EXHIBIT 99.1
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COLUMBIA NATIONAL, INCORPORATED,
as Master Servicer,
AMERICAN HOME MORTGAGE TRUST 2004-1,
as Issuer
and
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as Indenture Trustee,
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SERVICING AGREEMENT
Dated as of March 31, 2004
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Mortgage Loans
American Home Mortgage Investment Trust 2004-1
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions..............................................................................................2
Section 1.01 DEFINITIONS.......................................................................2
Section 1.02 OTHER DEFINITIONAL PROVISIONS.....................................................2
Section 1.03 INTEREST CALCULATIONS.............................................................2
ARTICLE II
Representations and Warranties...........................................................................4
Section 2.01 REPRESENTATIONS AND WARRANTIES REGARDING THE MASTER SERVICER......................4
Section 2.02 EXISTENCE.........................................................................5
Section 2.03 ENFORCEMENT OF REPRESENTATIONS AND WARRANTIES.....................................5
ARTICLE III
Administration and Servicing of Mortgage Loans...........................................................7
Section 3.01 MASTER SERVICER TO ASSURE SERVICING...............................................7
Section 3.02 SUBSERVICING AGREEMENTS BETWEEN MASTER SERVICER AND SUBSERVICERS..................9
Section 3.03 SUCCESSOR SUBSERVICERS............................................................9
Section 3.04 LIABILITY OF THE MASTER SERVICER.................................................10
Section 3.05 ASSUMPTION OR TERMINATION OF SUBSERVICING AGREEMENTS BY INDENTURE TRUSTEE........10
Section 3.06 COLLECTION OF MORTGAGE LOAN PAYMENTS.............................................11
Section 3.07 WITHDRAWALS FROM THE COLLECTION ACCOUNT..........................................13
Section 3.08 COLLECTION OF TAXES ASSESSMENTS AND SIMILAR ITEMS; SERVICING ACCOUNTS............15
Section 3.09 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE MORTGAGE LOANS.....15
Section 3.10 MAINTENANCE OF PRIMARY INSURANCE POLICIES; COLLECTION THEREUNDER.................16
Section 3.11 MAINTENANCE OF HAZARD INSURANCE AND FIDELITY COVERAGE............................16
Section 3.12 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.......................................18
Section 3.13 REALIZATION UPON DEFAULTED MORTGAGE LOANS........................................18
Section 3.14 INDENTURE TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES........................20
Section 3.15 MASTER SERVICING COMPENSATION....................................................21
Section 3.16 ANNUAL STATEMENTS OF COMPLIANCE..................................................21
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Section 3.17 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT..........................22
Section 3.18 OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS....................................22
Section 3.19 INFORMATION REQUIRED BY THE INTERNAL REVENUE SERVICE GENERALLY AND
REPORTS OF FORECLOSURES AND ABANDONMENTS OF MORTGAGED PROPERTY...................23
ARTICLE IV
Servicing Certificate...................................................................................24
Section 4.01 REMITTANCE REPORTS...............................................................24
Section 4.02 RESERVED.........................................................................24
Section 4.03 RESERVED.........................................................................24
Section 4.04 ADVANCES.........................................................................24
Section 4.05 COMPENSATING INTEREST PAYMENTS...................................................25
Section 4.06 EXCHANGE ACT REPORTING...........................................................25
ARTICLE V
The Master Servicer.....................................................................................27
Section 5.01 LIABILITY OF THE MASTER SERVICER.................................................27
Section 5.02 MERGER OR CONSOLIDATION OF OR ASSUMPTION OF THE OBLIGATIONS OF THE
MASTER SERVICER..................................................................27
Section 5.03 LIMITATION ON LIABILITY OF THE MASTER SERVICER AND OTHERS........................27
Section 5.04 MASTER SERVICER NOT TO RESIGN....................................................28
Section 5.05 DELEGATION OF DUTIES.............................................................28
Section 5.06 INDEMNIFICATION...................................................................29
ARTICLE VI
Default.................................................................................................31
Section 6.01 SERVICING DEFAULT................................................................31
Section 6.02 INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR...............................33
Section 6.03 NOTIFICATION TO NOTEHOLDERS......................................................35
Section 6.04 WAIVER OF DEFAULTS...............................................................35
ARTICLE VII
Miscellaneous Provisions................................................................................36
Section 7.01 AMENDMENT........................................................................36
Section 7.02 GOVERNING LAW....................................................................36
Section 7.03 NOTICES..........................................................................36
Section 7.04 SEVERABILITY OF PROVISIONS.......................................................37
Section 7.05 THIRD-PARTY BENEFICIARIES........................................................37
Section 7.06 COUNTERPARTS.....................................................................37
Section 7.07 EFFECT OF HEADINGS AND TABLE OF CONTENTS.........................................37
Section 7.08 TERMINATION......................................................................37
Section 7.09 NO PETITION......................................................................37
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Section 7.10 NO RECOURSE......................................................................37
EXHIBIT A - MORTGAGE LOAN SCHEDULE..............................................................................A-1
EXHIBIT B - FORM OF REQUEST FOR RELEASE.........................................................................B-1
EXHIBIT C-1 - FORM OF CERTIFICATION TO BE PROVIDED BY
THE MASTER SERVICER WITH FORM 10-K..........................................................C-1
EXHIBIT C-2 - FORM OF FORM CERTIFICATION TO BE PROVIDED BY
THE INDENTURE TRUSTEE WITH FORM 10-K........................................................C-2
EXHIBIT D - FORM OF REMITTANCE REPORT FROM MASTER SERVICER......................................................D-1
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This Servicing Agreement, dated as of March 31, 2004, among
Columbia National, Incorporated, as Master Servicer (the "Master Servicer" ),
American Home Mortgage Investment Trust 2004-1, as Issuer (the "Issuer") and
▇▇▇▇▇ Fargo Bank, National Association, as Indenture Trustee (the "Indenture
Trustee").
W I T N E S S E T H T H A T :
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WHEREAS, pursuant to the terms of the Mortgage Loan Purchase
Agreement, American Home Mortgage Securities LLC (the "Company" or the
"Depositor") will acquire the Mortgage Loans;
WHEREAS, the Company will create American Home Mortgage
Investment Trust 2004-1, a Delaware statutory trust, and will transfer the
Mortgage Loans and all of its rights under the Mortgage Loan Purchase Agreement
to the Issuer;
WHEREAS, pursuant to the terms of an Amended and Restated
Trust Agreement dated as of March 31, 2004 (the "Trust Agreement") among the
Company, as depositor, Wilmington Trust Company, as owner trustee (the "Owner
Trustee") and ▇▇▇▇▇ Fargo Bank, National Association, as certificate registrar
and certificate paying agent, the Company will convey the Mortgage Loans to the
Issuer in exchange for the Certificates (as defined below);
WHEREAS, pursuant to the terms of the Trust Agreement, the
Issuer will issue and transfer to or at the direction of the Depositor, the
Trust Certificates, 2004-1 (the "Certificates");
WHEREAS, pursuant to the terms of an Indenture dated as of
March 31, 2004 (the "Indenture") between the Issuer and ▇▇▇▇▇ Fargo Bank,
National Association (the "Indenture Trustee"), the Issuer will pledge the
Mortgage Loans and issue and transfer to or at the direction of the Purchaser
the Mortgage-Backed Notes, Series 2004-1, Class I-A, Class II-A, Class III-A,
Class IV-A, Class I-M-1, Class I-M-2, Class I-M-3, Class II-M-1, Class II-M-2,
Class II-M-3, Class III-M- 1, Class III-M-2, Class IV-M-1, Class IV-M-2 and
Class IV-M-3 Notes (collectively, the "Notes"); and
WHEREAS, pursuant to the terms of this Servicing Agreement,
the Master Servicer will service the Mortgage Loans set forth on the Mortgage
Loan Schedule attached hereto as Exhibit A 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 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.
(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 Stated Principal Balance of a Mortgage
Loan shall be made on the basis of a 360-day
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year consisting of twelve 30-day months, notwithstanding the terms of the
related Mortgage Note and Mortgage.
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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 Mortgage Loans and the
Noteholders, as of the Cut-off Date and the Closing Date, that:
(i) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Maryland 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 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 or the validity or enforceability of the Mortgage
Loans;
(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;
(v) No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending (other
than litigation with respect to which pleadings or documents have been
filed with a court, but not served on the Master Servicer), 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 Notes or the Certificates which,
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to the knowledge of the Master Servicer, has a reasonable likelihood of
resulting in a material adverse effect on the transactions contemplated
by this Servicing Agreement; and
(vi) The Master Servicer is a member of MERS in good standing,
and will comply in all material respects with the rules and procedures
of MERS in connection with the servicing of the Mortgage Loans that are
registered with MERS.
The foregoing representations and warranties shall survive any
termination of the Master Servicer hereunder.
Section 2.02 EXISTENCE. The Issuer will keep in full effect its
existence, rights and franchises as a statutory trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other state or of the United States of
America, in which case the Issuer will keep in full effect its existence, rights
and franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Servicing Agreement.
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 Mortgage Loans shall enforce the representations and warranties
and related obligations for breaches thereof of the Seller pursuant to the
Mortgage Loan Purchase Agreement. Upon the discovery by the Seller, the Master
Servicer, the Indenture Trustee or the Company of a breach of any of the
representations and warranties made in the Mortgage Loan Purchase Agreement in
respect of any Mortgage Loan which materially and adversely affects the
interests of the Noteholders or the Certificateholders, the party discovering
the same shall give prompt written notice to the other parties. The Master
Servicer shall promptly notify the Seller and request that, pursuant to the
terms of the Mortgage Loan Purchase Agreement, the Seller either (i) cure such
breach in all material respects or (ii) purchase such Mortgage Loan, in each
instance in accordance with the Mortgage Loan Purchase Agreement; provided that
the Seller shall, subject to the conditions set forth in the Mortgage Loan
Purchase Agreement, have the option to substitute an Eligible Substitute
Mortgage Loan or Eligible Substitute Mortgage Loans for such Mortgage Loan.
Monthly Payments due with respect to Eligible Substitute Mortgage Loans in the
month of substitution shall not be part of the Trust Estate and will be retained
by the Master Servicer and remitted by the Master Servicer to the Seller on the
next succeeding Payment Date. For the month of substitution, distributions to
the Payment Account pursuant to this Agreement will include the Monthly Payment
due on a Deleted Mortgage Loan for such month and thereafter the Seller shall be
entitled to retain all amounts received in respect of such Deleted Mortgage
Loan. The Master Servicer shall amend or cause to be amended the Mortgage Loan
Schedule to reflect the removal of such Deleted Mortgage Loan and the
substitution of the Eligible Substitute Mortgage Loans and the Master Servicer
shall promptly deliver the amended Mortgage Loan Schedule to the related
Subservicer, Owner Trustee and Indenture Trustee.
In connection with the substitution of one or more Eligible Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer will
determine the amount (such amount, a "Substitution Adjustment Amount"), if any,
by which the aggregate principal balance of all such Eligible Substitute
Mortgage Loans as of the date of substitution is less than the aggregate
principal
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balance of all such Deleted Mortgage Loans (after application of the principal
portion of the Monthly Payments due on such Deleted Mortgage Loans in the month
of substitution that are to be distributed to the Payment Account in the month
of substitution). The Seller shall pay the Substitution Adjustment Amount to the
Master Servicer and the Master Servicer shall deposit such Substitution
Adjustment Amount into the Collection Account upon receipt.
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ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01 MASTER SERVICER TO ASSURE SERVICING. (a) The Master
Servicer shall supervise, or take such actions as are necessary to ensure, the
servicing and administration of the Mortgage Loans and any REO Property in
accordance with this Servicing Agreement and its normal servicing practices,
which generally shall conform to the standards of an institution prudently
servicing mortgage loans for its own account and shall have full authority to do
anything it reasonably deems appropriate or desirable in connection with such
servicing and administration. The Master Servicer may perform its
responsibilities relating to servicing through other agents or independent
contractors, but shall not thereby be released from any of its responsibilities
for the servicing and administration of the Mortgage Loans. The authority of the
Master Servicer, in its capacity as master servicer, and any Subservicer acting
on its behalf, shall include, without limitation, the power to (i) consult with
and advise any Subservicer regarding administration of a related Mortgage Loan,
(ii) approve any recommendation by a Subservicer to foreclose on a related
Mortgage Loan, (iii) supervise the filing and collection of insurance claims and
take or cause to be taken such actions on behalf of the insured Person
thereunder as shall be reasonably necessary to prevent the denial of coverage
thereunder, and (iv) effectuate foreclosure or other conversion of the ownership
of the Mortgaged Property securing a related Mortgage Loan, including the
employment of attorneys, the institution of legal proceedings, the collection of
deficiency judgments, the acceptance of compromise proposals, the filing of
claims under any Primary Insurance Policy, and any other matter pertaining to a
delinquent Mortgage Loan. The authority of the Master Servicer shall include, in
addition, the power on behalf of the Noteholders, the Indenture Trustee or any
of them to (i) execute and deliver customary consents or waivers and other
instruments and documents, (ii) consent to transfer of any related Mortgaged
Property and assumptions of the related Mortgage Notes and Security Instruments
(in the manner provided in this Servicing Agreement) and (iii) collect any
Insurance Proceeds and Liquidation Proceeds. Without limiting the generality of
the foregoing, the Master Servicer and any Subservicer acting on its behalf may,
and is hereby authorized, and empowered by the Indenture Trustee, to execute and
deliver, on behalf of itself, the Noteholders, the Indenture Trustee or any of
them, any instruments of satisfaction, cancellation, partial or full release,
discharge and all other comparable instruments, with respect to the related
Mortgage Loans, the insurance policies and the accounts related thereto, and the
Mortgaged Properties. The Master Servicer may exercise this power in its own
name or in the name of a Subservicer.
In accordance with the standards of the preceding paragraph, the Master
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.08, and further as
provided in Section 3.07; provided that the Master Servicer shall not be
obligated to make such advance if, in its good faith judgment, the Master
Servicer determines that such advance will be a Nonrecoverable Advance.
The relationship of the Master Servicer (and of any successor to the
Master Servicer under this Agreement) to the Indenture Trustee under this
Agreement is intended by the parties to be that
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of an independent contractor and not that of a joint venturer, partner or agent;
provided, however, that the Master Servicer is authorized and empowered by the
Indenture Trustee, on behalf of the Noteholders and the Indenture Trustee, in
its own name or in the name of any Subservicer, when the Master Servicer or such
Subservicer, as the case may be, believes it is appropriate in its best judgment
to register any Mortgage Loan on the MERS(R) System, or cause the removal from
the registration of any Mortgage Loan on the MERS(R) System, to execute and
deliver, on behalf of the Indenture Trustee and the Noteholders or any of them,
any and all instruments of assignment and other comparable instruments with
respect to such assignment or re-recording of a Mortgage in the name of MERS,
solely as nominee for the Indenture Trustee and its successors and assigns. Any
expenses incurred in connection with the actions described in the preceding
sentence shall be borne by the Master Servicer in accordance with Section 3.15,
with no right of reimbursement; provided, that if, as a result of MERS
discontinuing or becoming unable to continue operations in connection with the
MERS System, it becomes necessary to remove any Mortgage Loan from registration
on the MERS System and to arrange for the assignment of the related Mortgages to
the Indenture Trustee, then any related expenses shall be reimbursable to the
Master Servicer from the Trust Estate.
(b) The Master Servicer may not consent to the placing of a lien senior
to that of the Mortgage on the related Mortgaged Property.
(c) The Master Servicer or the related Subservicer, as the case may be,
shall be entitled to (A) execute assumption agreements, substitution agreements,
and instruments of satisfaction or cancellation or of full release or discharge,
or any other document contemplated by this Servicing Agreement and other
comparable instruments with respect to the Mortgage 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 prepared by it) 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, 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 Mortgage Loan, that the security for, and the
timely and full collectability of, such Mortgage Loan would not be adversely
affected thereby. An assumption pursuant to this Section 3.01 is permitted
solely if the creditworthiness of the prospective purchaser of a Mortgaged
Property meets the same or better underwriting guidelines as those which were
applied to the original borrower and the security for such Mortgage Loan is not
impaired by the assumption. 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.
(d) Notwithstanding the provisions of Subsection 3.01(a), the Master
Servicer shall not take any action inconsistent with the interests of the
Indenture Trustee or the Noteholders or with the rights and interests of the
Indenture Trustee or the Noteholders under this Servicing Agreement.
(e) The Indenture Trustee shall execute and return to the Master
Servicer any limited powers of attorney and other documents in form as provided
to the Indenture Trustee necessary or appropriate to enable the Master Servicer
to service and administer the related Mortgage Loans and REO Property.
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Section 3.02 SUBSERVICING AGREEMENTS BETWEEN MASTER SERVICER AND
SUBSERVICERS. (a) The Master Servicer may enter into Subservicing Agreements
with Subservicers for the servicing and administration of the Mortgage Loans and
for the performance of any and all other activities of the Master Servicer
hereunder. Each Subservicer shall be either (i) an institution the accounts of
which are insured by the FDIC or (ii) another entity that engages in the
business of originating or servicing mortgage loans comparable to the Mortgage
Loans, and in either case shall be authorized to transact business in the state
or states in which the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Subservicer to perform its obligations hereunder and under the Subservicing
Agreement, and in either case shall be a ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae approved
mortgage servicer. Any Subservicing Agreement entered into by the Master
Servicer shall include the provision that such Agreement may be immediately
terminated with or without cause and without the payment of any termination fee
by any successor Master Servicer (including, without limitation, the Indenture
Trustee as successor Master Servicer) under this Servicing Agreement. In
addition, each Subservicing Agreement shall provide for servicing of the
Mortgage Loans consistent with the terms of this Servicing Agreement. The Master
Servicer and the Subservicers may enter into Subservicing Agreements and make
amendments to the Subservicing Agreements or enter into different forms of
Subservicing Agreements providing for, among other things, the delegation by the
Master Servicer to a Subservicer of additional duties regarding the
administration of the Mortgage Loans; provided, however, that any such
amendments or different forms shall be consistent with and not violate the
provisions of this Servicing Agreement, and that no such amendment or different
form shall be made or entered into which could be reasonably expected to be
materially adverse to the interests of the Noteholders, without the consent of
the Holders of Notes representing not less than a majority of the aggregate Note
Principal Balance of the Notes.
(b) As part of its servicing activities hereunder, the Master Servicer,
for the benefit of the Indenture Trustee and the Noteholders, shall enforce the
obligations of each Subservicer under the related Subservicing Agreement. 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, in its good faith business judgment, would require
were it the owner of the related Mortgage Loans. The Master Servicer shall pay
the costs of such enforcement at its own expense, but shall be reimbursed
therefor only (i) from a general recovery resulting from such enforcement only
to the extent, if any, that such recovery exceeds all amounts due in respect of
the related Mortgage Loan or (ii) from a specific recovery of costs, expenses or
attorneys' fees against the party against whom such enforcement is directed.
Section 3.03 SUCCESSOR SUBSERVICERS. The Master Servicer shall be
entitled to terminate any Subservicing Agreement that may exist in accordance
with the terms and conditions of such Subservicing Agreement subject to the
terms of Section 3.02(a) of this Servicing Agreement; provided, however, that
upon termination, the Master Servicer shall either act as servicer of the
related Mortgage Loan or enter into an appropriate contract with a successor
Subservicer and in conformance with the terms of Section 3.02(a) of this
Servicing Agreement pursuant to which such successor Subservicer will be bound
by all relevant terms of the related Subservicing Agreement and this Servicing
Agreement pertaining to the servicing of such Mortgage Loan.
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Section 3.04 LIABILITY OF THE MASTER SERVICER. (a) Notwithstanding any
Subservicing Agreement, any of the provisions of this Servicing Agreement
relating to agreements or arrangements between the Master Servicer and a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Master Servicer shall under all circumstances remain obligated and primarily
liable to the Indenture Trustee, the Noteholders for the servicing and
administering of the Mortgage Loans and any REO Property in accordance with this
Servicing Agreement. The obligations and liability of the Master Servicer shall
not be diminished by virtue of Subservicing Agreements or by virtue of
indemnification of the Master Servicer by any Subservicer, or any other Person.
The obligations and liability of the Master Servicer shall remain of the same
nature and under the same terms and conditions as if the Master Servicer alone
were servicing and administering the related Mortgage Loans. The Master Servicer
shall, however, be entitled to enter into indemnification agreements with any
Subservicer or other Person and nothing in this Servicing Agreement shall be
deemed to limit or modify such indemnification. For the purposes of this
Servicing Agreement, the Master Servicer shall be deemed to have received any
payment on a Mortgage Loan on the date the Subservicer received such payment;
PROVIDED, HOWEVER, that this sentence shall not apply to the Indenture Trustee
as the successor Master Servicer; PROVIDED, FURTHER, however, that the foregoing
provision shall not affect the obligation of the Master Servicer if it is also
the Indenture Trustee to advance amounts which are not Nonrecoverable Advances.
Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such shall be deemed to be between the Subservicer and the
Master Servicer alone, and the Indenture Trustee and the Noteholders shall not
be deemed parties thereto and shall have no claims, rights, obligations, duties
or liabilities with respect to the Subservicer except as set forth in Section
3.05.
Section 3.05 ASSUMPTION OR TERMINATION OF SUBSERVICING AGREEMENTS BY
INDENTURE TRUSTEE. (a) If the Indenture Trustee or a successor Master Servicer
shall assume the servicing obligations of the Master Servicer in accordance with
Section 6.02 below, the Indenture Trustee, to the extent necessary to permit the
Indenture Trustee to carry out the provisions of Section 6.02 with respect to
the Mortgage Loans, shall succeed to all of the rights and obligations of the
Master Servicer under each of the Subservicing Agreements. In such event, the
Indenture Trustee or its designee as the successor master servicer shall be
deemed to have assumed all of the Master Servicer's rights and obligations
therein and to have replaced the Master Servicer as a party to such Subservicing
Agreements to the same extent as if such Subservicing Agreements had been
assigned to the Indenture Trustee or its designee as a successor master
servicer, except that the Indenture Trustee or its designee as a successor
master servicer shall not be deemed to have assumed any obligations or
liabilities of the Master Servicer arising prior to such assumption (other than
the obligation to make any Advances) and the Master Servicer shall not thereby
be relieved of any liability or obligations under such Subservicing Agreements
arising prior to such assumption. Nothing in the foregoing shall be deemed to
entitle the Indenture Trustee or its designee as a successor master servicer at
any time to receive any portion of the servicing compensation provided under
Section 3.15 except for such portion as the Master Servicer would be entitled to
receive.
(b) In the event that the Indenture Trustee or a successor Master
Servicer assumes the servicing obligations of the Master Servicer under Section
6.02, upon the reasonable request of the Indenture Trustee or such successor
Master Servicer, the Master Servicer shall at its own expense
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(or the expense of the Trust, if the Master Servicer fails to do so) deliver to
the Indenture Trustee, or to such successor Master Servicer, photocopies of all
documents, files and records, electronic or otherwise, relating to the
Subservicing Agreements and the related Mortgage Loans or REO Property then
being serviced and an accounting of amounts collected and held by it, if any,
and will otherwise cooperate and use its reasonable efforts to effect the
orderly and efficient transfer of the Subservicing Agreements, or
responsibilities hereunder to the Indenture Trustee, or to such successor Master
Servicer.
Section 3.06 COLLECTION OF MORTGAGE LOAN PAYMENTS. (a) The Master
Servicer will coordinate and monitor remittances by Subservicers to it with
respect to the Mortgage Loans in accordance with this Servicing Agreement.
(b) The Master Servicer shall make its best reasonable efforts to
collect or cause to be collected all payments required under the terms and
provisions of the Mortgage Loans and shall follow, and use its best reasonable
efforts to cause Subservicers to follow, collection procedures comparable to the
collection procedures of prudent mortgage lenders servicing mortgage loans for
their own account to the extent such procedures shall be consistent with this
Servicing Agreement. Consistent with the foregoing, the Master Servicer or the
related Subservicer may in its discretion (i) waive or permit to be waived any
late payment charge, prepayment charge, assumption fee, or any penalty interest
in connection with the prepayment of a Mortgage Loan and (ii) suspend or reduce
or permit to be suspended or reduced regular monthly payments for a period of up
to six months, or arrange or permit an arrangement with a Mortgagor for a
scheduled liquidation of delinquencies; provided, however, that the Master
Servicer or the related Subservicer may permit the foregoing only if it
believes, in good faith, that recoveries of Monthly Payments will be maximized;
provided further, however, that Monthly Payments may not be suspended during the
twelve months prior to the final maturity of the Notes. In the event the Master
Servicer or related Subservicer shall consent to the deferment of the due dates
for payments due on a Mortgage Note, the Master Servicer shall nonetheless make
an Advance or shall cause the related Subservicer to make an advance to the same
extent as if such installment were due, owing and delinquent and had not been
deferred through liquidation of the Mortgaged Property; PROVIDED, HOWEVER, that
the obligation of the Master Servicer or the related Subservicer to make an
Advance shall apply only to the extent that the Master Servicer believes, in
good faith, that such advances are not Nonrecoverable Advances.
(c) Within five Business Days after the Master Servicer has determined
that all amounts which it expects to recover from or on account of a Mortgage
Loan have been recovered and that no further Liquidation Proceeds will be
received in connection therewith, the Master Servicer shall cause the related
Subservicer to provide to the Master Servicer a certificate of a Servicing
Officer that such Mortgage Loan became a Liquidated Mortgage Loan as of the date
of such determination. The Master Servicer shall provide to the Indenture
Trustee a monthly summary of each Mortgage Loan that became a Liquidated
Mortgage Loan.
(d) The Master Servicer shall establish a segregated account in the
name of the Indenture Trustee for the benefit of the Noteholders (the
"Collection Account"), which shall be an Eligible Account, in which the Master
Servicer shall deposit or cause to be deposited any amounts representing
payments on and any collections in respect of the Mortgage Loans due subsequent
to the Cut-off Date (other than in respect of the payments referred to in the
following paragraph) within
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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, including Principal
Prepayments, of or interest on the Mortgage Loans (including advances
by a Subservicer) received by the Master Servicer directly from
Mortgagors or from the respective Subservicer, net of the Master
Servicing Fee;
(ii) the aggregate Repurchase Price of the Mortgage Loans
purchased by the Master Servicer pursuant to Section 3.18;
(iii) Net Liquidation Proceeds;
(iv) all proceeds of any Mortgage Loans repurchased by the
Seller pursuant to the Mortgage Loan Purchase Agreement, and all
Substitution Adjustment Amounts required to be deposited in connection
with the substitution of an Eligible Substitute Mortgage Loan pursuant
to the Mortgage Loan Purchase Agreement;
(v) Insurance Proceeds, other than Net Liquidation Proceeds,
resulting from any insurance policy maintained on a Mortgaged Property;
(vi) any Advance and any Compensating Interest payments; and
(vii) any other amounts received by the Master Servicer,
including any fees or penalties not retained by a Subservicer, required
to be deposited in the Collection Account pursuant to this Servicing
Agreement.
PROVIDED, HOWEVER, that with respect to each Due Period, the Master Servicer
shall be permitted to retain from payments in respect of interest on the
Mortgage Loans, the Master Servicing Fee for such Due Period. The foregoing
requirements respecting deposits to the Collection Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the
Master Servicer need not deposit in the Collection Account fees (including
annual fees or assumption fees) or late charge and prepayment penalties, payable
by Mortgagors, each as further described in Section 3.15, or amounts received by
the Subservicer 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 Collection Account is so
deposited, the Master Servicer may at any time (prior to being terminated under
this Agreement) withdraw such amount from the Collection Account, any provision
herein to the contrary notwithstanding. The Master Servicer shall keep records
that accurately reflect the funds on deposit in the Collection Account that have
been identified by it as being attributable to the Mortgage Loans and shall hold
all collections in the Collection Account for the benefit of the Owner Trustee,
the Indenture Trustee and the Noteholders, as their interests may appear. The
Master Servicer shall remit all Foreclosure Profits to the Collection Account,
to the extent not payable to the related Subservicer.
Funds in the Collection Account may not be invested with, and shall not
be commingled with, the Master Servicer's own funds or general assets or with
funds respecting payments on
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mortgage loans or with any other funds not related to the Notes. Funds in the
Collection Account shall be invested solely in Eligible Investments, designated
in the name of the Indenture Trustee, which shall mature not later than the
Business Day next preceding the Master Servicer Remittance Date next following
the date of such investment 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 or the related Subservicer. The amount of any
losses incurred with respect to any such investments shall be deposited in the
Collection Account by the Master Servicer.
In the event the Indenture Trustee assumes the responsibilities of the
Master Servicer under this Servicing Agreement upon a Servicing Default under
Section 6.01, the Indenture Trustee shall be entitled to reimburse itself for
Advances pursuant to Sections 3.07(a)(v), (viii) and (ix) prior to reimbursement
of the terminated Master Servicer or any successor Master Servicer.
(e) The Master Servicer will require each Subservicer to hold all funds
constituting collections on the Mortgage Loans, pending remittance thereof to
the Master Servicer, in one or more accounts meeting the requirements of an
Eligible Account, and invested in Eligible Investments, and in the name of the
Indenture Trustee. The Subservicer shall segregate and hold all funds collected
and received pursuant to each Mortgage Loan separate and apart from any of its
own funds and general assets and any other funds.
Section 3.07 WITHDRAWALS FROM THE COLLECTION ACCOUNT. (a) The Master
Servicer shall, from time to time as provided herein, make withdrawals from the
Collection Account of amounts on deposit therein pursuant to Section 3.06 that
are attributable to the Mortgage Loans for the following purposes (without
duplication):
(i) to deposit in the Payment Account, by the Master Servicer
Remittance Date, the Available Funds required to be distributed as
provided in the Indenture on a Payment Date;
(ii) to the extent deposited to the Collection Account, to
reimburse itself or the related Subservicer for previously unreimbursed
expenses incurred in maintaining individual insurance policies pursuant
to Sections 3.10 or 3.11, or Liquidation Expenses, paid pursuant to
Section 3.13 or otherwise reimbursable pursuant to the terms of this
Servicing Agreement, such withdrawal right being limited to amounts
received on the related Mortgage Loans (other than any Repurchase Price
in respect thereto) which represent late recoveries of the payments for
which such advances were made, or from related Liquidation Proceeds;
(iii) to pay to itself out of each payment received on account
of interest on a Mortgage Loan as contemplated by Section 3.15, an
amount equal to the related Master Servicing Fee (to the extent not
retained pursuant to Section 3.06);
(iv) to pay to itself or the Seller, with respect to any
Mortgage Loan or property acquired in respect thereof that has been
purchased or otherwise transferred to the Seller, the Master Servicer
or other entity, all amounts received thereon and not required to be
distributed to Noteholders as of the date on which the related Purchase
Price or Repurchase Price is determined;
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(v) to reimburse the Master Servicer or any Subservicer for
any Advance of its own funds or any advance of such Subservicer's own
funds, the right of the Master Servicer or a Subservicer to
reimbursement pursuant to this subclause (v) being limited to amounts
received (including, for this purpose, the Repurchase Price therefor,
Insurance Proceeds and Liquidation Proceeds) which represent late
payments or recoveries of the principal of or interest on such Mortgage
Loan respecting which such Advance or advance was made;
(vi) to reimburse the Master Servicer or any Subservicer from
Insurance Proceeds or Liquidation Proceeds relating to a particular
Mortgage Loan for amounts expended by the Master Servicer or such
Subservicer pursuant to Section 3.13 in good faith in connection with
the restoration of the related Mortgaged Property which was damaged by
the Uninsured Cause or in connection with the liquidation of such
Mortgage Loan;
(vii) to pay the Master Servicer or any Subservicer (payment
to any Subservicer to be subject to prior payment to the Master
Servicer of an amount equal to the Master Servicing Fee), as
appropriate, from Liquidation Proceeds or Insurance Proceeds received
in connection with the liquidation of any Mortgage Loan, the amount
which it or such Subservicer would have been entitled to receive under
subclause (iii) of this Subsection 3.07(a) as servicing compensation on
account of each defaulted Monthly Payment on such Mortgage Loan if paid
in a timely manner by the related Mortgagor, but only to the extent
that the aggregate of Liquidation Proceeds and Insurance Proceeds with
respect to such Mortgage Loan, after any reimbursement to the Master
Servicer or any Subservicer, pursuant to other subclauses of this
Subsection 3.07(a), exceeds the outstanding Stated Principal Balance of
such Mortgage Loan plus accrued and unpaid interest thereon at the
related Mortgage Rate less the Master Servicing Fee Rate to but not
including the date of payment (in any event, the amount of servicing
compensation received by a Subservicer and the Master Servicer with
respect to any defaulted Monthly Payment shall not exceed the
applicable Master Servicing Fee);
(viii) to reimburse the Master Servicer or any Subservicer for
any Nonrecoverable Advance previously made, and not reimbursed pursuant
to this Subsection 3.07(a);
(ix) to withdraw any other amount deposited in the Collection
Account that was not required to be deposited therein pursuant to
Section 3.06;
(x) to reimburse the Master Servicer for costs incurred by it
associated with the environmental report specified in Section 3.13(e);
and
(xi) clear and terminate the Collection Account following a
termination of the Trust pursuant to Section 8.01 of the Trust
Agreement.
In connection with withdrawals pursuant to clauses (ii), (iii), (iv), (v), (vi)
and (vii), the Master Servicer's entitlement thereto is limited to collections
or other recoveries on the related Mortgage Loan, and the Master Servicer shall
keep and maintain separate accounting, on a Mortgage Loan by Mortgage Loan
basis, for the purpose of justifying any withdrawal from the Collection Account
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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 3.13 or otherwise
reimbursable expenses incurred pursuant to the terms of this Servicing
Agreement, but only to the extent of collections or other recoveries on the
related Mortgage Loan.
(b) Notwithstanding the provisions of this Section 3.07, the Master
Servicer may, but is not required to, allow the Subservicers to deduct from
amounts received by them or from the related account maintained by a
Subservicer, prior to deposit in the Collection Account, any portion to which
such Subservicers are entitled as servicing compensation (including income on
Eligible Investments) or reimbursement of any reimbursable Advances or Servicing
Advances made by such Subservicers.
(c) The Master Servicer shall pay to the Indenture Trustee interest on
any payments to the Payment Account which were due on the Master Servicer
Remittance Date but were made after the Master Servicer Remittance Date at a
rate equal to the federal funds rate from the date due to the date paid, both
inclusive. This interest shall be solely an obligation of the Master Servicer
and shall not be recoverable by the Indenture Trustee from the Trust or from any
other source.
Section 3.08 COLLECTION OF TAXES ASSESSMENTS AND SIMILAR ITEMS;
SERVICING ACCOUNTS.
(a) The Master Servicer shall establish and maintain or cause the
related Subservicer to establish and maintain, one or more Servicing Accounts.
The Master Servicer or a Subservicer will deposit and retain therein all
collections from the Mortgagors for the payment of taxes, assessments, insurance
premiums, or comparable items as agent of the Mortgagors.
(b) The deposits in the Servicing Accounts shall be held in trust by
the Master Servicer or a Subservicer (and its successors and assigns) in the
name of the Indenture Trustee for the benefit of the Noteholders. Such Servicing
Accounts shall be Eligible Accounts and if permitted by applicable law, invested
in Eligible Investments held in trust by the Master Servicer or a Subservicer as
described above and maturing, or be subject to redemption or withdrawal, no
later than the date on which such funds are required to be withdrawn, and in no
event later than 45 days after the date of investment; withdrawals of amounts
from the Servicing Accounts may be made only to effect timely payment of taxes,
assessments, insurance premiums, or comparable items, to reimburse the Master
Servicer or a Subservicer for any advances made with respect to such items, to
refund to any Mortgagors any sums as may be determined to be overages, to pay
interest, if required, to Mortgagors on balances in the Servicing Accounts or to
clear and terminate the Servicing Accounts at or any time after the termination
of this Servicing Agreement.
Section 3.09 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE MORTGAGE LOANS. The Master Servicer shall provide, and shall cause any
Subservicer to provide, to the Indenture Trustee and the Owner Trustee access to
the documentation regarding the related Mortgage Loans and REO Property and to
the Noteholders, the FDIC, and the supervisory agents and examiners of the FDIC
access to the documentation regarding the related Mortgage Loans required by
applicable regulations, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the Master
Servicer or the Subservicers
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that are designated by these entities; PROVIDED, HOWEVER, that, unless otherwise
required by law, the Master Servicer or the Subservicer shall not be required to
provide access to such documentation if the provision thereof would violate the
legal right to privacy of any Mortgagor; PROVIDED, FURTHER, HOWEVER, that the
Indenture Trustee and the Owner Trustee shall coordinate their requests for such
access so as not to impose an unreasonable burden on, or cause an unreasonable
interruption of, the business of the Master Servicer or any Subservicer. The
Master Servicer and the Subservicers shall allow representatives of the above
entities to photocopy any of the documentation and shall provide equipment for
that purpose at a charge that covers their own actual out-of-pocket costs.
Section 3.10 MAINTENANCE OF PRIMARY INSURANCE POLICIES; COLLECTION
THEREUNDER.
(a) The Master Servicer shall, or shall cause the related Subservicer
to, exercise its best reasonable efforts to maintain and keep in full force and
effect each Primary Insurance Policy by a Qualified Insurer, or other insurer
satisfactory to the Rating Agencies, with respect to each Mortgage Loan as to
which as of the Cut-off Date a Primary Insurance Policy was in effect and the
original principal amount of the related Mortgage Note exceeded 80% of the
Original Value in an amount at least equal to the excess of such original
principal amount over 75% of such Original Value until the principal amount of
any such first lien Mortgage Loan is reduced below 80% of the Original Value or,
based upon a new appraisal, the principal amount of such first lien Mortgage
Loan represents less than 80% of the new appraised value. The Master Servicer
shall, or shall cause the related Subservicer to, effect the timely payment of
the premium on each Primary Insurance Policy. The Master Servicer and the
related Subservicer shall have the power to substitute for any Primary Insurance
Policy another substantially equivalent policy issued by another Qualified
Insurer, PROVIDED, THAT, such substitution shall be subject to the condition
that it will not cause the ratings on the Notes to be downgraded or withdrawn,
as evidenced by a writing from each Rating Agency.
Section 3.11 MAINTENANCE OF HAZARD INSURANCE AND FIDELITY COVERAGE. (a)
The Master Servicer shall maintain and keep, or cause each Subservicer to
maintain and keep, with respect to each Mortgage Loan and REO Property, in full
force and effect hazard insurance (fire insurance with extended coverage) equal
to at least the lesser of the Stated Principal Balance of the Mortgage Loan or
the current replacement cost of the Mortgaged Property, and containing a
standard mortgagee clause, PROVIDED, HOWEVER, that the amount of hazard
insurance may not be less than the amount necessary to prevent loss due to the
application of any co-insurance provision of the related policy. Unless
applicable state law requires a higher deductible, the deductible on such hazard
insurance policy may be no more than $1,000 or 1% of the applicable amount of
coverage, whichever is less. In the case of a condominium unit or a unit in a
planned unit development, the required hazard insurance shall take the form of a
multi-peril policy covering the entire condominium project or planned unit
development, in an amount equal to at least 100% of the insurable value based on
replacement cost.
(b) Any amounts collected by the Master Servicer or a Subservicer under
any such hazard insurance policy (other than amounts to be applied to the
restoration or repair of the Mortgaged Property or amounts released to the
Mortgagor in accordance with the Master Servicer's or a Subservicer's normal
servicing procedures, the Mortgage Note, the Security Instrument or applicable
law) shall be deposited initially in a Collection Account, for transmittal to
the Payment Account, subject to withdrawal pursuant to Section 3.07.
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(c) Any cost incurred by a Master Servicer or a Subservicer in
maintaining any such hazard insurance policy shall not be added to the amount
owing under the Mortgage Loan for the purpose of calculating monthly
distributions to Noteholders, notwithstanding that the terms of the Mortgage
Loan so permit. Such costs shall be recoverable by the Master Servicer or a
Subservicer out of related late payments by the Mortgagor or out of Insurance
Proceeds or Liquidation Proceeds or by the Master Servicer from the Repurchase
Price, to the extent permitted by Section 3.07.
(d) No earthquake or other additional insurance is to be required of
any Mortgagor or maintained on property acquired with respect to a Security
Instrument other than pursuant to such applicable laws and regulations as shall
at any time be in force and shall require such additional insurance. When, at
the time of origination of the Mortgage Loan or at any subsequent time, the
Mortgaged Property is located in a federally designated special flood hazard
area, the Master Servicer shall use its best reasonable efforts to cause with
respect to the Mortgage Loans and each REO Property flood insurance (to the
extent available and in accordance with mortgage servicing industry practice) to
be maintained. Such flood insurance shall cover the Mortgaged Property,
including all items taken into account in arriving at the Appraised Value on
which the Mortgage Loan was based, and shall be in an amount equal to the lesser
of (i) the Stated Principal Balance of the related Mortgage Loan and (ii) the
minimum amount required under the terms of coverage to compensate for any damage
or loss on a replacement cost basis, but not more than the maximum amount of
such insurance available for the related Mortgaged Property under either the
regular or emergency programs of the National Flood Insurance Program (assuming
that the area in which such Mortgaged Property is located is participating in
such program). Unless applicable state law requires a higher deductible, the
deductible on such flood insurance may not exceed $1,000 or 1% of the applicable
amount of coverage, whichever is less.
(e) If insurance has not been maintained complying with Subsections
3.11 (a) and (d) and there shall have been a loss which would have been covered
by such insurance had it been maintained, the Master Servicer shall pay, or
cause the related Subservicer to pay, for any necessary repairs.
(f) The Master Servicer shall present, or cause the related Subservicer
to present, claims under any applicable Primary Insurance Policy or the related
hazard insurance or flood insurance policy.
(g) The Master Servicer shall obtain and maintain at its own expense
and for the duration of this Servicing Agreement and shall cause each
Subservicer to obtain and maintain a blanket fidelity bond and an errors and
omissions insurance policy covering such Person's officers, employees and other
persons acting on its behalf in connection with its activities under this
Servicing Agreement or the related Subservicing Agreement. The amount of
coverage shall be at least equal to the coverage maintained by the Master
Servicer acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac to service loans for it or
otherwise in an amount as is commercially available at a cost that is generally
not regarded as excessive by industry standards. The Master Servicer shall
promptly notify the Indenture Trustee of any material change in the terms of
such bond or policy. The Master Servicer shall provide annually to the Indenture
Trustee a certificate of insurance that each such bond and policy are in effect.
If any such bond or policy ceases to be in effect, the Master Servicer shall, to
the extent possible, give the Indenture Trustee ten days' notice prior to any
such cessation and the
17
Master Servicer shall use its reasonable best efforts to obtain a comparable
replacement bond or policy, as the case may be. Any amounts relating to the
Mortgage Loans collected under each such bond or policy shall be deposited
initially in a Collection Account for transmittal to the Payment Account,
subject to withdrawal pursuant to Section 3.07.
Section 3.12 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS. (a) In any
case in which the Master Servicer is notified by any Mortgagor or Subservicer
that a Mortgaged Property relating to a Mortgage Loan has been or is about to be
conveyed by the Mortgagor, the Master Servicer shall enforce, or shall instruct
such Subservicer to enforce, any due-on-sale clause contained in the related
Security Instrument to the extent permitted under the terms of the related
Mortgage Note and by applicable law. The Master Servicer or the related
Subservicer may repurchase a Mortgage Loan at the Repurchase Price when the
Master Servicer requires acceleration of the Mortgage Loan, but only if the
Master Servicer is satisfied, as evidenced by an Officer's Certificate delivered
to the Indenture Trustee, that either (i) such Mortgage Loan is in default or
default is reasonably foreseeable or (ii) if such Mortgage Loan is not in
default or default is not reasonably foreseeable, such repurchase will have no
adverse tax consequences for the Trust Estate or any Securityholder. If the
Master Servicer reasonably believes that such due-on-sale clause cannot be
enforced under applicable law or if the Mortgage Loan does not contain a
due-on-sale clause, the Master Servicer is authorized, and may authorize any
Subservicer, to consent to a conveyance subject to the lien of the Mortgage, and
to take or enter into an assumption agreement from or with the Person to whom
such property has been or is about to be conveyed, pursuant to which such Person
becomes liable under the related Mortgage Note and unless prohibited by
applicable state law, such Mortgagor remains liable thereon, on condition,
however, that the related Mortgage Loan shall continue to be covered by a hazard
policy and (if so covered before the Master Servicer or the related Subservicer
enters into such agreement) by any Primary Insurance Policy. In connection with
any such assumption, no material term of the related Mortgage Note may be
changed. The Master Servicer shall forward to the Indenture Trustee the original
copy of such assumption agreement, which copy shall be added by the Indenture
Trustee to the related Mortgage File and which shall, for all purposes, be
considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. A portion, equal to up to
2% of the Stated Principal Balance of the related Mortgage Loan, of any fee or
additional interest collected by the Master Servicer or the related Subservicer
for consenting in any such conveyance or entering into any such assumption
agreement may be retained by the related Subservicer as additional servicing
compensation.
(b) Notwithstanding the foregoing paragraph or any other provision of
this Servicing Agreement, the Master Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason of
any assumption of a Mortgage Loan by operation of law or any conveyance by the
Mortgagor of the related Mortgaged Property or assumption of a Mortgage Loan
which the Master Servicer reasonably believes it may be restricted by law from
preventing, for any reason whatsoever or if the exercise of such right would
impair or threaten to impair any recovery under any applicable insurance policy.
Section 3.13 REALIZATION UPON DEFAULTED MORTGAGE LOANS. (a) The Master
Servicer shall, or shall direct the related Subservicer to, foreclose upon or
otherwise comparably convert the ownership of properties securing any Mortgage
Loans that come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant
18
to Section 3.06, except that the Master Servicer shall not, and shall not direct
the related Subservicer to, foreclose upon or otherwise comparably convert a
Mortgaged Property if there is evidence of toxic waste or other environmental
hazards thereon unless the Master Servicer follows the procedures in Subsection
(e) below.
(b) The Master Servicer shall foreclose or shall direct the related
Subservicer to foreclose on any Mortgaged Property in the name of the Trustee
for the benefit of the Noteholders.
(c) In connection with such foreclosure or other conversion, the Master
Servicer in conjunction with the related Subservicer, if any, shall use its best
reasonable efforts to preserve REO Property and to realize upon defaulted
Mortgage Loans in such manner (including short sales) as to maximize the receipt
of principal and interest by the Noteholders, taking into account, among other
things, the timing of foreclosure and the considerations set forth in Subsection
3.13(d). 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
towards the restoration of any property unless it determines in good faith (i)
that such restoration or foreclosure will increase the proceeds of liquidation
of the Mortgage Loan to Noteholders after reimbursement to itself for such
expenses and (ii) that such expenses will be recoverable to it either through
Liquidation Proceeds (respecting which it shall have priority for purposes of
reimbursements from the Collection Account pursuant to Section 3.07) or through
Insurance Proceeds (respecting which it shall have similar priority). The Master
Servicer shall be responsible for all other costs and expenses incurred by it in
any such proceedings; PROVIDED, HOWEVER, that it shall be entitled to
reimbursement thereof (as well as its normal servicing compensation). Any income
from or other funds (net of any income taxes) generated by REO Property shall be
deemed for purposes of this Servicing Agreement to be Insurance Proceeds.
(d) The Trust Estate shall not acquire any real property (or any
personal property incident to such real property) except in connection with a
default or reasonably foreseeable default of a Mortgage Loan. In the event that
the Trust Estate acquires any real property (or personal property incident to
such real property) in connection with a default or imminent default of a
Mortgage Loan, such property shall be disposed of by the Master Servicer (or its
agent) on behalf of the Trust Estate within two years after its acquisition by
the Trust Estate.
(e) With respect to any Mortgage Loan as to which the Master Servicer
or a Subservicer has received notice of, or has actual knowledge of, the
presence of any toxic or hazardous substance on the Mortgaged Property, the
Master Servicer shall promptly notify the Indenture Trustee and the Owner
Trustee and shall act in accordance with any such directions and instructions
provided by the Indenture Trustee, as pledgee of the Issuer. If the Indenture
Trustee, as applicable, has not provided directions and instructions to the
Master Servicer in connection with any such Mortgage Loan within 30 days of a
request by the Master Servicer for such directions and instructions, then the
Master Servicer shall take such action as it deems to be in the best economic
interest of the Trust Estate (other than proceeding against the Mortgaged
Property) and is hereby authorized at such time as it deems appropriate to
release such Mortgaged Property from the lien of the related Mortgage. The
parties hereto acknowledge that the Master Servicer shall not obtain on behalf
of the Issuer a deed as a result or in lieu of foreclosure, and shall not
otherwise acquire possession of or title to, or commence any proceedings to
acquire possession of or title to, or take any other action with respect
19
to, any Mortgaged Property, if the Owner Trustee or the Indenture Trustee could
reasonably be considered to be a responsible party for any liability arising
from the presence of any toxic or hazardous substance on the Mortgaged Property,
unless the Owner Trustee or the Indenture Trustee has been indemnified to its
reasonable satisfaction against such liability.
Section 3.14 INDENTURE TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES.
(a) Upon payment in full of any Mortgage Loan or the receipt by the Master
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Master Servicer will immediately notify the
Custodian by a certification signed by a Servicing Officer in the form of the
request for release (the "Request for Release") attached hereto as Exhibit B
(which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to
be deposited in the Payment Account have been so deposited) and shall request
delivery to the Master Servicer or Subservicer, as the case may be, of the
Mortgage File. Upon receipt of such certification and request, the Custodian
shall release the related Mortgage File to the Master Servicer or Subservicer
and execute and deliver to the Master Servicer, without recourse, the request
for reconveyance, deed of reconveyance or release or satisfaction of mortgage or
such instrument releasing the lien of the Security Instrument (furnished by the
Master Servicer), together with the Mortgage Note with written evidence of
cancellation thereon. In connection with the satisfaction of any MOM Loan, the
Master Servicer is authorized to cause the removal from the registration on the
MERS(R) System of such Mortgage.
(b) From time to time as is appropriate, for the servicing or
foreclosure of any Mortgage Loan or collection under an insurance policy, the
Master Servicer may deliver to the Custodian a Request for Release signed by a
Servicing Officer on behalf of the Master Servicer in substantially the form
attached as Exhibit B hereto. Upon receipt of the Request for Release, the
Custodian, on behalf of the Indenture Trustee shall deliver the Mortgage File or
any document therein to the Master Servicer or Subservicer, as the case may be,
as bailee for the Indenture Trustee.
(c) The Master Servicer shall cause each Mortgage File or any document
therein released pursuant to Subsection 3.14(b) to be returned to the Custodian
as custodian for the Indenture Trustee, when the need therefor no longer exists,
and in any event within 21 days of the Master Servicer's receipt thereof, unless
the Mortgage Loan has become a Liquidated Mortgage Loan and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Collection
Account or such Mortgage File is being used to pursue foreclosure or other legal
proceedings. Prior to return of a Mortgage File or any document to the
Custodian, the Master Servicer, the related insurer or Subservicer to whom such
file or document was delivered shall retain such file or document in its
respective control as bailee for the Indenture Trustee unless the Mortgage File
or such document has been delivered to an attorney, or to a public trustee or
other public official as required by law, to initiate or pursue legal action or
other proceedings for the foreclosure of the Mortgaged Property either
judicially or non- judicially, and the Master Servicer has delivered to the
Custodian a certificate of a Servicing Officer certifying as to the name and
address of the Person to which such Mortgage File or such document was delivered
and the purpose or purposes of such delivery. If a Mortgage Loan becomes a
Liquidated Mortgage Loan, the Custodian shall deliver the Request for Release
with respect thereto to the Master Servicer and upon deposit of the related
Liquidation Proceeds in the Collection Account.
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(d) The Indenture Trustee shall execute and deliver to the Master
Servicer any court pleadings, requests for trustee's sale or other documents
necessary to (i) the foreclosure or trustee's sale with respect to a Mortgaged
Property; (ii) any legal action brought to obtain judgment against any Mortgagor
on the Mortgage Note or Security Instrument; (iii) obtain a deficiency judgment
against the Mortgagor; or (iv) enforce any other rights or remedies provided by
the Mortgage Note or Security Instrument or otherwise available at law or
equity. Together with such documents or pleadings the Master Servicer shall
deliver to the Indenture Trustee a certificate of a Servicing Officer in which
it requests the Indenture Trustee to execute the pleadings or documents. The
certificate shall certify and explain the reasons for which the pleadings or
documents are required. It shall further certify that the Indenture Trustee's
execution and delivery of the pleadings or documents will not invalidate any
insurance coverage under the insurance policies or invalidate or otherwise
affect the lien of the Security Instrument, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.
Section 3.15 MASTER SERVICING COMPENSATION. (a) As compensation for its
activities hereunder, the Master Servicer shall be entitled to receive the
Master Servicing Fee from full payments of accrued interest on each Mortgage
Loan or as otherwise provided in Section 3.07. The Master Servicer shall be
solely responsible for paying any and all fees with respect to a Subservicer and
the Trust Estate shall not bear any fees, expenses or other costs directly
associated with any Subservicer.
(b) The Master Servicer or the related Subservicer may retain
additional servicing compensation in the form of prepayment charges, if any, a
portion of the assumption fees up to 2% of the Stated Principal Balance of the
related Mortgage Loan, tax service fees, fees for statement of account or
payoff, late payment charges, or otherwise, to the extent such fees are
collected from the related Mortgagors or, with respect to a Liquidated Mortgage
Loan, to the extent such fees have accrued. The Master Servicer shall be
required to pay all expenses it incurs in connection with servicing activities
under this Servicing Agreement and shall not be entitled in connection with
servicing activities under this Servicing Agreement to reimbursement except as
provided in this Servicing Agreement. Expenses to be paid by the Master Servicer
under this Subsection 3.15(b) shall include payment of the expenses of the
accountants retained pursuant to Section 3.17.
Section 3.16 ANNUAL STATEMENTS OF COMPLIANCE. No later than March 1 of
each year, commencing in March 2005, the Master Servicer at its own expense
shall deliver to the Indenture Trustee, with a copy to the Rating Agencies, an
Officer's Certificate stating, as to the signer thereof, that (i) a review of
the activities of the Master Servicer during the preceding calendar year and of
performance under this Servicing Agreement has been made under such officer's
supervision, (ii) to the best of such officer's knowledge, based on such review,
the Master Servicer has fulfilled all its obligations under this Servicing
Agreement for such year, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and the
nature and status thereof including the steps being taken by the Master Servicer
to remedy such default; (iii) a review of the activities of each Subservicer
during the Subservicer's most recently ended calendar year on or prior to
December 31 of the preceding year and its performance under its Subservicing
Agreement has been made under such officer's supervision; and (iv) to the best
of the Servicing Officer's knowledge, based on his review and the certification
of an officer of the Subservicer (unless the Servicing Officer has reason to
believe that reliance on such certification is not justified),
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either each Subservicer has performed and fulfilled its duties, responsibilities
and obligations under this Servicing Agreement and its Subservicing Agreement in
all material respects throughout the year, or, if there has been a default in
performance or fulfillment of any such duties, responsibilities or obligations,
specifying the nature and status of each such default known to the Servicing
Officer. Copies of such statements shall be provided by the Master Servicer to
the Noteholders upon request or by the Indenture Trustee at the expense of the
Master Servicer should the Master Servicer fail to provide such copies.
Section 3.17 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
(a) No later than March 1 of each year, commencing in March 2005, the Master
Servicer, at its expense, shall cause a firm of independent public accountants
who are members of the American Institute of Certified Public Accountants and
who are Deloitte & Touche LLP (or a successor thereof) to furnish a statement to
the Master Servicer, which will be provided to the Indenture Trustee and the
Rating Agencies, to the effect that, in connection with the firm's examination
of the Master Servicer's financial statements as of the end of the preceding
calendar year, nothing came to their attention that indicated that the Master
Servicer was not in compliance with this Agreement, including Sections 3.06,
3.07 and 3.08 except for (i) such exceptions as such firm believes to be
immaterial and (ii) such other exceptions as are set forth in such statement.
(b) No later than March 1 of each year, commencing in March 2005, the
Master Servicer, at its expense, shall or shall cause each Subservicer to cause
a nationally recognized firm of independent certified public accountants to
furnish to the Master Servicer or such Subservicer a report stating that (i) it
has obtained a letter of representation regarding certain matters from the
management of the Master Servicer or such Subservicer which includes an
assertion that the Master Servicer or such Subservicer has complied with certain
minimum mortgage loan servicing standards (to the extent applicable to
residential mortgage loans) identified in the Uniform Single Attestation Program
for Mortgage Bankers established by the Mortgage Bankers Association of America
with respect to the servicing of first lien conventional single family mortgage
loans during the most recently completed calendar year and (ii) on the basis of
an examination conducted by such firm in accordance with standards established
by the American Institute of Certified Public Accountants, such representation
is fairly stated in all material respects, subject to such exceptions and other
qualifications that may be appropriate. Immediately upon receipt of such report,
the Master Servicer shall or shall cause each Subservicer to furnish a copy of
such report to the Indenture Trustee and the Rating Agencies. Any annual
independent public accountants' report furnished pursuant to this Section 3.17
shall be in such form as shall permit such report to be filed with the
Securities and Exchange Commission as part of the Issuer's annual report on Form
10-K filed pursuant to the Securities Exchange Act of 1934, as amended, and no
such annual independent public accountant's report shall contain any language
restricting, limiting or prohibiting such use of such report.
Section 3.18 OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS. The Master
Servicer may, on behalf of the Issuer, but is not obligated to, repurchase from
the Issuer any Mortgage Loan delinquent in payment for a period of 90 days or
longer (a "90-Day Delinquent Mortgage Loan") for a price equal to the Repurchase
Price. Any such 90-Day Delinquent Mortgage Loan shall only be eligible for
purchase pursuant to this Section during the period beginning on the first
Business Day of the Calendar Quarter following the Calendar Quarter in which
such Mortgage Loan became a 90-Day Delinquent Mortgage Loan, and ending at the
close of business on the second-to-last Business Day
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of such following Calendar Quarter. Such option if not exercised shall not
thereafter be reinstated as to any Mortgage Loan, unless the delinquency is
cured and the Mortgage Loan thereafter again becomes delinquent in payment by 90
days or more in a subsequent Calendar Quarter. Any such purchase shall be
accomplished as provided in Subsection 2.03 hereof. Notwithstanding the
foregoing, the Indenture Trustee, whether acting as Indenture Trustee or in the
capacity of successor Master Servicer, shall have no obligation hereunder or
under any other Basic Document to repurchase any Mortgage Loan.
Section 3.19 INFORMATION REQUIRED BY THE INTERNAL REVENUE SERVICE
GENERALLY AND REPORTS OF FORECLOSURES AND ABANDONMENTS OF MORTGAGED PROPERTY.
The Master Servicer shall prepare and deliver all federal and state information
reports when and as required by all applicable state and federal income tax
laws. In particular, with respect to the requirement under Section 6050J of the
Code 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 2004, the Master Servicer or Subservicer shall file reports relating to each
instance occurring during the previous calendar year in which the Master
Servicer (i) acquires an interest in any Mortgaged Property through foreclosure
or other comparable conversion in full or partial satisfaction of a Mortgage
Loan, or (ii) knows or has reason to know that any Mortgaged Property has been
abandoned. The reports from the Master Servicer or Subservicer shall be in form
and substance sufficient to meet the reporting requirements imposed by Section
6050J, Section 6050H (reports relating to mortgage interest received) and
Section 6050P of the Code (reports relating to cancellation of indebtedness).
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ARTICLE IV
Servicing Certificate
Section 4.01 REMITTANCE REPORTS. On or prior to each Determination
Date, the Master Servicer shall deliver to the Indenture Trustee a report,
prepared as of the close of business on the Determination Date (the "Remittance
Report"), in the form of a disk or such other electronic method as to which the
Master Servicer and Indenture Trustee shall agree and containing the information
set forth on Exhibit D. The Remittance Report and any written information
supplemental thereto shall include such information with respect to the Mortgage
Loans that is reasonably available to the Master Servicer and that is required
by the Indenture Trustee for purposes of making the calculations and providing
the reports referred to in the Indenture, as set forth in written specifications
or guidelines issued by the Indenture Trustee from time to time.
In addition, prior to each Payment Date, the Master Servicer shall
determine the total amount of Realized Losses, if any, that resulted from any
Cash Liquidation, Debt Service Reduction, Deficient Valuation or REO Disposition
that occurred during the related Prepayment Period. The amount of each Realized
Loss shall be evidenced by an Officer's Certificate delivered to the Indenture
Trustee with the related Remittance Report.
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. The
Indenture Trustee shall have no obligation to recompute, recalculate or verify
any information provided to it by the Master Servicer.
Section 4.02 RESERVED.
Section 4.03 RESERVED.
Section 4.04 ADVANCES. If any Monthly Payment on a Mortgage Loan that
was due on the immediately preceding Due Date or due during the related Due
Period and delinquent on the Determination Date is delinquent other than as a
result of application of the Relief Act, the Master Servicer will deposit in the
Collection Account not later than the Master Servicer Remittance Date an amount
equal to such Monthly Payment net of the related Master Servicing Fee for such
Mortgage Loan, except to the extent the Master Servicer or the related
Subservicer determines any such advance to be nonrecoverable from Liquidation
Proceeds, Insurance Proceeds or future payments on any Mortgage Loan. Subject to
the foregoing and in the absence of such a determination, the Master Servicer
shall continue to make such advances through the date that the related Mortgaged
Property or REO Property has, in the judgment of the Master Servicer, been
completely liquidated. No later than the fourth Business Day preceding each
Payment Date, the Master Servicer shall present an Officer's Certificate to the
Indenture Trustee with respect to the Mortgage Loans, (i) stating that the
Master Servicer elects not to make an Advance in a stated amount and (ii)
detailing the reason it deems the advance to be a Nonrecoverable Advance. The
Master Servicer will include
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in the Remittance Report a list of each Mortgage Loan for which it does not make
an Advance in accordance with this Section.
Such Advances may be made in whole or in part from funds in the
Collection Account being held for future distribution or withdrawal on or in
connection with Payment Dates in subsequent months. Any funds being held for
future distribution to Securityholders and so used shall be replaced by the
Master Servicer from its own funds by deposit in the Collection Account on or
before the fourth Business Day preceding any Payment Date to the extent that
funds in the Collection Account with respect to such Payment Date shall be less
than payments to Securityholders required to be made on such date.
Section 4.05 COMPENSATING INTEREST PAYMENTS. The Master Servicer shall
deposit in the Collection Account not later than the Master Servicer Remittance
Date an amount equal to the Compensating Interest for the related Determination
Date. The Master Servicer shall not be entitled to any reimbursement of any
Compensating Interest payment.
Section 4.06 EXCHANGE ACT REPORTING. (a) The Indenture Trustee and the
Master Servicer shall reasonably cooperate with the Issuer and the Depositor in
connection with the Trust's satisfying the reporting requirements under the
Exchange Act. The Indenture Trustee shall prepare on behalf of the Trust any
Forms 8-K (other than the initial report on Form 8-K) and 10-K customary for
similar securities as required by the Exchange Act and the Rules and Regulations
of the Commission thereunder, and the Depositor shall sign (or shall cause
another entity acceptable to the Commission to sign) and the Indenture Trustee
shall file (via the Commission's Electronic Data Gathering and Retrieval System)
such forms on behalf of the Depositor or Issuer (or such other entity). The
Depositor and the Issuer hereby grant to the Indenture Trustee a limited power
of attorney to execute any Form 8-K and file each such document on behalf of the
Depositor and the Issuer. Such power of attorney shall continue until the
earlier of (i) receipt by the Indenture Trustee from the Depositor and the
Issuer of written termination of such power of attorney and (ii) the termination
of the Trust. Notwithstanding anything herein or in the Indenture to the
contrary, the Depositor, and not the Indenture Trustee, shall be responsible for
executing each Form 10-K filed on behalf of the Trust.
(b) The Depositor shall prepare and file or cause to be prepared and
filed the initial current report on Form 8-K for the Issuer. Each Form 8-K
thereafter shall be filed by the Indenture Trustee within 15 days after each
Distribution Date, with a copy of the statement to the Certificateholders for
such Distribution Date as an exhibit thereto. If expressly instructed in writing
by the Depositor, the Indenture Trustee shall, in accordance with industry
standards, prepare and deliver to the Depositor for execution a Form 15
Suspension Notice with respect to the Issuer. Prior to (unless and until a Form
15 Suspension Notice shall have been filed) March 30th of each year (or such
earlier date as may be required or permitted by the Exchange Act and the Rules
and Regulations of the Commission), the Indenture Trustee shall file a Form
10-K, in substance as required by applicable law or applicable Commission
staff's interpretations. The Indenture Trustee shall prepare the Form 10-K and
provide the Depositor with the Form 10-K no later than March 20th of each year.
The Depositor shall execute such Form 10-K upon its receipt and shall provide
the original of such executed Form 10-K to the Indenture Trustee no later than
March 25th of each year. Such Form 10-K shall include as exhibits the Master
Servicer's annual statement of compliance described under Section 3.16 and the
accountant's report described under Section 3.17, in each case to the extent
they
25
have been timely delivered to the Indenture Trustee. If they are not so timely
delivered, the Indenture Trustee shall file an amended Form 10-K including such
documents as exhibits reasonably promptly after they are delivered to the
Indenture Trustee. The Indenture Trustee shall have no liability with respect to
any failure to properly prepare or file such periodic reports resulting from or
relating to the Indenture Trustee's inability or failure to obtain any
information not resulting from its own negligence or willful misconduct. The
Form 10-K shall also include a certification in the form attached hereto as
Exhibit C-1 (the "Certification"), in compliance with Rules 13a-14 and 15d-14
under the Exchange Act and any additional directives of the Commission, which
shall be signed by the senior officer of the Master Servicer in charge of
securitization.
(c) In addition, the Indenture Trustee shall sign a certification (in
the form attached hereto as Exhibit C-2) for the benefit of the Master Servicer
and its officers, directors and Affiliates regarding certain aspects of items 1
through 3 of the Certification (provided, however, that the Indenture Trustee
shall not undertake an analysis of any accountant's report attached as an
exhibit to the Form 10-K).
(d) In addition, (i) the Indenture Trustee shall indemnify and hold
harmless the Master Servicer and the Depositor and their officers, directors and
Affiliates from and against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other costs
and expenses arising out of or based upon a breach of the Indenture Trustee's
obligations under this Section 4.06 caused by the Indenture Trustee's
negligence, bad faith or willful misconduct in connection therewith, and (ii)
the Master Servicer shall indemnify and hold harmless the Indenture Trustee, the
Master Servicer, the Issuer and their respective officers, directors and
Affiliates from and against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other costs
and expenses arising out of or based upon a breach of the Master Servicer's
obligations under this Section 4.06 or the Master Servicer's negligence, bad
faith or willful misconduct in connection therewith. If (i) the indemnification
provided for herein is unavailable or insufficient to hold harmless the Master
Servicer, then the Indenture Trustee agrees that it shall contribute to the
amount paid or payable by the Master Servicer as a result of the losses, claims,
damages or liabilities of the Master Servicer in such proportion as is
appropriate to reflect the relative fault of the Master Servicer on the one hand
and the Indenture Trustee on the other in connection with a breach of the
Indenture Trustee's obligations under this Section 4.06 caused by the Indenture
Trustee's negligence, bad faith or willful misconduct in connection therewith
and (ii) the indemnification provided for herein is unavailable or insufficient
to hold harmless the Indenture Trustee, then the Master Servicer agrees that it
shall contribute to the amount paid or payable by the Indenture Trustee as a
result of the losses, claims, damages or liabilities of the Indenture Trustee in
such proportion as is appropriate to reflect the relative fault of the Indenture
Trustee on the one hand and the Master Servicer on the other in connection with
a breach of the Master Servicer's obligations under this Section 4.06 or the
Master Servicer's negligence, bad faith or willful misconduct in connection
therewith.
(e) Notwithstanding any other provision of the Basic Documents, the
provisions of this Section 4.06 may be amended by the Master Servicer, the
Issuer and the Indenture Trustee without the consent of the Securityholders.
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ARTICLE V
The Master Servicer
Section 5.01 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 5.02 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; PROVIDED, HOWEVER, that the successor or surviving Person to
the Master Servicer shall be qualified to sell mortgage loans to and service
mortgage loans for ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac.
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 on behalf of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, is reasonably
satisfactory to the Indenture Trustee (as pledgee of the Mortgage Loans) and the
Company (in its sole discretion) is willing to service the Mortgage Loans and
executes and delivers to the Indenture Trustee and the Company an agreement, in
form and substance reasonably satisfactory to the Indenture Trustee and the
Company, 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 Notes 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) or considered to be below
investment grade.
Section 5.03 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 Company, the
Issuer, the Owner Trustee, the Indenture Trustee or the Noteholders 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 Company and held harmless against any loss,
liability or expense incurred in connection with any legal action relating to
this
27
Servicing Agreement or the Notes, including any amount paid to the Owner Trustee
or the Indenture Trustee pursuant to Section 5.06(b), other than any loss,
liability or expense related to any specific Mortgage Loan or Mortgage Loans
(except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Servicing Agreement) and 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 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 Mortgage 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 hereunder. 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 Company, and the
Master Servicer shall be entitled to be reimbursed therefor. The Master
Servicer's right to indemnity or reimbursement pursuant to this Section 5.03
shall survive any resignation or termination of the Master Servicer pursuant to
Section 5.04 or 6.01 with respect to any losses, expenses, costs or liabilities
arising prior to such resignation or termination (or arising from events that
occurred prior to such resignation or termination).
Section 5.04 MASTER SERVICER NOT TO RESIGN. Subject to the provisions
of Section 5.02, 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 (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) or (ii) upon satisfaction of the following conditions:
(a) the Master Servicer has proposed a successor servicer to the Company and the
Indenture Trustee in writing and such proposed successor servicer is reasonably
acceptable to the Company and the Indenture Trustee; and and (b) each Rating
Agency shall have delivered a letter (obtained by and at the expense of the
Master Servicer) to the Company 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 Notes; PROVIDED,
HOWEVER, that no such resignation by the Master Servicer shall become effective
until such successor servicer shall have assumed the Master Servicer's
responsibilities and obligations hereunder or another successor Master Servicer
has been appointed in accordance with Section 6.02. Any such resignation shall
not relieve the Master Servicer of responsibility for any of the obligations
specified in Sections 6.01 and 6.02 as obligations that survive the resignation
or termination of the Master Servicer. The Master Servicer shall have no claim
(whether by subrogation or otherwise) or other action against any Noteholder for
any amounts paid by the Master Servicer pursuant to any provision of this
Servicing Agreement.
Section 5.05 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 5.04.
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Section 5.06 INDEMNIFICATION. (a) 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 claim, tax, penalty, loss, liability or expense of any kind whatsoever,
incurred without negligence (gross negligence in the case of the Owner Trustee)
or willful misconduct on its part, arising out of, or in connection with, the
failure by the Master Servicer to perform its duties in compliance with this
Servicing Agreement, including the costs and expenses (including reasonable
legal fees and expenses) of defending against any claim in connection with the
exercise or performance of any of its powers or duties under any Basic Document,
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, it
being understood that failure to give such notice shall not relieve the
Master Servicer of its indemnification obligations hereunder;
(ii) while maintaining control over its own defense, the
Company, 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,
which consent shall not be unreasonably withheld.
(c) The Master Servicer agrees to indemnify the Owner Trustee for, and
to hold the Owner Trustee, harmless against, any claim, tax, penalty, loss,
liability or expense of any kind whatsoever, in connection with the Owner
Trustee's duties under any of the Basic Documents, except to the extent that
such claim, tax, penalty, loss liability or expense is (i) caused by the Owner
Trustee's own willful misconduct, gross negligence or bad faith or grossly
negligent failure to act or (ii) incurred as a result of the inaccuracy of any
representation or warranty contained in Section 6.03 of the Trust Agreement
expressly made by the Owner Trustee.
(d) No termination of this Servicing Agreement or the resignation or
removal of the Owner Trustee or the Indenture Trustee shall affect the
obligations created by this Section 5.06 of the Master Servicer to indemnify the
Indenture Trustee and the Owner Trustee under the conditions and to the extent
set forth herein. This section shall survive the termination of this Servicing
Agreement and the resignation or removal of the Master Servicer. Any amounts to
be paid by the Master Servicer pursuant to this Subsection may not be paid from
the Trust Estate.
Section 5.07 DUTIES OF THE MASTER SERVICER WITH RESPECT TO THE
INDENTURE. (a) The Master Servicer shall take all appropriate action that is the
duty of the Issuer to take with respect to the following matters under the
Indenture (references are to sections of the Indenture):
(i) causing the preparation of the Notes (for execution by the
Owner Trustee) upon their initial issuance and causing the preparation
of an Issuer Request (for execution
29
by the Owner Trustee) for delivery to the Indenture Trustee regarding
the authentication of the Notes (Sections 2.02);
(ii) causing the preparation of an Issuer Request and
Officer's Certificate (and executing the same on behalf of the Issuer)
and the obtaining of an Opinion of Counsel and Independent
Certificates, if necessary, for the release of the Collateral, as
defined in the Indenture (Section 8.05);
(iii) causing the preparation of Issuer Requests (and
executing the same on behalf of the Issuer) and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures;
(iv) causing the preparation and obtaining or filing of the
instruments, opinions and certificates and other documents required for
the release of collateral (Sections 8.05 and 10.01);
(v) the delivery of notice to the Indenture Trustee and the
Rating Agency of each Event of Default under the Indenture and under
the Trust Agreement (Sections 3.24 and 5.01);
(vi) the annual delivery of Opinions of Counsel, in accordance
with Section 3.07 of the Indenture, as to the Trust Estate, and the
annual delivery and execution of the Officers' Certificate (Section
3.10);
(vii) causing the preparation and execution of an Officer's
Certificate and the obtaining of the Opinion of Counsel and the
Independent Certificate relating thereto with respect to any request by
the Issuer to the Indenture Trustee to take any action under the
Indenture (Sections 4.10 and 10.01);
(viii) obtaining and preserving the Issuer's qualification to
do business in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of the
Indenture, the Notes, the Mortgage Loans and each other instrument and
agreement included in the Trust Estate (Section 3.04).
(b) In addition to the duties of the Master Servicer set forth above,
the Master Servicer shall prepare for execution by the Issuer or shall cause the
preparation by other appropriate persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuer to prepare, file or deliver pursuant to the Basic Documents, and at the
request of the Owner Trustee or the Indenture Trustee shall take all appropriate
action that it is the duty of the Issuer to take pursuant to the Basic
Documents. In accordance with the directions of the Owner Trustee or Indenture
Trustee, the Master Servicer shall administer, perform or supervise the
performance of such other activities in connection with the Collateral
(including the Basic Documents) as are not covered by any of the foregoing
provisions and as are expressly requested by the Owner Trustee or the Indenture
Trustee and are reasonably within the capability of the Master Servicer.
30
ARTICLE VI
Default
Section 6.01 SERVICING DEFAULT. If any one of the following events
(each, a "Servicing Default") shall occur and be continuing:
(i) Any failure by the Master Servicer to deposit in the
Collection Account or Payment Account any deposit required to be made
under the terms of this Servicing Agreement, including any Advances and
Compensating Interest (other than Servicing Advances), which continues
unremedied for a period of one (1) Business Day after the date upon
which written notice of such failure shall have been given to the
Master Servicer by the Company, the Issuer or the Indenture Trustee; or
(ii) Failure on the part of the Master Servicer duly to
observe or perform in any material respect any representation or
warranty of the Master Servicer or any other covenants or agreements of
the Master Servicer (including the making of Servicing Advances) set
forth in this Servicing Agreement, which failure, in each case,
materially and adversely affects the interests of Noteholders and which
continues unremedied for a period of 30 days after the date on which
written notice of such failure, requiring the same to be remedied, and
stating that such notice is a "Notice of Default" hereunder, shall have
been given to the Master Servicer by the Company, the Issuer or the
Indenture Trustee; 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, marshaling 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 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,
marshaling 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, marshaling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Master
Servicer and such decree or order shall have remained in force
undischarged, 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;
31
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 holders of at least
51% of the aggregate Note Principal Balance of each Class of Notes may, subject
to the direction of the Indenture Trustee as pledgee of the Mortgage Loans, by
notice then given to the Master Servicer, 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 Mortgage Loans hereunder during any period prior to the date of
such termination and the Issuer, subject to the direction of the Indenture
Trustee as pledgee of the Mortgage Loans may exercise any and all other remedies
available at law or equity; provided, however, that the successor to the Master
Servicer appointed pursuant to Section 6.02 shall have accepted the duties of
Master Servicer effective upon the termination of the Master Servicer. Any such
notice to the Master Servicer shall also be given to each Rating Agency, the
Company 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 Notes or the Mortgage Loans or
otherwise, shall pass to and be vested in the Indenture Trustee, pursuant to and
under this Section 6.01; 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 Mortgage Loan and related
documents, or otherwise. Notwithstanding the foregoing, the parties hereto and
the Securityholders by their acceptance of any Security, acknowledge and agree
that there will be a period of transition before the actual servicing functions
can be fully transferred to the Indenture Trustee, as successor Master Servicer,
or to a successor Master Servicer appointed by the Indenture Trustee pursuant to
the provisions hereof, provided, that the Indenture Trustee shall use its
reasonable best efforts to succeed to the actual servicing functions or find a
successor Master Servicer as soon as possible but no later than 90 days after
such termination. 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 or the successor Master Servicer for administration by it of
(i) the property and amounts which are then or should be part of the Trust
Estate or which thereafter become part of the Trust Estate; (ii) originals or
copies of all documents of the Master Servicer reasonably requested by the
Indenture Trustee to enable it to assume the Master Servicer's duties
thereunder; (iii) the rights and obligations of the Master Servicer under the
Subservicing Agreements with respect to the Mortgage Loans; (iv) all cash
amounts which shall at the time be deposited by the Master Servicer or should
have been deposited to the Collection or the Payment Account or thereafter be
received with respect to the Mortgage Loans; and (v) all costs or expenses
associated with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
Indenture Trustee or any successor Master Servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Indenture
Trustee or successor Master Servicer to service the Mortgage Loans properly and
effectively. All reasonable costs and expenses (including, but not limited to,
attorneys' fees and disbursements) incurred by the Indenture Trustee in
connection with the succession as Master Servicer, including amending this
Servicing Agreement to reflect such succession as Master Servicer pursuant to
this Section 6.01 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,
32
and if not so paid by the predecessor Master Servicer, shall be reimbursed by
the Issuer pursuant to Section 6.07 of the Indenture.
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 Mortgage 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 3.07 and 3.15 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.
The Master Servicer shall immediately notify the Indenture Trustee and
the Owner Trustee in writing of any Servicing Default.
Section 6.02 INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. (a)
Within 90 days of the time the Master Servicer receives a notice of termination
pursuant to Section 6.01 or sends a notice pursuant to clause (i) of Section
5.04, the Indenture Trustee on behalf of the Noteholders, or other successor
appointed in accordance with this Section 6.02, 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, including but
not limited to the provisions of Article VIII. Nothing in this Servicing
Agreement shall be construed to permit or require the Indenture Trustee or any
other successor Master Servicer to (i) succeed to the responsibilities, duties
and liabilities of the initial Master Servicer in its capacity as the Seller
under the Mortgage Loan Purchase Agreement, (ii) be responsible or accountable
for any act or omission of the Master Servicer prior to the effectiveness of the
Master Servicer's termination hereunder, (iii) require or obligate the Indenture
Trustee, in its capacity as successor Master Servicer, to purchase, repurchase
or substitute any Mortgage Loan, (iv) fund any losses on any Eligible Investment
directed by any other Master Servicer, or (v) be responsible for the
representations and warranties of the Master Servicer, except as provided
herein; PROVIDED, HOWEVER, that the Indenture Trustee, as successor Master
Servicer, shall be required to make any Advances to the extent that the Master
Servicer failed to make such Advances, to the extent such Advance is not
determined by the Indenture Trustee to be nonrecoverable. 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 on behalf
of the Noteholders 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 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 the appointment of any such successor Master
Servicer will not result in the qualification, reduction or withdrawal of the
ratings assigned to the Notes by the Rating Agencies. Pending appointment of a
successor to the Master Servicer hereunder, unless the Indenture Trustee is
prohibited by law from so acting or is unwilling to act as such, the Indenture
Trustee shall act in such capacity as hereinabove provided. In connection with
such appointment and
33
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation which the
Master Servicer would otherwise have received pursuant to Section 3.15 (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 obligation to purchase Mortgage Loans pursuant to Section 3.01,
to pay any deductible under an insurance policy pursuant to Section 3.11 or to
indemnify the Indenture Trustee pursuant to Section 5.06), 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, the Custodian and such successor shall take
such action, consistent with this Servicing Agreement, as shall be necessary to
effectuate any such succession.
In connection with the termination or resignation of the Master
Servicer hereunder, either (i) the successor Master Servicer, including the
Indenture Trustee if the Indenture Trustee is acting as successor Master
Servicer, shall represent and warrant that it is a member of MERS in good
standing and shall agree to comply in all material respects with the rules and
procedures of MERS in connection with the servicing of the Mortgage Loans that
are registered with MERS, in which case the predecessor Master Servicer shall
cooperate with the successor Master Servicer in causing MERS to revise its
records to reflect the transfer of servicing to the successor Master Servicer as
necessary under MERS' rules and regulations, or (ii) the predecessor Master
Servicer shall cooperate with the successor Master Servicer in causing MERS to
execute and deliver an assignment of Mortgage in recordable form to transfer the
Mortgage from MERS to the Indenture Trustee and to execute and deliver such
other notices, documents and other instruments as may be necessary or desirable
to effect a transfer of such Mortgage Loan or servicing of such Mortgage Loan on
the MERS(R) System to the successor Master Servicer. The predecessor Master
Servicer shall file or cause to be filed any such assignment in the appropriate
recording office. The predecessor Master Servicer shall bear any and all fees of
MERS, costs of preparing any assignments of Mortgage, and fees and costs of
filing any assignments of Mortgage that may be required under this Section 6.02.
To the extent these fees and costs are not paid by the Master Servicer and are
incurred by any successor Master Servicer, such fees and costs will be
reimbursable to the successor Master Servicer by the Trust. The successor Master
Servicer shall cause such assignment to be delivered to the Indenture Trustee
promptly upon receipt of the original with evidence of recording thereon or a
copy certified by the public recording office in which such assignment was
recorded.
(b) Any successor, including the Indenture Trustee on behalf of the
Noteholders, to the Master Servicer as servicer shall during the term of its
service as servicer (i) continue to service and administer the Mortgage 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 3.11(g).
(c) Any successor Master Servicer, including the Indenture Trustee on
behalf of the Noteholders, shall not be deemed to be in default or to have
breached its duties hereunder if the
34
predecessor Master Servicer shall fail to deliver any required deposit to the
Collection Account or otherwise cooperate with any required servicing transfer
or succession hereunder.
(d) Notwithstanding anything else herein to the contrary, in no event
shall the Indenture Trustee be liable for any servicing fee or any differential
in the amount of the servicing fee paid hereunder and the amount necessary to
induce any successor Master Servicer to act as a successor Master Servicer under
this Servicing Agreement and the transactions set forth or provided for herein.
Section 6.03 NOTIFICATION TO NOTEHOLDERS. Upon any termination or
appointment of a successor to the Master Servicer pursuant to this Article VI or
Section 5.04, the Indenture Trustee shall give prompt written notice thereof to
the Noteholders, the Owner Trustee, the Company, the Issuer and the Rating
Agency.
Section 6.04 WAIVER OF DEFAULTS. The Indenture Trustee shall transmit
by mail to all Noteholders, within 10 days after the occurrence of any Servicing
Default known to the Indenture Trustee, unless such Servicing Default shall have
been cured, notice of each such Servicing Default hereunder known to a
Responsible Officer of the Indenture Trustee. The holders of at least 51% of the
aggregate Note Principal Balance of the Notes may waive any default by the
Master Servicer in the performance of its obligations hereunder and the
consequences thereof, except a default in the making of or the causing to be
made any required distribution on the Notes. Upon any such waiver of a past
default, such default shall be deemed to cease to exist, and any Servicing
Default arising therefrom shall be deemed to have been timely remedied for every
purpose of this Servicing Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived. The Master Servicer shall give notice of any such
waiver to the Rating Agency.
35
ARTICLE VII
Miscellaneous Provisions
Section 7.01 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 Agency that the amendment will not result in the
downgrading or withdrawal of the rating then assigned to the Notes or the rating
then assigned to the Notes and the consent of the Indenture Trustee.
Section 7.02 GOVERNING LAW. THIS SERVICING AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 7.03 NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if when
delivered to:
(a) in the case of the Master Servicer: Columbia National, Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) in the case of Rating Agency: Standard & Poor's, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - 41st Floor
New York, New York 10041
Attention: Asset Backed Surveillance Group
(c) in the case of the
Owner Trustee,
the Corporate Trust Office: Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
(d) in the case of the Issuer,
to American Home Mortgage
Investment Trust 2004-1: c/o American Home Mortgage Securities LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
(e) in the case of the Indenture Trustee: its Corporate Trust Office
36
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 Noteholder shall be given by first class mail, postage prepaid, at
the address of such Noteholder as shown in the Note 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 Noteholder
receives such notice. Any notice or other document required to be delivered or
mailed by the Indenture Trustee to the 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 deliver such notice
or document to the Rating Agency.
Section 7.04 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 Notes or the rights of the Noteholders thereof.
Section 7.05 THIRD-PARTY BENEFICIARIES. This Servicing Agreement will
inure to the benefit of and be binding upon the parties hereto, the Noteholders,
the Owner Trustee, the Indenture 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. The Indenture Trustee
shall have the right to exercise all rights of the Issuer under this Agreement.
Section 7.06 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 7.07 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 7.08 TERMINATION. The respective obligations and
responsibilities of the Master Servicer and the Issuer created hereby shall
terminate upon the satisfaction and discharge of the Indenture pursuant to
Section 4.10 thereof.
Section 7.09 NO PETITION. The Master Servicer, by entering into this
Servicing Agreement, hereby covenants and agrees that it will not at any time
institute against the Issuer, or join in any institution against the Issuer, any
bankruptcy proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations of the Issuer. This section shall
survive the satisfaction and discharge of the Indenture by one year.
Section 7.10 NO RECOURSE. The Master Servicer acknowledges that no
recourse may be had against the Issuer, except as may be expressly set forth in
this Servicing Agreement.
37
IN WITNESS WHEREOF, the Master Servicer, the Issuer and the Indenture
Trustee 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.
COLUMBIA NATIONAL, INCORPORATED
as Master Servicer
By: /s/ ▇▇▇▇ ▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: Executive Vice President
AMERICAN HOME MORTGAGE INVESTMENT
TRUST 2004-1,
as Issuer
Wilmington Trust Company, not in its
individual capacity, but solely as Owner
Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Financial Services Officer
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATON,
as Indenture Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
Acknowledged and agreed with respect to
Section 5.03 hereof:
AMERICAN HOME MORTGAGE SECURITIES LLC.,
as Depositor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Executive Vice President
EXHIBIT A
MORTGAGE LOAN SCHEDULE
(Filed Manually)
A-1
EXHIBIT B
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with your administration of the Mortgage 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) Mortgage Loan Prepaid in Full
Other
Mortgage Loan Repurchased
Please deliver the Mortgage File to ____________________________________________
________________________________________________________________________________
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been deposited as
provided in the Servicing Agreement."
_______________________________
[Name of Master Servicer]
Authorized Signature
******************************************************************************
TO CUSTODIAN: 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
[ ] Primary Insurance Policy
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or
Deed of Trust
[ ] Title Insurance Policy
_______________________ [ ] Other:
Name
_______________________
Title
_______________________
Date
B-1
EXHIBIT C-1
FORM OF CERTIFICATION TO BE PROVIDED BY THE MASTER SERVICER
WITH FORM 10-K
Re: American Home Mortgage Investment Trust 2004-1
Mortgage-Backed Notes, Series 2004-1
I, [identify the certifying individual], certify that:
l. I have reviewed this annual report on Form 10-K, and all
reports on Form 8-K containing distribution or servicing reports filed in
respect of periods included in the year covered by this annual report, of
American Home Mortgage Securities LLC (the "Registrant");
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 this annual report;
3. Based on my knowledge, the servicing information required
to be provided to the Trustee 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 Registrant's certified public
accountants all significant deficiencies relating to 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 or similar standard as set forth in the Servicing Agreement.
Capitalized terms used but not defined herein have the
meanings ascribed to them in Appendix A to the Indenture, dated as of March 31,
2004 (the "Indenture"), between American Home Mortgage Investment Trust 2004-1,
as issuer, and ▇▇▇▇▇ Fargo Bank, National Association, as indenture trustee.
COLUMBIA NATIONAL, INCORPORATED
By:____________________________
Name:
Title:
Date:
C-1-1
EXHIBIT C-2
FORM OF CERTIFICATION TO BE
PROVIDED TO MASTER SERVICER BY THE INDENTURE TRUSTEE
Re: American Home Mortgage Investment Trust 2004-1
(the "Trust" or the "Issuer") Mortgage-Backed Notes,
Series 2004-1
I, [identify the certifying individual], a [title] of ▇▇▇▇▇
Fargo Bank, National Association, as Indenture Trustee of the Trust, hereby
certify to [Columbia National, Incorporated][American Home Mortgage Securities
LLC] and its officers, directors and affiliates, and with the knowledge and
intent that they will rely upon this certification, 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 reports
filed in respect of periods included in the year covered by that annual report,
of the Issuer relating to the above-referenced trust;
2. Based on my knowledge, the information in these
distribution reports prepared by the Indenture Trustee, 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; and
3. Based on my knowledge, the distribution information
required to be provided by the Indenture Trustee under the Indenture is included
in these distribution reports.
Capitalized terms used but not defined herein have the
meanings ascribed to them in Appendix A to the Indenture, dated March 31, 2004
(the "Indenture"), between American Home Mortgage Investment Trust 2004-1, as
issuer, and ▇▇▇▇▇ Fargo Bank, National Association, as indenture trustee.
▇▇▇▇▇ FARGO BANK,
NATIONAL ASSOCIATION, as Indenture Trustee
By:__________________________________
Name:
Title:
Date:
C-2-1
&&&
EXHIBIT D
3rd PARTY FILE LAYOUT: REQUIRED DATA
DATA DESCRIPTION FORMAT
---- ----------- ------
Loan Number A numeric identifier for each loan- no more than 10 digits. Text: up to 10 characters
Borrower Next Pay Due The date that the borrower's next payment is due to the servicer. Date: "MM/DD/YYYY"
Date
Current Loan Rate The current interest rate that the borrower is paying on the Number: max length of 6 w/4
outstanding principal. decimal places
Actual Ending Principal The borrower's outstanding principal balance due on the Number: 2 decimal places, no
Balance mortgage loan at the end of the reporting period. commas (,) or dollar signs ($)
Scheduled Ending The outstanding principal amount (ending) due to be passed Number: 2 decimal places, no
Principal Balance through to the investors after the application of the current commas (,) or dollar signs ($)
period principal amount, if applicable. Please
note that if a A/A or S/A deal structure - this
may be the Actual Ending Balance.
Actual Beginning The borrowers outstanding principal balance due on the Number: 2 decimal places, no
Principal Balance mortgage loans at the beginning of the reporting period. commas (,) or dollar signs ($)
Scheduled Beginning The outstanding principal amount (beginning) due to be passed Number: 2 decimal places, no
Principal Balance through to the investors before the application of the current commas (,) or dollar signs ($)
period principal amount, if applicable.
Scheduled Pay Amount Monthly scheduled P&I Payment: Scheduled principal and Number: 2 decimal places, no
interest payment due to the servicer. commas (,) or dollar signs ($)
Scheduled Principal Pay The scheduled principal payment due to the Servicer. This Number: 2 decimal places, no
Amount amount may also reflect actual principal collected if A/A or S/A commas (,) or dollar signs ($)
deal structure.
Curtailment Principal All curtailments and principal adjustments including curtailment Number: 2 decimal places, no
Amount interest. commas (,) or dollar signs ($)
Curtailment Principal Additional Unscheduled Principal Column Number: 2 decimal places, no
Amount 2 commas (,) or dollar signs ($)
Curtailment Principal Additional Unscheduled Principal Column Number: 2 decimal places, no
Amount 3 commas (,) or dollar signs ($)
Reported Action Code Industry standard delinquency codes used to determine the type Action Key Code: 15 = Bankruptcy,
of loan. 30 = Foreclosure, 70 = REO, 60 =
PIF, and 65 = Repurchase
Paid in Full Amount Liquidation amount/proceeds. Number: 2 decimal places, no
commas (,) or dollar signs ($)
Paid in Full Date Liquidation date. Date: "MM/DD/YYYY"
Scheduled Gross Interest The borrower's scheduled interest payment due to the servicer. Number: 2 decimal places, no
Amount This is inclusive of servicing fee. commas (,) or dollar signs ($)
Loan Fee Amount The servicer's monthly fee rate. Number: 2 decimal places, no
commas (,) or dollar signs ($)
D-1
Loan Fee Rate The servicer's annual fee rate. Number: max length of 6 w/4
decimal places
Credit Loss Amount The amount of loss due to credit. Number: 2 decimal places, no
commas (,) or dollar signs ($)
Fraud Loss Amount The amount of loss due to fraud. Number: 2 decimal places, no
commas (,) or dollar signs ($)
Bankruptcy Loss The amount of loss due to Bankruptcy. Number: 2 decimal places, no
Amount commas (,) or dollar signs ($)
Special Hazard Loss The amount of loss due to special hazard. Number: 2 decimal places, no
Amount commas (,) or dollar signs ($)
Prepayment Penalty The amount of prepayment penalty pledged to Trust on a Number: 2 decimal places, no
Amount prepayment in full or large partial prepayment prior to end of commas (,) or dollar signs ($)
prepayment period.
IMPORTANT FILE NOTES:
1. FILE CONTAINS COLUMN HEADERS
2. COLUMN HEADERS DO NOT CONTAIN SPACES OR PERIODS
3. COLUMN HEADERS ARE CONSISTENT MONTHLY
4. ORDER OF COLUMNS IS NOT IMPORTANT
5. DATA IS IN CORRECT FORMAT AS STATED IN THE FILE ▇▇▇▇▇▇
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