the Master Servicer hereunder in the assumption
of all or any part of the responsibilities, duties or liabilities of the Master
Servicer hereunder; provided that any such successor Master Servicer shall be
acceptable to the Credit Enhancer, as evidenced by the Credit Enhancer's prior
written consent which consent shall not be unreasonably withheld and provided
further that the appointment of any such successor Master Servicer will not
result in the qualification, reduction or withdrawal of the ratings assigned to
the Securities by the Rating Agencies, if determined without regard to the
Credit Enhancement Instrument. Pending appointment of a successor to the Master
Servicer hereunder, unless the Indenture Trustee is prohibited by law from so
acting, the Indenture Trustee shall act in such capacity as herein above
provided. In connection with such appointment and assumption, the successor
Master Servicer shall be entitled to receive compensation out of payments on
Home Loans in an amount equal to the compensation which the Master Servicer
would otherwise have received pursuant to Section 3.09 (or such lesser
compensation as the Indenture Trustee and such successor shall agree). The
appointment of a successor Master Servicer shall not affect any liability of the
predecessor Master Servicer which may have arisen under this Servicing Agreement
prior to its termination as Master Servicer (including, without limitation, the
29
obligation to purchase Home Loans pursuant to Section 3.01, to pay any
deductible under an insurance policy pursuant to Section 3.04 or to indemnify
the Indenture Trustee pursuant to Section 6.06), nor shall any successor Master
Servicer be liable for any acts or omissions of the predecessor Master Servicer
or for any breach by such Master Servicer of any of its representations or
warranties contained herein or in any related document or agreement. The
Indenture Trustee and such successor shall take such action, consistent with
this Servicing Agreement, as shall be necessary to effectuate any such
succession.
(b) Any successor, including the Indenture Trustee, to the Master
Servicer as servicer shall during the term of its service as servicer (i)
continue to service and administer the Home Loans for the benefit of the
Securityholders, (ii) maintain in force a policy or policies of insurance
covering errors and omissions in the performance of its obligations as Master
Servicer hereunder and a fidelity bond in respect of its officers, employees and
agents to the same extent as the Master Servicer is so required pursuant to
Section 3.13 and (iii) be bound by the terms of the Insurance Agreement.
(c) Any successor Master Servicer, including the Indenture Trustee,
shall not be deemed in default or to have breached its duties hereunder if the
predecessor Master Servicer shall fail to deliver any required deposit to the
Custodial Account or otherwise cooperate with any required servicing transfer or
succession hereunder.
Section 7.03. Notification to Securityholders. Upon any termination of
or appointment of a successor to the Master Servicer pursuant to this Article
VII or Section 6.04, the Indenture Trustee shall give prompt written notice
thereof to the Securityholders, the Credit Enhancer, the Issuer and each Rating
Agency.
Section 7.04. Servicing Trigger; Removal of Master Servicer.
(a) Upon determination by the Credit Enhancer that a Servicing Trigger
has occurred, the Credit Enhancer shall give notice of such Servicing Trigger to
the Master Servicer, the Depositor, the Indenture Trustee and to each Rating
Agency.
(b) At any time after such determination and while a Servicing Trigger
is continuing, the Credit Enhancer may direct the Indenture Trustee to remove
the Master Servicer if the Credit Enhancer makes a determination that the manner
of master servicing was a factor contributing to the size of the delinquencies
or losses incurred in the Trust Estate.
(c) Upon receipt of directions to remove the Master Servicer pursuant to
the preceding clause (b), the Indenture Trustee shall notify the Master Servicer
that it has been terminated and the Master Servicer shall be terminated in the
same manner as specified in Sections 7.01 and 7.02.
(d) After notice of occurrence of a Servicing Trigger has been given and
while a Servicing Trigger is continuing, until and unless the Master Servicer
has been removed as provided in clause (b), the Master Servicer covenants and
agrees to act as the Master Servicer for a term from the occurrence of the
Servicing Trigger to the end of the calendar quarter in which such Servicing
Trigger occurs, which term may at the Credit Enhancer's discretion be extended
by notice to the Indenture Trustee for successive terms of three (3) calendar
months each, until the termination of the Trust Estate. The Master Servicer
will, upon the receipt of each such notice of extension (a "Master Servicer
30
Extension Notice") become bound for the duration of the term covered by such
Master Servicer Extension Notice to continue as Master Servicer subject to and
in accordance with this Agreement. If, as of the fifteenth (15th) day prior to
the last day of any term as the Master Servicer, the Indenture Trustee shall not
have received any Master Servicer Extension Notice from the Credit Enhancer, the
Indenture Trustee shall, within five (5) Business Days thereafter, give written
notice of such nonreceipt to the Credit Enhancer and the Master Servicer. If any
such term expires without a Master Servicer Extension Notice then the Indenture
Trustee shall act as successor Master Servicer as provided in Section 7.02.
(e) No provision of this Section 7.04 shall have the effect of limiting
the rights of the Depositor, the Indenture Trustee, the Securityholders or the
Credit Enhancer under Section 7.01.
ARTICLE VIII
Miscellaneous Provisions
Section 8.01. Amendment. This Servicing Agreement may be amended from time to
time by the parties hereto, provided that any amendment be accompanied by a
letter from the Rating Agencies that the amendment will not result in the
downgrading or withdrawal of the rating then assigned to the Securities, if
determined without regard to the Credit Enhancement Instrument, and the consent
of the Credit Enhancer and the Indenture Trustee. Promptly after the execution
by the Master Servicer, the Issuer and the Indenture Trustee of any amendment of
this Servicing Agreement pursuant to this Section 8.01, the Indenture Trustee
shall provide the Custodian with written copies thereof. Any failure of the
Indenture Trustee to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amendment.
Section 8.02. GOVERNING LAW. THIS SERVICING AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 8.03. Notices. All demands, notices and communications hereunder shall
be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by certified mail, return receipt requested, to (a) in
the case of the Master Servicer, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Addition Director - Bond Administration, (b)
in the case of the Credit Enhancer, Financial Guaranty Insurance Company, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (c) in the case of ▇▇▇▇▇'▇, Home Mortgage
Loan Monitoring Group, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
(d) in the case of Standard & Poor's, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - 41st Floor, New York,
New York 10041, Attention: Residential Mortgage Surveillance Group, (e) in the
case of the Owner Trustee, Wilmington Trust Company, ▇▇▇▇▇▇ Square North, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust
Administration, (f) in the case of the Issuer, to Home Loan Trust 2004-HI3, c/o
Owner Trustee, Wilmington Trust Company, ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust
Administration, (g) in the case of the Indenture Trustee, JPMorgan Chase Bank, ▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Institutional
Trust Services/Global Debt Home Loan Trust 2004-HI3 and (h) in the case of the
Underwriters c/o the Representative, at Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; or, as to each party, at such other address as
shall be designated by such party in a written notice to each other party. Any
notice required or permitted to be mailed to a Securityholder shall be given by
first class mail, postage prepaid, at the address of such Securityholder as
shown in the Register. Any notice so mailed within the time prescribed in this
Servicing Agreement shall be conclusively presumed to have been duly given,
whether or not the Securityholder receives such notice. Any notice or other
document required to be delivered or mailed by the Indenture Trustee to any
Rating Agency shall be given on a reasonable efforts basis and only as a matter
of courtesy and accommodation and the Indenture Trustee shall have no liability
for failure to delivery such notice or document to any Rating Agency.
Section 8.04. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Servicing Agreement shall be
for any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Servicing Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Servicing
Agreement or of the Securities or the rights of the Securityholders thereof.
Section 8.05. Third-Party Beneficiaries. This Servicing Agreement will
inure to the benefit of and be binding upon the parties hereto, the
Securityholders, the Credit Enhancer, the Owner Trustee and their respective
successors and permitted assigns. Except as otherwise provided in this Servicing
Agreement, no other Person will have any right or obligation hereunder.
Section 8.06. Counterparts. This instrument may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 8.07. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 8.08. Termination Upon Purchase by the Master Servicer or
Liquidation of All Home Loans; Partial Redemption. (a) The respective
obligations and responsibilities of the Master Servicer, the Issuer and the
Indenture Trustee created hereby shall terminate upon the last action required
to be taken by the Issuer pursuant to the Trust Agreement and by the Indenture
Trustee pursuant to the Indenture following the earlier of:
(i) the date on or before which the Indenture or Trust Agreement is
terminated, or
32
(ii) the purchase by the Master Servicer from the Issuer of all Home Loans
and all property acquired in respect of any Home Loan at a price equal
to the Termination Price.
The right of the Master Servicer to purchase the assets of the Issuer pursuant
to clause (ii) above on any Payment Date is conditioned upon the Pool Balance
(after applying payments received in the related Collection Period) as of such
Payment Date being less than ten percent of the aggregate of the Cut-off Date
Loan Balances of the Home Loans. If such right is exercised by the Master
Servicer, the Master Servicer shall deposit the Termination Price calculated
pursuant to clause (ii) above with the Indenture Trustee pursuant to Section
4.10 of the Indenture and, upon the receipt of such deposit, the Indenture
Trustee or Custodian shall release to the Master Servicer, the files pertaining
to the Home Loans being purchased.
(b) The Master Servicer, at its expense, shall prepare and deliver to
the Indenture Trustee for execution, at the time the Home Loans are to be
released to the Master Servicer, appropriate documents assigning each such Home
Loan from the Indenture Trustee or the Issuer to the Master Servicer or the
appropriate party.
(c) The Master Servicer shall give the Indenture Trustee not less than
seven Business Days' prior written notice of the Payment Date on which the
Master Servicer anticipates that the final distribution will be made to
Noteholders. Notice of any termination, specifying the anticipated Final Insured
Payment Date or other Payment Date (which shall be a date that would otherwise
be a Payment Date) upon which the Noteholders may surrender their Notes to the
Indenture Trustee (if so required by the terms hereof) for payment of the final
distribution and cancellation, shall be given promptly by the Master Servicer to
the Indenture Trustee specifying:
(i) the anticipated Final Insured Payment Date or other Payment Date upon
which final payment of the Notes is anticipated to be made upon
presentation and surrender of Notes at the office or agency of the
Indenture Trustee therein designated; and
(ii) the amount of any such final payment, if known.
Section 8.09. Certain Matters Affecting the Indenture Trustee. For all
purposes of this Servicing Agreement, in the performance of any of its duties or
in the exercise of any of its powers hereunder, the Indenture Trustee shall be
subject to and entitled to the benefits of Article VI of the Indenture.
Section 8.10. Owner Trustee Not Liable for Related Documents. The
recitals contained herein shall be taken as the statements of the Depositor, and
the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of this
Servicing Agreement, of any Basic Document or of the Certificates (other than
the signatures of the Owner Trustee on the Certificates) or the Notes, or of any
Related Documents. The Owner Trustee shall at no time have any responsibility or
liability with respect to the sufficiency of the Owner Trust Estate or its
ability to generate the payments to be distributed to Certificateholders under
33
the Trust Agreement or the Noteholders under the Indenture, including, the
compliance by the Depositor or the Seller with any warranty or representation
made under any Basic Document or in any related document or the accuracy of any
such warranty or representation, or any action of the Certificate Paying Agent,
the Certificate Registrar or the Indenture Trustee taken in the name of the
Owner Trustee.
34
IN WITNESS WHEREOF, the Master Servicer, the Indenture Trustee
and the Issuer have caused this Servicing Agreement to be duly executed by their
respective officers or representatives all as of the day and year first above
written.
RESIDENTIAL FUNDING CORPORATION,
as Master Servicer
By: /s/ ▇▇▇▇▇ ▇▇▇
Name: ▇▇▇▇▇ ▇▇▇
Title: Director
HOME LOAN TRUST 2004-HI3
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
JPMORGAN CHASE BANK, as Indenture Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Trust Officer
35
EXHIBIT A
HOME LOAN SCHEDULE
EXHIBIT B
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PREMISES:
That JPMorgan Chase Bank, as Indenture Trustee (the "Trustee"), under the
Indenture (the "Indenture") among ________________________________________ and
the Indenture Trustee, a national banking association organized and existing
under the laws of the State of New York, and having its principal office located
at 4 New York Plaza, in the City of New York in the State of New York, hath
made, constituted and appointed, and does by these presents make, constitute and
appoint Residential Funding Corporation, a corporation organized and existing
under the laws of the State of Delaware, its true and lawful Attorney-in-Fact,
with full power and authority to sign, execute, acknowledge, deliver, file for
record, and record any instrument on its behalf and to perform such other act or
acts as may be customarily and reasonably necessary and appropriate to
effectuate the following enumerated transactions in respect of any of the
mortgages or deeds of trust (the "Mortgages" and the "Deeds of Trust",
respectively) creating a trust or second lien or an estate in fee simple
interest in real property securing a Home Loan and promissory notes secured
thereby (the "Mortgage Notes") for which the undersigned is acting as Indenture
Trustee for various Securityholders (whether the undersigned is named therein as
mortgagee or beneficiary or has become mortgagee by virtue of Endorsement of the
Mortgage Note secured by any such Mortgage or Deed of Trust) and for which
Residential Funding Corporation is acting as master servicer pursuant to a
Servicing Agreement, dated as of September 29, 2004 (the "Servicing Agreement").
This appointment shall apply only to transactions which the Trustee is
authorized to enter into under the Indenture, but in no event shall apply to any
transactions other than the following enumerated transactions only:
1. The modification or re-recording of a Mortgage or Deed of Trust,
where said modification or re-recording is for the purpose of
correcting the Mortgage or Deed of Trust to conform same to the
original intent of the parties thereto or to correct title errors
discovered after such title insurance was issued and said
modification or re-recording, in either instance, does not
adversely affect the lien of the Mortgage or Deed of Trust as
insured.
2. The subordination of the lien of a Mortgage or Deed of Trust to
an easement in favor of a public utility company or a government
agency or unit with powers of eminent domain; this section shall
include, without limitation, the execution of partial
satisfactions/releases, partial reconveyances or the execution of
requests to trustees to accomplish same.
3. With respect to a Mortgage or Deed of Trust, the foreclosure, the
taking of a deed in lieu of foreclosure, or the completion of
judicial or non-judicial foreclosure or termination, cancellation
or rescission of any such foreclosure, including, without
limitation, any and all of the following acts:
a. The substitution of trustee(s) serving under a Deed of
Trust, in accordance with state law and the Deed of Trust;
b. Statements of breach or non-performance;
c. Notices of default;
d. Cancellations/rescissions of notices of default and/or
notices of sale;
e. The taking of a deed in lieu of foreclosure; and
f. Such other documents and actions as may be necessary under
the terms of the Mortgage, Deed of Trust or state law to
expeditiously complete said transactions.
4. The conveyance of the properties to the mortgage insurer, or the
closing of the title to the property to be acquired as real
estate owned, or conveyance of title to real estate owned.
5. The completion of loan assumption agreements.
6. The full satisfaction/release of a Mortgage or Deed of Trust or
full reconveyance upon payment and discharge of all sums secured
thereby, including, without limitation, cancellation of the
related Mortgage Note.
7. The assignment of any Mortgage or Deed of Trust and the related
Mortgage Note, in connection with the repurchase of the Home Loan
secured and evidenced thereby pursuant to the requirements of a
Residential Funding Corporation Seller Contract.
8. The full assignment of a Mortgage or Deed of Trust upon payment
and discharge of all sums secured thereby in conjunction with the
refinancing thereof, including, without limitation, the
endorsement of the related Mortgage Note.
9. The modification or re-recording of a Mortgage or Deed of Trust,
where said modification or re-recording is for the purpose of any
modification pursuant to Section 3.01 of the Servicing Agreement.
10. The subordination of the lien of a Mortgage or Deed of Trust,
where said subordination is in connection with any modification
pursuant to Section 3.01 of the Servicing Agreement, and the
execution of partial satisfactions/releases in connection with
such same Section 3.01.
The undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of Attorney; and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect has not been
revoked unless an instrument of revocation has been made in writing by the
undersigned.
JPMORGAN CHASE BANK, not in its
individual capacity, but solely
as Indenture Trustee under the
Servicing Agreement and the
Indenture
Name: ______________________ Name: ________________________
Title: ______________________ Title: ________________________
STATE OF )
SS.
COUNTY OF )
On this __ day of _______________, 2004, before me the undersigned,
Notary Public of said State, personally appeared _______________________________
personally known to me to be duly authorized officers of JPMorgan Chase Bank
that executed the within instrument and personally known to me to be the persons
who executed the within instrument on behalf of JPMorgan Chase Bank therein
named, and acknowledged to me such JPMorgan Chase Bank executed the within
instrument pursuant to its by-laws.
WITNESS my hand and official seal.
_______________________________
Notary Public in and for the
State of ___________________
After recording, please mail to:
_____________________________
_____________________________
_____________________________
Attn: ________________________
EXHIBIT C
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with your administration of the Home Loans, we request the release
of the Mortgage File described below.
Servicing Agreement Dated:
Series #:
Account #:
Pool #:
Loan #:
Borrower Name(s):
Reason for Document Request: (circle one) ..Home Loan Prepaid in Full
Home Loan Repurchased
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Servicing Agreement."
_____________________________________
Residential Funding Corporation
Authorized Signature
******************************************************************
TO CUSTODIAN/INDENTURE TRUSTEE: Please acknowledge this request, and check off
documents being enclosed with a copy of this form. You should retain this form
for your files in accordance with the terms of the Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or
Deed of Trust
[ ].Title Insurance Policy
[ ] Other: ___________________________
_________________
Name
_________________
Title
_________________
Date
EXHIBIT D
FORM OF FORM 10-K CERTIFICATE
I, [identify the certifying individual], certify that:
1. I have reviewed the annual report on Form 10-K for the fiscal year
[___], and all reports on Form 8-K containing distribution or servicing reports
filed in respect of periods included in the year covered by that annual report,
of the trust (the "Trust") created pursuant to the Amended and Restated Trust
Agreement dated September 29, 2004 (the "Trust Agreement") between Residential
Funding Mortgage Securities II, Inc. (the "Company") and Wilmington Trust
Company (the "Owner Trustee");
2. Based on my knowledge, the information in these reports, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as of the
last day of the period covered by that annual report;
3. Based on my knowledge, the servicing information required to be
provided to by the Master Servicer under the Servicing Agreement is included in
these reports;
4. I am responsible for reviewing the activities performed by the Master
Servicer under the Servicing Agreement and based upon the review required under
the Servicing Agreement, and except as disclosed in the report, the Master
Servicer has fulfilled its obligations under the Servicing Agreement; and
5. I have disclosed to the Company's certified public accountants all
significant deficiencies relating the Master Servicer's compliance with the
minimum servicing standards in accordance with a review conducted in compliance
with the Uniform Single Attestation Program for Mortgage Bankers as set forth in
the Servicing Agreement.
In giving the certifications above, I have reasonably relied on
information provided tome by the following unaffiliated parties.
Date:____________
By:____________________________
Name:__________________________
Company:_______________________
Title:___________________________