EXECUTION VERSION
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SERVICING AGREEMENT
By and Between
WASHINGTON MUTUAL BANK, FA
(Servicer)
and
▇▇▇▇▇▇ BROTHERS BANK, FSB
(Owner)
Dated as of September 1, 2003
Residential First Lien Mortgage Loans
Schedule/Schedule Flow Delivery Program
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TABLE OF CONTENTS
Page
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ARTICLE 1. DEFINITIONS...........................................................................................1
ARTICLE 2. ADMINISTRATION AND SERVICING OF MORTGAGE LOANS........................................................7
Section 2.1. Identification of Mortgage Loans; Servicer to Act as Servicer.........................7
Section 2.2. Liquidation of Mortgage Loans.........................................................9
Section 2.3. Collection of Mortgage Loan Payments.................................................10
Section 2.4. Establishment of Account; Deposits in Account........................................10
Section 2.5. Permitted Withdrawals from the Account...............................................12
Section 2.6. Establishment of Escrow Account; Deposits in Escrow Account; Escrow
Analysis.............................................................................12
Section 2.7. Permitted Withdrawals from the Escrow Account........................................13
Section 2.8. Payment of Taxes, Insurance and Other Charges........................................13
Section 2.9. Transfer of Accounts.................................................................14
Section 2.10. Maintenance of Hazard Insurance......................................................14
Section 2.11. Fidelity Bond; Errors and Omissions Insurance........................................15
Section 2.12. Title, Management and Disposition of Real Estate Owned...............................16
Section 2.13. Application of Proceeds of Insurance to Repair or Restoration........................17
Section 2.14. Inspections..........................................................................18
Section 2.15. Maintenance of Primary Mortgage Insurance Policies; Collections Thereunder...........18
Section 2.16. Monthly Advances by the Servicer.....................................................18
Section 2.17. Compliance With REMIC Provisions.....................................................19
Section 2.18. Owner to Cooperate; Release of Collateral Files......................................19
Section 2.19. Credit Reporting.....................................................................20
ARTICLE 3. PAYMENTS TO THE OWNER................................................................................20
Section 3.1. Distributions........................................................................20
Section 3.2. Reports..............................................................................21
Section 3.3. Delinquency and Foreclosure Statements...............................................23
ARTICLE 4. GENERAL SERVICING PROCEDURE; COVENANTS; REPRESENTATIONS AND WARRANTIES...............................23
Section 4.1. Assumption Agreements................................................................23
Section 4.2. Satisfaction of Mortgages and Release of Collateral Files............................24
Section 4.3. Servicing Compensation...............................................................25
Section 4.4. Statements as to Compliance..........................................................25
Section 4.5. Annual Independent Public Accountants' Servicing Report..............................26
Section 4.6. Owner's Right to Examine Servicer Records, etc.......................................26
Section 4.7. Cooperation..........................................................................27
Section 4.8. Consents and Approvals...............................................................27
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ARTICLE 5. THE SERVICER.........................................................................................27
Section 5.1. Indemnification; Third Party Claims..................................................27
Section 5.2. Servicer Covenants; Merger or Consolidation of the Servicer..........................28
Section 5.3. Limitation on Liability of the Servicer and Others...................................28
Section 5.4. Servicer Not to Resign...............................................................29
Section 5.5. Transfer of Servicing................................................................29
Section 5.6. Transfer of Mortgage Loans...........................................................29
Section 5.7. Representations and Warranties of the Servicer.......................................30
Section 5.8. Customer Information.................................................................31
ARTICLE 6. DEFAULT..............................................................................................31
Section 6.1. Events of Default....................................................................31
Section 6.2. Waiver of Defaults...................................................................33
Section 6.3. Survival of Certain Obligations and Liabilities of the Defaulted Servicer............33
ARTICLE 7. TERMINATION..........................................................................................33
Section 7.1. Termination of Agreement.............................................................33
Section 7.2. Termination of the Servicer Upon Unremedied Event of Default.........................33
ARTICLE 8. PASS-THROUGH AND WHOLE LOAN TRANSFERS................................................................34
Section 8.1. Pass-Through Transfers or Whole-Loan Transfers.......................................34
Section 8.2. Designation of a Master Servicer.....................................................35
Section 8.3. Servicer's Purchase Right............................................................36
ARTICLE 9. MISCELLANEOUS PROVISIONS.............................................................................37
Section 9.1. Successor to the Servicer............................................................37
Section 9.2. Amendment............................................................................37
Section 9.3. Recordation of Agreement; Perfection of Security Interest; Further Assurances........38
Section 9.4. Duration of Agreement................................................................38
Section 9.5. Governing Law........................................................................38
Section 9.6. General Interpretive Principles......................................................38
Section 9.7. Reproduction of Documents............................................................39
Section 9.8. Notices..............................................................................39
Section 9.9. Severability of Provisions...........................................................40
Section 9.10. Exhibits and Schedules...............................................................40
Section 9.11. Counterparts; Successors and Assigns.................................................40
Section 9.12. Effect of Headings...................................................................40
Section 9.13. Other Agreements Superseded; Entire Agreement........................................40
Section 9.14. Attorneys' Fees......................................................................40
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DESCRIPTION OF ATTACHMENTS
Exhibit A FORM OF REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
Exhibit B ACCOUNT CERTIFICATION
Exhibit C ACCOUNT LETTER AGREEMENT
Exhibit D ESCROW ACCOUNT CERTIFICATION
Exhibit E ESCROW ACCOUNT LETTER AGREEMENT
Exhibit F FORM OF OFFICER'S CERTIFICATE
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SERVICING AGREEMENT
This SERVICING AGREEMENT (this "Agreement") dated as of September 1,
2003, is between Washington Mutual Bank, FA, a savings association organized
under the laws of the United States, in its capacity as servicer (the
"Servicer"), and ▇▇▇▇▇▇ Brothers Bank, FSB, a federal savings bank, and its
successors and assigns, in its capacity as owner (the "Owner").
PRELIMINARY STATEMENT
WHEREAS, pursuant to that certain Mortgage Loan Purchase and Sale
Agreement of even date herewith among the Servicer, Washington Mutual Bank fsb
and Washington Mutual Bank, each as a seller (the "Sellers") and the Owner as
purchaser (the "Purchase Agreement"), and in reliance upon the representations,
warranties and covenants of the Servicer contained herein and of the Sellers
contained in the Purchase Agreement, the Owner has agreed to purchase from the
Sellers, and the Sellers have agreed to sell to the Owner, without recourse and
on a servicing-retained basis, certain residential, first lien mortgage loans;
WHEREAS, the Servicer has agreed to act as Servicer and, on behalf of
each of the Sellers as agent and subservicer, to service such mortgage loans for
the Owner from and after the purchase by the Owner of such mortgage loans; and
WHEREAS, the Servicer and the Owner desire to prescribe the terms and
conditions regarding the management, servicing, and control of the mortgage
loans purchased by the Owner pursuant to the Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Servicer and the Owner agree
as follows:
ARTICLE 1.
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings
specified in the Purchase Agreement, except that, whenever used herein, the
following words and phrases shall have the following meanings, unless the
context otherwise requires:
Acceptable Servicing Procedures: The procedures, including prudent
collection and loan administration procedures, and the standard of care employed
by prudent mortgage servicers that service mortgage loans of the same type as
the Mortgage Loans in the jurisdictions in which the related Mortgaged
Properties are located. Such standard of care shall not be lower than that the
Servicer customarily employs and exercises in servicing and administering
similar mortgage loans for its own account and shall be in full compliance with
all applicable federal, state and local laws, ordinances, rules and regulations.
Account: The account or accounts created and maintained pursuant to
Section 2.4 of this Agreement.
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Agreement: This Servicing Agreement, including all exhibits and
schedules hereto, and all amendments hereof and supplements hereto.
Applicable Requirements: With respect to each Mortgage Loan, (i) the
terms of the related Mortgage and Mortgage Note, (ii) the federal, state, local
and foreign laws, statutes, rules, regulations, ordinances, standards,
requirements, administrative rulings, orders and processes pertaining to such
Mortgage Loan, including but not limited to those pertaining to the processing,
origination and servicing of the Mortgage Loan, (iii) the requirements of the
Owner as set forth in this Agreement and (iv) Acceptable Servicing Procedures.
BIF: The Bank Insurance Fund.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking or savings and loan institutions in the States of
Washington, California, Illinois, Nebraska or New York are authorized or
obligated by law or executive order to be closed.
Code: The Internal Revenue Code of 1986, as amended from time to time,
or any successor statute thereto.
Compensating Interest Cap: An amount equal to 1/12 of the sum of:
(i) the aggregate Unpaid Principal Balance of all (A) fixed
rate Mortgage Loans and (B) Hybrid ARM Loans that bear interest at the initial
fixed rate (other than 3/1 Hybrid Arm Loans), multiplied by 0.25%, and
(ii) the aggregate Unpaid Principal Balance of all (A) ARM
Loans, (B) Hybrid ARM Loans that bear interest at an adjustable rate and (C) 3/1
Hybrid Arm Loans, multiplied by 0.375%.
Condemnation Proceeds: All awards or settlements in respect of a taking
of all or part of a Mortgaged Property by exercise of the power of eminent
domain or condemnation.
Customer Information: All personal, nonpublic information about the
Mortgagors that is supplied on behalf of the Mortgagors and is maintained by a
party hereto.
Cut-off Date: With respect to any Mortgage Loan purchased on a Closing
Date, the cut-off date specified in the Commitment Letter relating to the
purchase and sale of the related Loan Pool.
Defaulted Servicer: As defined in Section 6.1.
Determination Date: The thirteenth (13th) day of each month (or if such
day is not a Business Day, the next Business Day), commencing in the month
following the end of the calendar month in which the initial Cut-off Date
occurs. A Determination Date is related to a Monthly Remittance Date if such
Determination Date and such Monthly Remittance Date occur in the same calendar
month.
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Disclosure Document: As defined in Section 8.1(d).
Due Date: With respect to any Mortgage Loan, the day of the month on
which Monthly Payments on such Mortgage Loan are due, exclusive of any days of
grace, which day shall be the first day of the month unless otherwise specified
on the related Mortgage Loan Schedule.
Due Period: With respect to any Mortgage Loan, the period beginning on
the first day of any month and ending on the last day of such month.
Eligible Account: An account or accounts maintained with a Qualified
Depository.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 2.6.
Escrow Payments: The amounts constituting ground rents, taxes,
assessments, water rates, sewer rents, municipal charges, Primary Mortgage
Insurance Policy premiums, if any, fire and hazard insurance premiums,
condominium charges and other payments required to be escrowed by the Mortgagor
with the mortgagee pursuant to any Mortgage Loan or this Agreement.
Event of Default: Any one of the conditions or circumstances enumerated
in Section 6.1.
▇▇▇▇▇▇ ▇▇▇: ▇▇▇▇▇▇ ▇▇▇ (formerly known as the Federal National Mortgage
Association) and any successor thereto.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
Fidelity Bond: A fidelity bond to be obtained by the Servicer pursuant
to Section 2.11.
Final Recovery Determination: With respect to any defaulted Mortgage
Loan or any REO Property, a determination made by the Servicer that all related
Condemnation Proceeds, Insurance Proceeds, Liquidation Proceeds and other
payments or recoveries that the Servicer, in its reasonable good faith judgment,
expects to be finally recoverable have been so recovered. The Servicer shall
maintain records, prepared by a servicing officer of the Servicer, of each Final
Recovery Determination.
GAAP: Generally Accepted Accounting Principles, as promulgated by the
Financial Accounting Standards Board from time to time.
Indemnified Party: As defined in Section 8.1(d).
Initial Closing Date: September 25, 2003.
Insurance Proceeds: Proceeds of any Primary Mortgage Insurance Policy,
title policy, hazard insurance policy or any other insurance policy covering a
Mortgage Loan or the related Mortgaged Property, including any amounts required
to be deposited in the Account pursuant to Section 2.10, to the extent such
proceeds are not to be applied to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with Applicable
Requirements.
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Late Collections: With respect to any Mortgage Loan, all amounts
received during any Due Period, whether as late payments of Monthly Payments, or
as Insurance Proceeds, Liquidation Proceeds, Condemnation Proceeds or otherwise,
which amounts represent late payments or collections of Monthly Payments due but
delinquent for a previous Due Period and not previously recovered.
Liquidation Proceeds: Cash received in connection with (i) the
liquidation of a defaulted Mortgage Loan (whether through the sale or assignment
of the Mortgage Loan, trustee's sale, foreclosure sale or otherwise) or (ii) the
sale of the Mortgaged Property, if the Mortgaged Property is acquired in
satisfaction of the Mortgage.
Master Servicer: As defined in Section 8.2(a).
Master Servicing Agreement: As defined in Section 8.2(a).
Monthly Advance: The aggregate of the advances made by the Servicer on
any Monthly Remittance Date pursuant to Section 2.16(a).
Monthly Remittance Date: The eighteenth (18th) day of each month (or if
such day is not a Business Day, the next Business Day) commencing in the month
following the end of the calendar month in which the initial Cut-off Date
occurs. A Determination Date is related to a Monthly Remittance Date if such
Determination Date and such Monthly Remittance Date occur in the same calendar
month.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or any successor thereto.
Mortgage Interest Rate: With respect to each Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan.
Net Rate: With respect to each Mortgage Loan, the annual rate at which
interest thereon shall be remitted to the Owner (in each case computed on the
basis of a 360-day year consisting of twelve 30-day months), which annual rate
shall be equal to the Mortgage Interest Rate less the Servicing Fee Rate.
Nonrecoverable Advance: Any portion of any Servicing Advance or Monthly
Advance previously made or proposed to be made in respect of a Mortgage Loan by
the Servicer hereunder that the Servicer determines in its good faith judgment
will not be ultimately recoverable from Late Collections.
Officer's Certificate: A certificate signed by a Vice President or
other authorized officer and delivered to the Owner as required by this
Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Servicer, reasonably acceptable to the Owner.
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OTS: The Office of Thrift Supervision, or any successor thereto.
Owner: ▇▇▇▇▇▇ Brothers Bank, FSB, a federal savings bank, and any
successor owner of any of the Mortgage Loans.
Pass-Through Transfer: The sale or transfer of some or all of the
Mortgage Loans by the Owner to a trust to be formed as part of a publicly issued
or privately placed mortgage backed securities transaction.
Permitted Investments: Any one or more of the following obligations or
securities:
(i) direct obligations of, or obligations fully guaranteed as
to principal and interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and credit of
the United States;
(ii) repurchase obligations with respect to any security
described in clause (i) above, provided that the unsecured long-term obligations
of the party agreeing to repurchase such obligations are at the time rated by
S&P or Moody's in one of its two highest rating categories;
(iii) federal funds, certificates of deposit, time deposits,
and bankers' acceptances of any bank or trust company incorporated under the
laws of the United States or any state, provided that the long-term debt
obligations of such bank or trust company (or, in the case of the principal bank
in a bank holding company system, the long-term debt obligations of the bank
holding company) at the date of acquisition thereof have been rated by S&P or
Moody's in one of its two highest rating categories; and
(iv) commercial paper of any corporation incorporated under
the laws of the United States or any state thereof which on the date of
acquisition has been rated by S&P or Moody's in its highest short-term rating
category.
Portfolio Loans: As defined in Section 8.3.
Prepayment Charge: With respect to any Mortgage Loan, the prepayment
premium or charge, if any, required under the terms of the related Mortgage Note
to be paid in connection with a Principal Prepayment in Full or a Principal
Prepayment in Part, to the extent permitted by applicable law.
Primary Mortgage Insurance Policy: With respect to each Mortgage Loan,
the policy of primary mortgage insurance (including all endorsements thereto)
issued with respect to such Mortgage Loan, if any, or any replacement policy.
Prime: As of any date of determination, the annual interest rate,
adjusted daily, published from time to time in The Wall Street Journal (Western
Edition) as the "PRIME RATE" in the "MONEY RATES" section. In the event that
more than one such rate is specified, "Prime" shall mean the greatest of such
rates.
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Principal Prepayment: Any payment or other recovery of principal in
full ( a "Principal Prepayment in Full") or in part (a "Principal Prepayment in
Part") of the then-outstanding principal on a Mortgage Loan (other than
Condemnation Proceeds, Insurance Proceeds, and Liquidation Proceeds) that is
received in advance of its scheduled Due Date and not accompanied by an amount
of interest representing scheduled interest due on any date or dates in any
month or months subsequent to the month of prepayment. The term "Principal
Prepayment" shall not refer to any related Prepayment Charge.
Purchase Agreement: That certain Mortgage Loan Purchase and Sale
Agreement of even date herewith among Washington Mutual Bank, FA, Washington
Mutual Bank fsb and Washington Mutual Bank as the sellers and the Owner as the
purchaser.
Qualified Depository: Any of the following: (i) a depository, the
long-term unsecured debt obligations of which are rated by Moody's or S&P (or a
comparable rating agency) in one of its two highest rating categories, (ii) the
corporate trust department of a national bank, (iii) a depository that fully
insures the Account and the Escrow Account with insurance provided by the FDIC,
or (iv) the Servicer.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to
REMICs, which appear at Section 860G of Subchapter M of Chapter 1 of the Code
and related provisions, and regulations promulgated thereunder, as in effect
from time to time.
REO Management Fee: With respect to each REO Property, an amount equal
to $1,500.
REO Property: A Mortgaged Property acquired in foreclosure or by deed
in lieu of foreclosure, as described in Section 2.12.
SAIF: The Savings Association Insurance Fund.
S&P: Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., or its successor in interest.
Servicer: Washington Mutual Bank, FA, a savings association organized
under the laws of the United States, or its permitted successor in interest, or
any successor to the Servicer under this Agreement appointed as herein provided.
Servicer's Information: As defined in Section 8.1(d).
Servicing Advances: All customary, reasonable, and necessary "out of
pocket" costs and expenses, including reasonable attorneys' fees and
disbursements, incurred by the Servicer in the performance of its servicing
obligations hereunder, including, without limitation, costs related to (i) the
preservation, restoration, and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the Mortgaged Property if the Mortgaged Property
is acquired in satisfaction of the Mortgage and (iv) Servicer's compliance with
the obligations set forth in Sections 2.2, 2.3, 2.8, 2.10, 2.12 and 2.15 of this
Agreement.
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Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee payable to the Servicer pursuant to Section 4.3 as compensation for
servicing and administering such Mortgage Loan. Such fee shall, for a period of
one full month, be equal to one-twelfth of the product of (i) the related
Servicing Fee Rate, multiplied by (ii) the outstanding Unpaid Principal Balance
of such Mortgage Loan. Such fee shall be payable monthly and shall be computed
on the basis of the same principal amount and period respecting which any
related interest payment on such Mortgage Loan is computed.
Transferred Loans: As defined in Section 8.3.
USAP: As defined in Section 4.5.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans by the Owner to a third party, which sale or transfer is not a
Pass-Through Transfer.
ARTICLE 2.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 2.1. Identification of Mortgage Loans; Servicer to Act as
Servicer
(a) From each Closing Date, the Servicer, as independent
contract servicer, shall commence servicing and administering the Mortgage Loans
purchased by the Owner on such Closing Date. Such servicing shall be in
accordance with this Agreement and Acceptable Servicing Procedures, and, except
as otherwise expressly provided in this Agreement, the Servicer shall have full
power and authority, acting alone, to do any and all things in connection with
such servicing and administration that the Servicer may deem necessary or
desirable and consistent with the terms of this Agreement, including, without
limitation, all action permitted or required to be taken under any related
Primary Mortgage Insurance Policy. In servicing and administering the Mortgage
Loans, the Servicer shall employ Acceptable Servicing Procedures, except that
the Servicer shall employ the procedures set forth in this Agreement whenever
the Acceptable Servicing Procedures conflict with the requirements under this
Agreement (provided that in no event shall this Section 2.1 be interpreted to
permit the Servicer to act in conflict with any applicable federal, state and
local laws, ordinances, rules or regulations). The Servicer shall at all times
act in the best interests of the Owner in performing hereunder.
(b) The documents comprising the Collateral File and the
Credit File with respect to each Mortgage Loan serviced hereunder and that are
delivered to the Servicer, together with all other documents with respect to
each such Mortgage Loan that are prepared by or which come into the possession
of the Servicer, shall immediately vest in the Owner and shall be held and
maintained in trust by the Servicer at the will of the Owner and in a custodial
capacity only for the sole purpose of servicing or supervising the servicing of
the related Mortgage Loans. The documents comprising each Collateral File and
each Credit File and all related documents that come into the possession of the
Servicer and are so held by the Servicer shall be appropriately marked to
clearly reflect the ownership interest of the Owner in such Collateral File and
Credit File and related documents. The Servicer shall release its custody of any
such documents only in accordance with written instructions from the Owner,
unless such release is required as incidental to the Servicer's servicing of the
Mortgage Loans or is in connection with a repurchase or substitution of any
Mortgage Loan pursuant to Section 3.3 of the Purchase Agreement.
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(c) Consistent with the terms of this Agreement, the Servicer
may waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if, in the Servicer's reasonable and prudent
determination, such waiver, modification, variation, postponement or indulgence
is in the best interests of the Owner; provided, however, that the Servicer
shall not permit any modification with respect to any Mortgage Loan that would
change the Mortgage Interest Rate, defer or forgive the payment of any principal
or interest payments, reduce the outstanding principal amount (except for actual
payments of principal) or extend the related Maturity Date (unless the Mortgagor
is in default with respect to the Mortgage Loan or such default is, in the
judgment of the Servicer, imminent and the Servicer has obtained the prior
written consent of the Owner). Without limiting the generality of the foregoing,
the Servicer is hereby authorized and empowered to execute and deliver on behalf
of itself and the Owner all instruments of satisfaction, cancellation, full
release, or partial release or discharge, and all other comparable instruments
with respect to the Mortgage Loans and the Mortgaged Properties. If reasonably
required by the Servicer, the Owner shall furnish the Servicer with any powers
of attorney and other documents necessary or appropriate to enable the Servicer
to carry out its servicing and administrative duties under this Agreement.
(d) As to each ARM Loan, the Servicer shall make periodic
Mortgage Interest Rate and Monthly Payment adjustments, as applicable, and
execute and deliver all appropriate notices regarding the same, in strict
compliance with Applicable Requirements. The Servicer shall establish procedures
to monitor the Index in order to ensure that it uses the appropriate value for
the Index in determining an interest rate change. If the Servicer fails to make
a timely and correct Mortgage Interest Rate adjustment or Monthly Payment
adjustment, the Servicer shall use its own funds to satisfy any shortage in the
Mortgagor's Monthly Payment for so long as such shortage continues. In the event
the Index, as specified in the related Mortgage Note, becomes unavailable for
any reason, the Servicer shall select an alternative index based on comparable
information, in accordance with the terms of the Mortgage Note, and such
alternative index shall thereafter be the Index for such Mortgage Loan. In such
event, the Servicer shall also determine a new Gross Margin. The new Gross
Margin shall be the difference between (x) the average of the original Index for
the most recent three-year period that ends on the last date the original Index
was available plus the Gross Margin on the last date the original Index was
available and (y) the average of the new Index for the most recent three-year
period that ends on that date (or if not available for such three-year period,
for such time as it is available), rounded as provided in the Mortgage Note.
(e) In connection with the servicing and administration of the
Mortgage Loans and consistent with Acceptable Servicing Procedures, this
Agreement and the Purchase Agreement, the Servicer shall have full power and
authority to execute and deliver or cause to be executed and delivered on behalf
of the Owner such instruments of assignment or other comparable instruments as
the Servicer shall deem appropriate in order to register any Mortgage Loan on
the MERS(R) System or cause the removal of any Mortgage Loan from registration
on the MERS(R) System.
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Section 2.2. Liquidation of Mortgage Loans
(a) In the event that any payment due under any Mortgage Loan is not
paid when the same becomes due and payable, or in the event the Mortgagor fails
to perform any other covenant or obligation under the Mortgage Loan and such
failure continues beyond any applicable grace period, the Servicer shall proceed
diligently to collect all payments due and shall take such action, including
commencing foreclosure, as it shall reasonably deem to be in the best interests
of the Owner.
(b) Notwithstanding the foregoing provisions of this Section 2.2, with
respect to any Mortgage Loan as to which the Servicer has received actual notice
of, or has actual knowledge of, the presence of any toxic or hazardous substance
on the related Mortgaged Property, the Servicer shall neither (i) obtain title
to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, (ii) acquire possession of, nor (iii) take any other action with
respect to, such Mortgaged Property if, as a result of any such action, the
Owner would be considered to hold title to, to be a mortgagee-in-possession of,
or to be an owner or operator of such Mortgaged Property within the meaning of
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, or any comparable law, unless the Servicer
has either (x) obtained the written consent of the Owner, or (y) previously
determined, based on its reasonable judgment and a prudent report prepared by a
Person who regularly conducts environmental audits using customary industry
standards, that:
(i) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic interest of
the Owner to take such actions as are necessary to bring the Mortgaged Property
into compliance therewith; and
(ii) there are no circumstances present at such Mortgaged
Property relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or petroleum-based materials
for which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or local law or
regulation, or that if any such materials are present for which such action
could be required, that it would be in the best economic interest of the Owner
to take such actions with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this Section 2.2(b)
shall be advanced by the Servicer as a Servicing Advance, subject to the
Servicer's right to be reimbursed therefor from the Account and the Servicer's
right to make a judgment about whether any such advance would be a
Nonrecoverable Advance.
(c) If the Servicer has (i) determined that it is in the best economic
interest of the Owner to take such actions as are necessary to bring any such
Mortgaged Property into compliance with applicable environmental laws, or to
take such action with respect to the containment, clean-up or remediation of
hazardous substances, hazardous materials, hazardous wastes, or petroleum-based
materials affecting any such Mortgaged Property, or (ii) obtained the written
consent of the Owner, in each case as described above, then the Servicer shall
take such action as it deems to be in the best economic interest of the Owner
(or as otherwise directed by the Owner). The cost of any such compliance,
containment, clean-up or remediation shall be advanced by the Servicer as a
Servicing Advance, subject to the Servicer's right to be reimbursed therefor
from the Account and the Servicer's right to make a judgment about whether any
such advance would be a Nonrecoverable Advance.
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Section 2.3. Collection of Mortgage Loan Payments
Continuously from the related Closing Date until the principal and
interest on all of the Mortgage Loans are paid in full, the Servicer shall
proceed diligently to collect all payments due under each of the Mortgage Loans
when the same shall become due and payable. With respect to those Mortgage
Loans, if any, as to which the Servicer collects Escrow Payments, the Servicer
shall ascertain or estimate annual ground rents, taxes, assessments, water
rates, sewer rents, municipal charges, fire and hazard insurance premiums,
condominium charges, Primary Mortgage Insurance Policy premiums and all other
charges that, as provided in any Mortgage, shall become due and payable, to the
end that the Escrow Payments payable by the Mortgagors shall be sufficient to
pay such charges as and when they become due and payable. The Servicer shall not
be required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Mortgage Note, Primary Mortgage Insurance
Policy or otherwise or against any public or governmental authority with respect
to a taking or condemnation) if in the Servicer's reasonable judgment the
Servicer believes that the costs and expenses relating thereto would be
Nonrecoverable Advances. The Servicer shall be entitled to be reimbursed from
the Account for any costs, expenses or other liabilities incurred by the
Servicer in connection with any such litigation solely from the proceeds of the
related Mortgage Loan. The Servicer's right to such reimbursement shall be prior
to the Owner's right to such proceeds.
Section 2.4. Establishment of Account; Deposits in Account
(a) The Servicer shall establish and maintain one or more
Accounts (collectively, the "Account") entitled "Washington Mutual Bank, FA, in
trust for ▇▇▇▇▇▇ Brothers Bank, FSB, as Owner, and any successor Owner." The
Account shall be an Eligible Account, established with an institution that is a
Qualified Depository and maintained as a segregated account separate and apart
from any of the Servicer's own funds and general assets. The existence of any
such Account shall be evidenced by (i) a certification substantially in the form
of Exhibit B attached hereto, in the case of an account established with the
Servicer, or (ii) a letter agreement substantially in the form of Exhibit C
attached hereto in the case of an account held by an institution other than the
Servicer. In either case, the Servicer shall deliver a copy of such
certification or letter agreement to the Owner on or prior to the Initial
Closing Date.
(b) The Servicer shall, upon receipt (and in all events by not
later than the end of the second Business Day following receipt thereof),
deposit in the Account and retain therein, the following payments and
collections received or made by the Servicer subsequent to the related Cut-off
Date:
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(i) the principal portion of all Monthly Payments on the
Mortgage Loans;
(ii) the interest portion of all Monthly Payments on the
Mortgage Loans less the Servicing Fee;
(iii) all Principal Prepayments in Part and Principal
Prepayments in Full;
(iv) all Liquidation Proceeds;
(v) all Insurance Proceeds, other than Insurance Proceeds
to be held in the Escrow Account and applied to the restoration and repair of
the Mortgaged Property or released to the Mortgagor in accordance with
Applicable Requirements;
(vi) all Condemnation Proceeds which are not released to
the Mortgagor in accordance with the Owner's written consent and Applicable
Requirements;
(vii) any amount required to be deposited in the Account
pursuant to Sections 2.4(d), 2.10, 2.12(c), 2.12(e) or 4.2(b);
(viii) any amounts payable in connection with the
repurchase of any Mortgage Loan pursuant to Section 3.3 of the Purchase
Agreement and all amounts required to be deposited in connection with the
substitution of any Qualified Substitute Mortgage Loan pursuant to the Purchase
Agreement; and
(ix) with respect to each Principal Prepayment in Full,
an amount (to be paid by the Servicer out of its own funds without reimbursement
therefor) which, when added to all amounts allocable to interest received in
connection with such Principal Prepayment in Full, equals one month's interest
on the amount of principal so prepaid at the Net Rate, provided, however, that
the aggregate of deposits made by the Servicer pursuant to this clause (ix) in
respect of any Monthly Remittance Date shall not exceed the Compensating
Interest Cap.
(c) The Servicer shall, no later than 24 hours prior to the
next Monthly Remittance Date, deposit in the Account all Monthly Advances.
(d) The Servicer may cause the funds on deposit from time to
time in the Account to be invested in Permitted Investments, which Permitted
Investments shall mature not later than the Business Day immediately preceding
the next Monthly Remittance Date following the date such funds are invested. All
Permitted Investments shall be made in the name of the Servicer or its nominee.
All income and gain realized from any Permitted Investment shall be for the
benefit of the Servicer and shall be subject to its withdrawal or order from
time to time. The Servicer shall indemnify the Owner for any loss incurred in
respect of any Permitted Investment by such Servicer, and the amount of such
loss shall be deposited in the Account by the Servicer out if its own funds,
without reimbursement therefor, no later than 24 hours prior to the next Monthly
Remittance Date following the date of such loss.
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Section 2.5. Permitted Withdrawals from the Account
The Servicer may, from time to time, withdraw funds from the Account
for the following purposes:
(i) to make payments and distributions to the Owner in
the amounts and in the manner provided for in Section 3.1, and to pay itself any
unpaid Servicing Fees, unpaid REO Management Fees and other servicing
compensation in accordance with Section 4.3;
(ii) to reimburse itself for any unreimbursed Servicing
Advances or Monthly Advances made with respect to any Mortgage Loan; provided
that the Servicer's right to reimburse itself pursuant to this clause (ii) is
limited to any amounts collected or received by the Servicer with respect to
such Mortgage Loan;
(iii) to pay to itself any interest earned on funds
deposited in the Account;
(iv) to make any payment or reimburse itself for any
amount pursuant to Sections 2.12(c), 2.12(e), 5.1(a) or 5.3;
(v) to reimburse itself for any Monthly Advance or
Servicing Advance previously made that it has determined to be a Nonrecoverable
Advance;
(vi) if there shall be amounts deposited in error or
there shall be amounts deposited in the Account not required to be deposited
therein, including the Servicing Fee and other servicing compensation, to
withdraw such amount from the Account any provision herein to the contrary
notwithstanding;
(vii) to transfer funds to another Qualified Depository
in accordance with Section 2.9; and
(viii) to clear and terminate the Account upon the
termination of this Agreement in accordance with Article 7.
Section 2.6. Establishment of Escrow Account; Deposits in Escrow
Account; Escrow Analysis
(a) The Servicer shall segregate and hold separate and apart
from any of its own funds and general assets all Escrow Payments collected and
received pursuant to the Mortgage Loans and shall establish and maintain one or
more Escrow Accounts (collectively, the "Escrow Account"), in the form of time
deposit or demand accounts, which may be interest bearing, entitled "Washington
Mutual Bank, FA, in trust for ▇▇▇▇▇▇ Brothers Bank, FSB, as Owner, and any
successor Owner, and certain Mortgagors." The Escrow Account shall be an
Eligible Account established with a Qualified Depository. The creation of any
Escrow Account shall be evidenced by (i) a certification substantially in the
form of Exhibit D attached hereto, in the case of an account established with
the Servicer, or (ii) a letter agreement substantially in the form of Exhibit E
attached hereto, in the case of an account held by an institution other than the
Servicer. In either case, the Servicer shall deliver a copy of such
certification or letter agreement to the Owner on or prior to the Initial
Closing Date.
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(b) The Servicer shall, upon receipt (and in all events by not
later than the end of the second Business Day following receipt thereof, or
sooner if required by applicable law), deposit in the Escrow Account and retain
therein: (i) all Escrow Payments collected on account of the Mortgage Loans for
the purpose of effecting timely payment of escrow items as required under the
terms of this Agreement and (ii) all amounts representing proceeds of any hazard
insurance policy that are to be applied to the restoration or repair of the
related Mortgaged Property. The Servicer shall make withdrawals from the Escrow
Account only in accordance with Section 2.7. The Servicer shall be entitled to
retain any interest earned on funds deposited in the Escrow Account other than
interest on escrowed funds required by law to be paid to the Mortgagor and, to
the extent required by law, the Servicer shall pay interest on escrowed funds to
the Mortgagor without right of reimbursement therefor notwithstanding that the
Escrow Account maintained by the Servicer may not bear interest or that the
interest earned on such escrowed funds is insufficient for such purpose.
Section 2.7. Permitted Withdrawals from the Escrow Account
Withdrawals from the Escrow Account maintained by the Servicer may be
made by the Servicer only (i) to effect timely payments of ground rents, taxes,
assessments, sewer rents, municipal charges, water rates, insurance premiums,
condominium charges, fire and hazard insurance premiums or other items
constituting Escrow Payments for the related Mortgage, (ii) to reimburse the
Servicer for any Servicing Advance made by the Servicer pursuant to Sections 2.8
and 2.10 with respect to a related Mortgage Loan, (iii) to refund to any
Mortgagor any funds found to be in excess of the amounts required under the
terms of the related Mortgage Loan, (iv) for transfer to the Account in
accordance with the terms of this Agreement, (v) for restoration or repair of a
Mortgaged Property, provided the provisions of Section 2.13 have been complied
with, (vi) to pay to the Mortgagor, to the extent required by Applicable
Requirements, interest on the funds deposited in the Escrow Account, (vii) to
pay to itself any interest earned on funds deposited in the Escrow Account (and
not required to be paid to the Mortgagor), (viii) to remove funds inadvertently
placed in the Escrow Account by the Servicer, or (ix) to clear and terminate the
Escrow Account upon the termination of this Agreement, in accordance with
Article 7.
Section 2.8. Payment of Taxes, Insurance and Other Charges
With respect to each Mortgage Loan, the Servicer shall maintain
accurate records reflecting the status of property taxes, assessments and other
charges that are or may become a lien upon the related Mortgaged Property, the
status of Primary Mortgage Insurance premiums, if any, and the status of fire
and hazard insurance coverage and flood insurance, all as required hereunder. If
a Mortgage Loan requires Escrow Payments, the Servicer shall obtain, from time
to time, all bills for the payment of such charges (including renewal premiums)
and shall effect payment thereof prior to the applicable penalty or termination
date in a manner consistent with Acceptable Servicing Procedures, employing for
such purpose deposits of the Mortgagor in the Escrow Account that shall have
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been estimated and accumulated by the Servicer in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage. If a Mortgage Loan does
not require Escrow Payments, or if there are insufficient funds in the related
Escrow Account, the Servicer shall cause all such bills to be paid on a timely
basis and shall from its own funds (if necessary) make a Servicing Advance for
timely payment of all such bills. The Servicer shall monitor the payment status
of such charges (including renewal premiums) by the related Mortgagor. The
Servicer shall effect payment of such charges in a manner consistent with
Acceptable Servicing Procedures and, in all events, prior to the foreclosure of
any lien against the Mortgaged Property resulting from non-payment of such
property taxes, assessments and other charges and prior to the termination of
any such insurance coverage. Notwithstanding anything herein to the contrary, if
a tax lien is imposed on the Mortgaged Property and the taxing authority
forecloses on such Mortgaged Property, the Servicer shall indemnify the Owner in
accordance with the provisions of Section 5.1 of this Agreement.
Section 2.9. Transfer of Accounts
The Servicer may, from time to time, transfer the Account or the Escrow
Account to a different Qualified Depository. The Servicer shall notify the Owner
of any such transfer within ten (10) Business Days of transfer.
Section 2.10. Maintenance of Hazard Insurance
(a) The Servicer shall cause to be maintained for each Mortgage Loan
serviced by it fire and hazard insurance with extended coverage customary in the
area where the related Mortgaged Property is located, in an amount which is at
least equal to the lesser of (i) 100% of the replacement value of the
improvements securing the Mortgage Loan, or (ii) the Unpaid Principal Balance of
the Mortgage Loan (so long as it equals 80% of the insurable value of the
improvements); provided that in any case such amount shall be sufficient to
prevent the Mortgagor and/or Mortgagee from becoming a co-insurer. If the
Mortgaged Property is in an area that, at the time of origination of the related
Mortgage Loan, is identified on a flood hazard boundary map or flood insurance
rate map issued by the Federal Emergency Management Agency as having special
flood hazards (and such flood insurance was then available), the Servicer shall
cause to be maintained a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration with a generally
acceptable insurance carrier, if such insurance is available. Such flood
insurance shall be in an amount representing coverage not less than the least of
(i) the Unpaid Principal Balance of the Mortgage Loan, (ii) the full insurable
value of the improvements securing such Mortgage Loan and (iii) the maximum
amount of insurance available under the National Flood Insurance Act of 1968 and
the Flood Disaster Protection Act of 1973, each as amended. The Servicer shall
also maintain on REO Property (x) fire and hazard insurance with extended
coverage in an amount that is at least equal to the maximum insurable value of
the improvements that are a part of such property, (y) liability insurance and
(z) to the extent required and available under the National Flood Insurance Act
of 1968 and the Flood Disaster Protection Act of 1973, each as amended, flood
insurance in an amount as provided above. Any amounts collected by the Servicer
under any such policies shall be paid over or applied by the Servicer in
accordance with Applicable Requirements whether (i) for the restoration or
repair of the Mortgaged Property, subject to the related Mortgage, (ii) for
release to the Mortgagor, or (iii) for application in reduction of the Mortgage
Loan, in which event such amounts shall be deposited in the Account, as provided
in Section 2.4. It is understood and agreed that no earthquake or other
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additional insurance need be maintained by the Servicer on any Mortgage Loan or
property acquired in respect of a Mortgage Loan, other than as required under
applicable laws and regulations as shall at any time be in force. All policies
required hereunder shall be endorsed with standard mortgagee clauses with loss
payable to the Servicer and shall provide for at least 30 days prior written
notice to the Servicer of any cancellation, reduction in amount, or material
change in coverage. The Servicer shall not interfere with the Mortgagor's
freedom of choice in selecting either the Mortgagor's insurance carrier or agent
upon any policy renewal; provided, however, that upon any such policy renewal,
the Servicer shall accept such insurance policies only from insurance companies
that (A) have a rating of B:III or better in Best's Key Rating Guide or a
financial performance index rating of 6 or better in Best's Insurance Reports
and (B) are licensed to do business in the jurisdiction in which the related
Mortgaged Property is located.
If a Mortgage is secured by a unit in a condominium project, the
Servicer shall verify that the coverage required of the owner's association,
including hazard, flood, liability, and fidelity coverage, is being maintained
in accordance with the current ▇▇▇▇▇▇ ▇▇▇ requirements, and secure from the
owner's association its agreement to notify the Servicer promptly of any change
in the insurance coverage or of any condemnation or casualty loss that may have
a material adverse effect on the value of the Mortgaged Property as security.
(b) If the Servicer, as servicer for the benefit of the Owner,
shall obtain and maintain a blanket policy that would meet the requirements of
▇▇▇▇▇▇ Mae if ▇▇▇▇▇▇ ▇▇▇ were the purchaser of the Mortgage Loans, insuring
against loss to the Owner as mortgagee from damage to any or all of the
Mortgaged Properties, then, to the extent such blanket policy (i) provides
coverage, without coinsurance, in an amount equal to the aggregate outstanding
Unpaid Principal Balance of the Mortgage Loans, (ii) otherwise complies with the
requirements of Section 2.10(a) and (iii) contains a deductible not greater than
$10,000, the Servicer shall be deemed conclusively to have satisfied its
obligations under Section 2.10(a); provided, however, that if there shall have
been one or more of such losses the Servicer shall deposit in the Account, as
provided in Section 2.4, out of the Servicer's own funds and without
reimbursement therefor, the difference, if any, between the amount that would
have been payable under a policy complying with Section 2.10(a) and the amount
paid under the blanket policy permitted under this Section 2.10(b). At the
request of the Owner, the Servicer shall cause to be delivered to the Owner a
certified true copy of such policy and a statement from the insurer thereunder
that such policy shall not be terminated or materially modified without 30 days'
prior written notice to the Owner.
Section 2.11. Fidelity Bond; Errors and Omissions Insurance
The Servicer shall maintain, at its own expense, with companies that
meet the requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, a blanket fidelity bond and
an errors and omissions insurance policy, with broad coverage on all officers,
employees, agents and other persons acting in any capacity that would require
such persons to handle funds, money, documents or papers relating to the
Mortgage Loans (collectively, the "Servicer Employees"). Any such fidelity bond
and errors and omissions insurance shall be in the form of the Mortgage Banker's
Blanket Bond and shall protect and insure the Servicer against losses relating
to forgery, theft, embezzlement, fraud, errors and omissions, failure to
maintain any insurance policies required under this Agreement and negligent acts
of Servicer Employees. Such fidelity bond shall also protect and insure the
Servicer against losses relating to the release or satisfaction of a Mortgage
without having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 2.11 requiring such fidelity bond and errors and
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omissions insurance shall diminish or relieve the Servicer from its duties and
obligations as set forth in this Agreement. The terms of any such fidelity bond
and errors and omissions insurance policy shall be at least equal to the
corresponding amounts required by ▇▇▇▇▇▇ Mae in the ▇▇▇▇▇▇ ▇▇▇ MBS Selling and
Servicing Guide or by ▇▇▇▇▇▇▇ Mac in the ▇▇▇▇▇▇▇ Mac Seller's and Servicer's
Guide, as amended or restated from time to time. At the request of the Owner,
the Servicer shall cause to be delivered to the Owner a certified true copy of
such fidelity bond and errors and omissions insurance policy and a statement
from the surety and the insurer that such fidelity bond and errors and omissions
insurance policy shall not be terminated or materially modified without 30 days'
prior written notice to the Owner.
Section 2.12. Title, Management and Disposition of Real Estate Owned
(a) If title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure ("REO Property"), the deed or
certificate of sale shall be taken in the name of the Owner, or in the name of
such Person or Persons designated by the Owner; provided, however, that (i) the
Owner shall not designate the Servicer as holder without the Servicer's prior
written consent and (ii) such designated Person or Persons shall acknowledge in
writing that such title is to be held as nominee for the Owner. The Servicer
shall provide written notice to the Owner after any REO Property is acquired in
foreclosure or by deed in lieu of foreclosure.
(b) The Servicer, shall manage, conserve, protect, and operate
each REO Property solely for the purpose of its prompt disposition and sale. The
Servicer shall either itself, or through an agent selected by the Servicer,
manage, conserve, protect and operate the REO Property in accordance with
Acceptable Servicing Procedures. The Servicer shall attempt to sell the same
(and may temporarily rent the same) on such terms and conditions as the Servicer
deems to be in the best interests of the Owner. If a REMIC election has been
made with respect to the arrangement under which the related Mortgage Loan is
held and the Servicer has received written notice from the Owner that a REMIC
election has been made with respect to such Mortgage Loan, the Servicer shall
use its best efforts to dispose of the REO Property as soon as practicable and
shall sell such REO Property, in any event, within three (3) years after title
has been taken to such REO Property (unless the Servicer determines, and gives
the Owner appropriate notice that a longer period is necessary for the orderly
liquidation of such REO Property).
(c) The Servicer shall collect all revenues arising from the
operation of REO Property. The Servicer shall deposit, or cause to be deposited,
all such revenues in the Account in accordance with Section 2.4. The Servicer
may use all such revenues and, if any thereof have been deposited in the
Account, withdraw such revenues therefrom as is necessary for the proper
operation, management and maintenance of any REO Property, including, but not
limited to, the cost of maintaining any hazard insurance pursuant to Section
2.10 and the fees of any managing agent acting on behalf of the Servicer. The
Servicer shall use reasonable efforts to dispose of the REO Property at such
price and upon the terms and conditions as the Servicer deems to be in the best
interest of the Owner.
(d) The Servicer shall also maintain on each REO Property fire
and hazard insurance with extended coverage, liability insurance, and flood
insurance in accordance with the provisions of Section 2.10.
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(e) The proceeds of sale of an REO Property shall be deposited
in the Account in accordance with Section 2.4. The Servicer shall apply the sale
proceeds of any REO Property (i) first to pay the expenses of such sale, (ii)
second to reimburse itself for any related unpaid Servicing Fees, unpaid REO
Management Fees and unreimbursed Servicing Advances and Monthly Advances and
(iii) the balance to be distributed to the Owner. If the sale proceeds have been
deposited in the Account, the Servicer may withdraw from the Account the amounts
necessary to make such payments and reimbursements. The Servicer shall undertake
to sell the REO Property at such price and upon the terms and conditions as the
Servicer deems to be in the best interest of the Owner.
(f) Upon request, with respect to any REO Property, the
Servicer shall furnish to the Owner a statement covering the Servicer's efforts
in connection with the sale of that REO Property and any rental of the REO
Property incidental to the sale thereof for the previous month (together with an
operating statement for such REO Property). Such statement shall be accompanied
by such other information as the Owner shall reasonably request. The Servicer
shall maintain separate accounting for each REO Property.
(g) The Owner hereby constitutes and appoints the Servicer as
its true and lawful attorney-in-fact, with full power and authority to sign,
execute, acknowledge, deliver, file for record and record any instrument on its
behalf and to perform such other act or acts as may be customarily and
reasonably necessary and appropriate to effectuate the transactions contemplated
by this Section 2.12, in each case as fully as the Owner might or could do. The
Owner ratifies and confirms each action that the Servicer, as such
attorney-in-fact, shall lawfully take or cause to be taken by authority hereof.
Third parties without actual notice may rely upon the exercise of the power
granted under this power of attorney, and may be satisfied that this power of
attorney shall continue in full force and effect and has not been revoked unless
this Agreement is terminated as provided herein. If requested by the Servicer,
the Owner shall furnish the Servicer with any instrument or document necessary
or appropriate to evidence or confirm the power of attorney granted in this
Section 2.12(g), including one or more separate instruments or documents in
recordable form for recordation in any jurisdiction in which any Mortgaged
Property is located.
(h) Notwithstanding anything to the contrary contained in this
Agreement, the Owner may, at the Owner's sole option, terminate the Servicer as
servicer of any such REO Property without payment of any termination fee,
provided that the Servicer shall on the date said termination takes effect be
reimbursed for any unreimbursed advances of the Servicer's funds made pursuant
to Section 2.16 and any unreimbursed Servicing Advances and Servicing Fees in
each case relating to the Mortgage Loan underlying such REO Property. In the
event of any such termination, the provisions of Section 9.1 shall apply to said
termination and the transfer of servicing responsibilities with respect to such
REO Property to the Owner or its designees.
Section 2.13. Application of Proceeds of Insurance to Repair or
Restoration
The Servicer shall collect the proceeds from all policies of insurance
required to be maintained pursuant to Section 2.10 with respect to all losses
that may occur. The Servicer may remit such proceeds to the Mortgagor for the
restoration or repair of the related property and shall otherwise take such
actions in connection with such restoration and repair in a manner consistent
with Acceptable Servicing Procedures.
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Section 2.14. Inspections
The Servicer shall conduct inspections of the Mortgaged Properties at
such times and in a manner consistent with Acceptable Servicing Procedures and
shall maintain a written report of all such inspections. If any Mortgage Loan is
more than sixty (60) days delinquent, the Servicer shall promptly inspect the
Mortgaged Property.
Section 2.15. Maintenance of Primary Mortgage Insurance Policies;
Collections Thereunder
The parties acknowledge that, as of any Closing Date, not all Mortgage
Loans purchased on such Closing Date are covered by Primary Mortgage Insurance.
In the event that any Mortgage Loans are covered by a Primary Mortgage Insurance
Policy on the related Closing Date or subsequently become covered by a Primary
Mortgage Insurance Policy, the provisions set forth below shall apply.
(a) The Servicer shall maintain in full force and effect any
Primary Mortgage Insurance Policy covering a Mortgage Loan serviced by the
Servicer. The Servicer shall cause the premium for any such Primary Mortgage
Insurance Policy to be paid on a timely basis and shall from its own funds, if
necessary, make a Servicing Advance to pay the premium on a timely basis. The
Servicer shall not cancel or refuse to renew any such Primary Mortgage Insurance
Policy in effect on the related Closing Date, unless cancellation or non-renewal
is required by applicable law or regulation. The Servicer shall not take any
action or fail to take any action which would result in non-coverage under any
applicable Primary Mortgage Insurance Policy of any loss which, but for the
actions of the Servicer, would have been covered thereunder. In connection with
any assumption or substitution agreement entered into or to be entered into
pursuant to Section 4.1, the Servicer shall promptly notify the insurer under
the related Primary Mortgage Insurance Policy, if any, of such assumption or
substitution of liability in accordance with the terms of such policy and shall
take all actions which may be required by such insurer as a condition to the
continuation of coverage under such Primary Mortgage Insurance Policy. If such
Primary Mortgage Insurance Policy is terminated as a result of such assumption
or substitution of liability, the Servicer shall obtain a replacement Primary
Mortgage Insurance Policy as provided above.
(b) As part of its activities as servicer of the Mortgage
Loans, the Servicer agrees to prepare and present, on behalf of itself and the
Owner, claims under any Primary Mortgage Insurance Policy in a timely fashion in
accordance with the terms thereof and, in this regard, to take such reasonable
action as shall be necessary to permit recovery under any Primary Mortgage
Insurance Policy respecting a defaulted Mortgage Loan.
Section 2.16. Monthly Advances by the Servicer
(a) Not later than the close of business on the Business Day
preceding each Monthly Remittance Date, the Servicer shall deposit in the
Account an amount equal to all payments not previously advanced by the Servicer
of principal and interest at the Net Rate that were (i) due on any Mortgage Loan
during the Due Period that commences in the same month in which such Monthly
Remittance Date occurs, (ii) not received as of the close of business on the
related Determination Date (whether or not deferred) and (iii) not due on or
prior to the related Cut-off Date (the aggregate of all such amounts, the
"Monthly Advance"). In lieu of making all or a portion of any Monthly Advance,
the Servicer may cause to be made an appropriate entry in its records relating
to the Account that funds in such account, including but not limited to any
18
amounts received in respect of scheduled principal and interest on any Mortgage
Loan due after the related Due Period for the related Monthly Remittance Date,
have been used by the Servicer in discharge of its obligation to make any such
Monthly Advance. Any funds so applied shall be replaced by the Servicer by
deposit, in the manner set forth above, in the Account no later than the close
of business on the Business Day immediately preceding the next Monthly
Remittance Date to the extent that funds in the Account on such date are less
than the amounts required to be distributed on such Monthly Remittance Date. The
Servicer shall be entitled to be reimbursed from the Account for all Monthly
Advances of its own funds made pursuant to this Section as provided in Section
2.5.
(b) The obligation of the Servicer to make such Monthly
Advances is mandatory, and, with respect to any Mortgage Loan or REO Property,
shall continue through the earlier of (i) the date on which a Final Recovery
Determination in connection with such Mortgage Loan is made and (ii) the due
date of the last Monthly Payment due prior to the payment in full of such
Mortgage Loan.
(c) Notwithstanding anything herein to the contrary, no
Monthly Advance shall be required to be made hereunder by the Servicer if such
Monthly Advance would, if made, constitute a Nonrecoverable Advance.
Section 2.17. Compliance With REMIC Provisions
If the Servicer has received written notice from the Owner that a REMIC
election has been made with respect to the arrangement under which any Mortgage
Loans and REO Property are held, the Servicer shall not take any action, cause
the REMIC to take any action or fail to take (or fail to cause to be taken) any
action that, under the REMIC Provisions, if taken or not taken, as the case may
be, could (i) endanger the status of the REMIC as a REMIC, or (ii) result in the
imposition of a tax upon the REMIC (including but not limited to the tax on
"prohibited transactions" as defined in Section 860F(a)(2) of the Code and the
tax on "contributions" to a REMIC set forth in Section 860G(d) of the Code)
unless the Servicer has received an Opinion of Counsel (at the expense of the
party seeking to take such action) to the effect that the contemplated action
will not endanger such REMIC status or result in the imposition of any such tax.
Section 2.18. Owner to Cooperate; Release of Collateral Files
If, at any time prior to termination of this Agreement, the Servicer
shall require the use of any Collateral File (or any portion thereof) to perform
its servicing activities as set forth in this Agreement, the Owner, within five
(5) Business Days of the written request of the Servicer in the form of Exhibit
A hereto, (or within such shorter period as may be necessary for the Servicer to
perform its obligations hereunder in compliance with all Acceptable Servicing
Procedures), shall release or shall cause the Custodian to release such
Collateral File, or portion thereof, to the Servicer. Within five (5) Business
Days of the Servicer's request therefor (or, within such shorter period as may
be necessary for the Servicer to perform obligations hereunder in compliance
with all Acceptable Servicing Procedures), the Owner shall execute and deliver
to the Servicer, in the form supplied to the Owner by the Servicer, any court
pleadings, requests for trustee's sale or other documents reasonably necessary
to perform the servicing activities with respect to any Mortgage Loan, including
the foreclosure or sale in respect of any Mortgaged Property, the commencement
and prosecution of any legal action to enforce the related Mortgage Note and
Mortgage and the defense of any legal action or counterclaim filed against the
Owner or the Servicer. The Servicer may execute and deliver any or all of such
pleadings or documents on behalf of the Owner pursuant to the power of attorney
granted pursuant to Section 2.12(g).
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Section 2.19. Credit Reporting
For each Mortgage Loan, the Servicer shall furnish, to the extent
required under applicable law, accurate and complete information (i.e.,
favorable and unfavorable) on its borrowers' credit files to Equifax, Experian
and Trans Union Credit Information Company, or their successors, on a monthly
basis.
Section 2.20. Delivery of Policies of Title and Primary Mortgage
Insurance Policies
The Servicer shall, at Servicer's expense and within thirty (30) days
of Owner's request or a request by a third party approved by the Owner, create a
xeroxed copy or an imaged copy of the policy of title insurance or the original
Primary Mortgage Insurance Policy, if any, of any Mortgage Loan and deliver, or
cause to be delivered, each such xeroxed copy or, through an electronic medium,
each such imaged copy to the Custodian or the Owner. The Servicer agrees to
indemnify and hold harmless the Owner against any and all losses, damages,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses resulting from the defense of any claim against
the Owner by a third party in any way related to the Servicer's failure, upon
Owner's request, to create and deliver, or cause to be delivered, any such
xeroxed copy or imaged copy of the policy of title insurance or the original
Primary Mortgage Insurance Policy; provided, that in no event shall the Servicer
have any liability for any indirect, special or consequential damages, losses,
costs or expenses incurred by the Owner.
ARTICLE 3.
PAYMENTS TO THE OWNER
Section 3.1. Distributions
(a) On each Monthly Remittance Date, the Servicer shall
distribute to the Owner all amounts credited to the Account as of the close of
business on the preceding Determination Date, net of charges against or
withdrawals from the Account pursuant to Section 2.5, plus all Monthly Advances
deposited in the Account prior to such Monthly Remittance Date pursuant to
Section 2.4, minus (i) any amounts attributable to Principal Prepayments
received after the last day of the Due Period immediately preceding the related
Monthly Remittance Date and (ii) any amounts attributable to Monthly Payments
collected but due on a Due Date(s) subsequent to the preceding Determination
Date.
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(b) All distributions made to the Owner on each Monthly
Remittance Date shall be made to the Owner of record, based on the Mortgage
Loans owned and held by the Owner. All distributions shall be made by wire
transfer of immediately available funds to the account of the Owner at a bank or
other entity having appropriate facilities therefor, if the Owner shall have so
notified the Servicer, or by check mailed to the address of the Owner.
Distributions on each Monthly Remittance Date may be made by more than one (1)
wire transfer or check, as the case may be.
(c) With respect to any remittance received by the Owner on or
after the second Business Day following the Business Day on which such payment
was due, the Owner shall send written notice thereof to the Servicer. The
Servicer shall pay to the Owner interest on any such late payment at an annual
rate equal to Prime plus one percentage point, but in no event greater than the
maximum amount permitted by applicable law. Such interest shall be paid by the
Servicer to the Owner on the date such late payment is made and shall cover the
period commencing with the day following such second Business Day and ending
with the Business Day on which such payment is made, both inclusive. The payment
by the Servicer of any such interest, or the failure of the Owner to notify the
Servicer of such interest, shall not be deemed an extension of time for payment
or a waiver of any Event of Default by the Servicer.
Section 3.2. Reports
(a) On or before the tenth (10th) day of each month (or if
such day is not a Business Day, the next Business Day), the Servicer shall
provide to the Owner or its designee by means of an electronic or other agreed
upon medium, with respect to the Due Period immediately preceding such Monthly
Remittance Date, the data set forth below on an individual loan basis:
(i) mortgage loan number;
(ii) interest rate;
(iii) pending rate;
(iv) scheduled principal and interest payment;
(v) scheduled principal;
(vi) gross interest;
(vii) curtailment collected;
(viii) curtailment adjustment;
(ix) PIF principal;
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(x) PIF interest difference;
(xi) ARM Index;
(xii) pending Index;
(xiii) ending scheduled balance;
(xiv) investor loan number;
(xv) Servicing Fee Rate;
(xvi) due date;
(xvii) yield rate;
(xviii) beginning balance;
(xix) ending balance;
(xx) beginning scheduled balance;
(xxi) principal collected;
(xxii) scheduled net interest;
(xxiii) scheduled buydown;
(xxiv) Servicing Fee collected; and
(xxv) remittance amount.
The Servicer may submit the foregoing information in more than one (1) report.
Requests for additional data regarding the Mortgage Loans or alternative means
for delivering such reports shall be accommodated at the discretion of the
Servicer and at the Owner's expense.
(b) Upon reasonable advance notice in writing, the Servicer
shall provide to any Owner which is a savings and loan association, a bank, an
insurance company or other regulated or supervised entity reports and access to
information and documentation regarding the Mortgage Loans and the transactions
contemplated hereby sufficient to permit the Owner to comply with the applicable
regulations of relevant regulatory or supervisory authorities with respect to
its investment in the Mortgage Loans and Owner's internal and third-party audit
requirements.
(c) The Servicer shall prepare and file any and all
information statements or other filings required to be delivered to any
governmental taxing authority or to Owner pursuant to any applicable law with
respect to the Mortgage Loans and the transactions contemplated hereby. In
addition, the Servicer shall provide Owner with such information concerning the
Mortgage Loans as is necessary for Owner to prepare its federal income tax
return as Owner may reasonably request from time to time. In addition, not more
than 90 days after the end of each calendar year, the Servicer shall furnish to
each Person who was an Owner at any time during such calendar year an annual
statement in accordance with the requirement of applicable federal income tax
law as to the aggregate of remittances for the applicable portion of such year.
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Section 3.3. Delinquency and Foreclosure Statements
The Servicer shall provide a monthly statement of delinquents and a
delinquency report on all Mortgage Loans more than 30 days delinquent. The
Servicer shall also provide a monthly statement regarding foreclosure status.
ARTICLE 4.
GENERAL SERVICING PROCEDURE; COVENANTS;
REPRESENTATIONS AND WARRANTIES
Section 4.1. Assumption Agreements
(a) The Servicer shall use its best efforts to enforce any
"due-on-sale" provision contained in any Mortgage or Mortgage Note and to deny
assumption by the person to whom the Mortgaged Property has been or is about to
be sold, whether by absolute conveyance or by contract of sale and whether or
not the Mortgagor remains liable on the Mortgage and the Mortgage Note, provided
that in accordance with the terms of the Mortgage Note, the Servicer may permit
an assumption (i) if the Servicer reasonably believes it is unable under
Applicable Requirements to enforce such "due-on-sale" clause, or (ii) if the
enforcement of such rights would impair or threaten to impair any recovery under
the related Primary Mortgage Insurance Policy, if any. In connection with any
such assumption, the related Mortgage Interest Rate, the Unpaid Principal
Balance and the term of the Mortgage Loan may not be changed. If an assumption
is allowed pursuant to this Section 4.1(a), the Servicer is authorized, at the
Servicer's discretion, to prepare a substitution of liability agreement to be
entered into by the Owner and the purchaser of the Mortgaged Property pursuant
to which the original Mortgagor is released from liability and the purchaser of
the Mortgaged Property is substituted as Mortgagor and becomes liable under the
Mortgage Note. Any such substitution of liability agreement shall be in lieu of
an assumption agreement. If an assumption fee is collected by the Servicer for
entering into an assumption agreement the entire amount of such fee may be
retained by the Servicer as additional servicing compensation.
(b) The Servicer shall follow Acceptable Servicing Procedures
with respect to any such assumption or substitution of liability (taking into
account the applicable Seller's then current underwriting guidelines applicable
to mortgage loans of the same type as the related Mortgage Loan). The Servicer
shall notify the Owner that any such substitution of liability or assumption
agreement has been completed by forwarding to the Owner a copy of any such
substitution of liability or assumption agreement, which document shall be added
to the related Collateral File and shall for all purposes be considered a part
of such Collateral File to the same extent as all other documents and
instruments constituting a part thereof.
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(c) For purposes of this Section 4.1, the term "assumption" is
deemed to also include a sale of the Mortgaged Property subject to the Mortgage
that is not accompanied by an assumption or substitution of liability agreement.
Section 4.2. Satisfaction of Mortgages and Release of Collateral Files
(a) Upon the payment in full of any Mortgage Loan or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Servicer shall prepare the
appropriate documents and instruments required to satisfy or release the lien of
the Mortgage in accordance with applicable state law requirements. The Servicer,
promptly and within the applicable legal deadlines appropriate to process the
satisfaction or release, shall notify the Owner of such event.
(b) The Servicer shall not grant a satisfaction or release of
a Mortgage without having obtained payment in full of the indebtedness secured
by the Mortgage. In the event the Servicer grants a satisfaction or release of a
Mortgage without having obtained payment in full of the indebtedness secured by
the Mortgage, the Servicer, upon becoming aware of the foregoing, shall remit to
the Owner the Unpaid Principal Balance of the related Mortgage Loan plus accrued
and unpaid interest by deposit thereof in the Account pursuant to Section 2.4.
The Owner shall assign the related Mortgage and endorse the related Mortgage
Note to the Servicer and shall do all things necessary to transfer ownership of
the Mortgage Loan to the Servicer. The Servicer shall maintain the Fidelity Bond
as provided for in Section 2.11 protecting and insuring the Servicer against,
losses sustained with respect to any Mortgage Loan satisfied or released other
than in accordance with the procedures set forth herein.
(c) The Owner shall, within five (5) Business Days following
receipt of any request from the Servicer (or within such shorter period as is
necessary for the Servicer to perform its obligations hereunder in compliance
with all Applicable Servicing Procedures) deliver or cause the Custodian to
deliver to the Servicer the Collateral File (or any portion thereof) required by
the Servicer to process any satisfaction or release of any Mortgage pursuant to
this Section 4.2. In addition, if any Mortgage Loan has been paid in full and,
pursuant to Section 2.2(b) of the Purchase Agreement, the Owner has recorded the
related Assignment of Mortgage designating the Owner as the holder of record of
the Mortgage, the Servicer shall prepare and deliver to the Owner, together with
a request for execution, the documents and instruments necessary to satisfy or
release the lien of the Mortgage. The Owner shall, within five (5) Business Days
following its receipt of any such request, send to the Servicer the
fully-executed documents that were prepared and requested by the Servicer. In
the event that applicable state law requires that a satisfaction or release be
recorded within a shorter time period than the foregoing procedure permits, the
Servicer shall advise the Owner accordingly and shall use its best efforts to
ensure that the lien of the Mortgage is released or satisfied in accordance with
applicable state law requirements, and the Owner shall assist therewith by, to
the extent reasonably practicable, returning to the Servicer the required
portion of the Collateral File and, if applicable, the executed satisfaction and
release documents and instruments within the time periods reasonably specified
by the Servicer.
(d) If a Mortgage Loan that has been paid in full is a MERS
Loan, the Servicer may cause the removal of such Mortgage Loan from registration
on the MERS(R) System and execute and deliver, on behalf of the Owner, any and
all related instruments of satisfaction or release. No expense incurred in
connection with the delivery of any instrument of satisfaction or deed or
reconveyance shall be chargeable to the Account or the Owner.
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Section 4.3. Servicing Compensation
The Servicer shall be entitled to pay itself a Servicing Fee for each
Mortgage Loan serviced hereunder. The obligation of the Owner to pay such
Servicing Fee is limited to, and payable solely from, the interest portion of
the Monthly Payments and Late Collections collected by the Servicer with respect
to the related Mortgage Loan. Additional servicing compensation in the form of
non-sufficient funds check fees, assumption fees, conversion fees, other related
administrative fees, late payment charges, Prepayment Charges (except as
otherwise specified in the relevant Commitment Letter) and other similar types
of ancillary fees and charges that are actually received by the Servicer may be
retained by the Servicer to the extent not required to be deposited into the
Account pursuant to the terms of this Agreement. In addition to the Servicing
Fee payable hereunder, the Servicer shall be entitled to pay itself an REO
Management Fee for each REO Property managed by the Servicer or its agent. The
Servicer shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder and shall not be entitled to reimbursement
therefor except as specifically provided for in this Agreement. Any Late
Collections shall be applied by the Servicer in the following order of priority:
(i) first to pay the expenses incurred in connection with collection of such
Late Collections, (ii) second to reimburse itself for any related unpaid
Servicing Fees, unpaid REO Management Fees and unreimbursed Servicing Advances
and Monthly Advances and (iii) the balance to be distributed to the Owner.
Section 4.4. Statements as to Compliance
(a) Not later than March 15 of each year (or if such day is
not a Business Day, the next succeeding Business Day), the Servicer will deliver
to the Owner and, with respect to any Mortgage Loans subject to a Pass-Through
Transfer, each other Person entitled to receive servicing reports provided
pursuant to Section 3.2(a) an Officer's Certificate for the prior calendar year,
beginning with the calendar year ending December 31, 2003, stating (i) a review
of the activities of the Servicer during the preceding year and of performance
under this Agreement has been made under such officer's supervision, and (ii) to
the best of such officer's knowledge, based on such review, the Servicer has
fulfilled all of its obligations under this Agreement throughout such year or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof.
(b) Not later than March 15 of each year (or if such day is
not a Business Day, the next succeeding Business Day), with respect to any
Mortgage Loans subject to a Pass-Through Transfer, the Servicer will deliver to
the Owner and each other Person entitled to receive servicing reports provided
pursuant to Section 3.2(a) an Officer's Certificate for the prior calendar year,
beginning with the calendar year ending December 31, 2003, in substantially the
form of Exhibit F to this Agreement.
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(c) The Servicer agrees to indemnify and hold harmless each of
the Owner, each other Person entitled to receive servicing reports provided
pursuant to Section 3.2(a), each Person, if any, who "controls" the Owner or
such other Person within the meaning of the Securities Act of 1933, as amended,
and their respective officers and directors against any and all losses,
penalties, fines, forfeitures, legal fees and related costs, judgments and any
other costs, fees and expenses that such Person may sustain arising out of third
party claims based on (i) the failure of the Servicer to deliver or cause to be
delivered when required any Officer's Certificate required pursuant to Section
4.4(a) or Section 4.4(b), or the accountants' statement required pursuant to
Section 4.5, or (ii) any material misstatement or omission in any certification
pursuant to Section 302(a) of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and Rules 13a-14
and 15d-14 promulgated by the Securities and Exchange Commission thereunder made
in reliance on any material misstatement or omission contained in any Officer's
Certificate provided pursuant to Section 4.4(a) or Section 4.4(b).
Section 4.5. Annual Independent Public Accountants' Servicing Report
Not later than March 15 of each year (or if such day is not a Business
Day, the next succeeding Business Day), the Servicer will, at its expense, cause
a firm of independent public accountants that is a member of the American
Institute of Certified Public Accountants to furnish to the Owner and, with
respect to any Mortgage Loans subject to a Pass-Through Transfer, each other
Person entitled to receive servicing reports provided pursuant to Section
3.2(a), a statement to the effect that, based on an examination conducted by
such firm in compliance with the Uniform Single Attestation Program for Mortgage
Bankers ("USAP"), the assertion of management of the Servicer that it has
complied with the minimum servicing standards identified in the USAP is fairly
stated in all material respects, except for (i) such exceptions as such firm
shall believe to be immaterial, and (ii) such other exceptions as shall be set
forth in such statement.
Section 4.6. Owner's Right to Examine Servicer Records, etc.
(a) Subject to any applicable standards of Section 5.8, the
Owner shall have the right, at its expense, to (i) examine and audit the
Servicer's books of account, records, reports and other papers relating to (x)
the performance by the Servicer of its obligations and duties under this
Agreement, or (y) the Mortgage Loans, (ii) make copies and extracts therefrom
and (iii) discuss the affairs, finances, and accounts of the Servicer relating
to such performance with the Servicer's officers and employees, all at such
times and places, and with such frequency, as may be reasonably requested.
(b) Subject to any applicable standards of Section 5.8, the
Servicer shall provide to the Owner and any supervisory agents or examiners
representing a state or federal governmental agency having jurisdiction over the
Owner, including without limitation the OTS, the FDIC and other similar
entities, access to any documentation regarding the Mortgage Loans in the
possession of the Servicer that is required by any applicable regulations. Such
access shall be afforded without charge, upon reasonable request, during normal
business hours, at the offices of the Servicer and in accordance with any
applicable regulations.
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Section 4.7. Cooperation
The Servicer and the Owner shall cooperate fully with one another and
their respective counsel and other representatives and advisors in connection
with the steps required to be taken as part of their respective obligations
under this Agreement.
Section 4.8. Consents and Approvals
The Servicer shall timely obtain, at its sole cost and expense, the
consents and approvals required by law or pursuant to contract to consummate the
transactions contemplated hereby. All such consents shall be obtained without
any cost or expense to the Owner and will be obtained without any adverse
modification in the terms of any of the agreements relating to the Mortgage
Loans or the imposition of any burdensome provisions or conditions on the Owner.
ARTICLE 5.
THE servicer
Section 5.1. Indemnification; Third Party Claims
(a) The Servicer agrees to indemnify and hold harmless the
Owner against any and all third party claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments and any other costs, fees
and expenses that the Owner may sustain in any way related to the failure of the
Servicer to service the Mortgage Loans in compliance with the terms of this
Agreement; provided, however, the Servicer shall not be liable hereunder with
respect to (i) any action or inaction resulting from the written direction or
consent of the Owner, (ii) any action or inaction resulting from the Owner's
failure to cause any Collateral File (or portion thereof) to be released to the
Servicer pursuant to Sections 2.18 or 4.2(c), or (iii) any action or inaction
resulting from the Owner's failure to comply with Section 5.1(b) or Section 5.6.
The Servicer shall notify the Owner if a claim is made by a third party with
respect to this Agreement or the Mortgage Loans that the Servicer determines in
its good faith judgment will materially affect the Owner's interest in such
Mortgage Loans. The Servicer shall assume (with the written consent of the
Owner) the defense of any such claim and, subject to the last sentence of this
paragraph, pay all reasonable expenses in connection therewith, including
counsel fees, and promptly pay, discharge and satisfy any judgment or decree
which may be entered against the Servicer or the Owner in respect of such claim.
The Servicer shall follow any written instructions received from the Owner in
connection with any such claim. The Servicer shall have the right to reimburse
itself from the Account for all expenses, advances and liabilities incurred by
the Servicer in respect of any such claim (whether or not the Servicer has
assumed the defense thereof), except when the claim (x) is related to the
Servicer's obligations to indemnify the Owner pursuant hereto, (y) results from
the failure of the Servicer to service the Mortgage Loans in compliance with the
terms of this Agreement, or (z) results from the Servicer's willful misconduct,
bad faith or negligence in performing its duties under this Agreement.
(b) With respect to any Mortgage Loan, if the Owner records or
causes to be recorded the related Assignment of Mortgage designating the Owner
as the holder of record of the Mortgage in the appropriate public recording
office of the jurisdiction in which the related Mortgaged Property is located,
and the Owner, in its capacity as the holder of record, receives written notice
of any action with respect to the related Mortgage or Mortgaged Property, the
Owner shall promptly send a copy of such notice to the Servicer in accordance
with Section 9.8. The Servicer shall have no liability to the Owner for claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
or any other costs or expenses, that result from the Owner's failure to comply
with the provisions set forth in this paragraph.
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Section 5.2. Servicer Covenants; Merger or Consolidation of the
Servicer
(a) The Servicer covenants that, subject to Section 5.2(b), it
shall keep in full force and effect its existence, rights and franchises as a
corporation and its status as a ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac approved servicer in
good standing and shall obtain and preserve its qualification to do business as
a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement
or any of the Mortgage Loans and to perform its duties under this Agreement.
(b) Any Person into which the Servicer may be merged or
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person succeeding
to all, or substantially all, of the business or assets of the Servicer (whether
or not related to loan servicing), shall be the successor of the Servicer
hereunder, without the execution or filing of any paper, or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the Servicer shall not be a party to
any such merger, consolidation or conversion, or sell or otherwise dispose of
all, or substantially all, of its business or assets, unless the successor or
surviving Person shall be an institution that is a ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac
approved servicer in good standing and a member of MERS in good standing. In
addition, the successor or surviving Person shall be an institution (i) having a
GAAP net worth of not less than $25,000,000 and (ii) the deposits of which are
insured by the FDIC, SAIF and/or BIF, or which is a HUD-approved mortgagee whose
primary business is in origination and servicing of first lien mortgage loans.
Section 5.3. Limitation on Liability of the Servicer and Others
The Servicer and the directors, officers, employees or agents of the
Servicer shall not be under any liability to the Owner (i) for any action taken,
or for refraining from the taking of any action, in good faith pursuant to this
Agreement, (ii) for errors in judgment made in good faith, (iii) for any action
or inaction in accordance with the written direction or consent of the Owner,
(iv) for any action or inaction resulting from the Owner's failure to cause any
Collateral File (or portion thereof) to be released to the Servicer pursuant to
Sections 2.18 or 4.2(c), or (v) for any action or inaction resulting from the
Owner's failure to comply with Section 5.1(b) or Section 5.6; provided, however,
this provision shall not protect the Servicer against any breach of warranties
or representations made herein, any failure to perform its obligations in
accordance with any standard of care set forth in this Agreement (unless in
accordance with the written direction or consent of the Owner) or any liability
that would otherwise be imposed by reason of willful misconduct, bad faith or
negligence in the performance of duties. The Servicer and any officer, employee
or agent of the Servicer may rely in good faith on any document of any kind that
appears, on its face, to be properly executed and submitted by any Person
respecting any matters arising hereunder. Subject to Section 5.1(a), the
Servicer shall not be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its duties under this Agreement and that
may result in any expense or liability to the Servicer; provided, however, that
the Servicer may, with the written consent of the Owner, undertake any such
action which it may deem necessary or desirable with respect to this Agreement
and the rights, duties, and the interests of the parties hereto. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs, and liabilities for which the Owner shall be
liable and the Servicer shall be entitled to be reimbursed therefor from the
Account, unless any such costs or liabilities shall result from the negligence,
bad faith or willful misfeasance of the Servicer in performing such action.
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Section 5.4. Servicer Not to Resign
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon the determination that such Servicer's duties
hereunder are no longer permissible under Applicable Requirements and such
incapacity cannot be cured by such Servicer. Any such determination permitting
the resignation of the Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Owner. No such resignation shall become effective
until a successor that satisfies the requirements set forth in Section 9.1 has
assumed the Servicer's responsibilities and obligations hereunder in accordance
with such Section.
Section 5.5. Transfer of Servicing
The Servicer acknowledges that the Owner has entered into this
Agreement in reliance upon the adequacy of the Servicer's servicing facilities,
plan, personnel, records and procedures, its integrity, reputation and financial
standing and the continuance thereof. Without in any way limiting the generality
of this Section 5.5, the Servicer shall not either assign this Agreement or any
of the servicing rights or obligations hereunder except (i) in connection with a
merger or consolidation permitted under Section 5.2(b), or (ii) with the prior
written consent of the Owner, which consent shall not be unreasonably withheld
or delayed.
Section 5.6. Transfer of Mortgage Loans
(a) The Owner shall have the right, without the consent of the
Servicer, to assign its interest under this Agreement with respect to any
Mortgage Loans that have been assigned in accordance with Article 6 of the
Purchase Agreement; provided, however, that the Owner shall give the Servicer
written notice 15 days prior to any such assignment of its interest under this
Agreement. The Owner shall also have the right to designate any Person to
exercise the rights of Owner hereunder to the extent provided in Section 8.2 of
this Agreement. In any such case, all references to the Owner shall be deemed to
include such assignee or designee.
(b) The Servicer shall keep books and records in which,
subject to such reasonable regulations as it may prescribe, the Servicer shall
note transfers of Mortgage Loans. For the purposes of this Agreement, the
Servicer shall be under no obligation to deal with any Person with respect to
this Agreement or any Mortgage Loan unless the books and records show such
person as the owner of such Mortgage Loan. Upon receipt of a written notice from
the Owner of any assignment of any Mortgage Loan permitted under the Purchase
Agreement, the Servicer shall ▇▇▇▇ its books and records to reflect the
ownership of such Mortgage Loan by such assignee, and, except with respect to
the indemnity set forth in Section 8.1(f) hereof, the previous Owner shall be
released from its obligations hereunder to the extent such obligations relate to
Mortgage Loans sold by the Owner and arise after the date of such sale.
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Section 5.7. Representations and Warranties of the Servicer
The Servicer hereby represents and warrants to the Owner as of each
Closing Date as follows:
(a) The Servicer is a federally chartered savings association,
duly organized, validly existing and in good standing under the laws of the
United States, has all licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in the states where
the Mortgaged Properties are located, if the laws of such states require
licensing or qualification in order to conduct business of the type conducted by
the Servicer and to the extent necessary to ensure the servicing of each
Mortgage Loan in accordance with this Agreement. The Servicer has the corporate
power and authority to enter into, execute and deliver this Agreement and all
documents and instruments executed and delivered pursuant hereto and to perform
its obligations in accordance therewith. The execution, delivery and performance
of this Agreement by the Servicer and the consummation of the transactions
contemplated hereby have been duly and validly authorized. This Agreement
evidences the valid, binding and enforceable obligations of the Servicer,
subject as to enforcement, (i) to bankruptcy, insolvency, receivership,
conservatorship, reorganization, arrangement, moratorium and other laws of
general applicability relating to or affecting creditors' rights and (ii) to
general principles of equity, whether such enforcement is considered in a
proceeding in equity or at law. All requisite corporate action has been taken by
the Servicer to make this Agreement valid and binding upon the Servicer in
accordance with its terms.
(b) No consent, approval, authorization, or order of any court
or governmental agency or body relating to the transactions contemplated by this
Agreement is required as to the Servicer or, if required, such consent,
approval, authorization, or order has been obtained.
(c) The consummation of the transactions contemplated by this
Agreement, including without limitation the fulfillment of, or compliance with,
the terms and conditions of this Agreement, are in the ordinary course of
business of the Servicer and shall not (i) result in the breach of any term or
provision of the charter or by-laws of the Servicer, (ii) result in the breach
of any term or provision of, or conflict with or constitute a default under, or
result in the acceleration of any obligation under, any material agreement,
indenture, loan or credit agreement, or other instrument to which the Servicer
or its property is subject, or (iii) result in the violation of any law, rule,
regulation, order, judgment, or decree to which the Servicer or its property is
subject.
(d) There is no action, suit, proceeding or investigation
pending or, to the best of the Servicer's knowledge, threatened against the
Servicer that, either in any one instance or in the aggregate, is likely (in the
Servicer's judgment), to result in any material impairment of the right or
ability of the Servicer to carry on its business substantially as now conducted,
or that would adversely affect the validity of this Agreement, or of any action
taken or to be taken in connection with the obligations of the Servicer
contemplated herein, or that would be likely to materially impair the ability of
the Servicer to perform its obligations hereunder.
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(e) The Servicer is an approved servicer of mortgage loans for
▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac, in good standing. No event has occurred, including
but not limited to a change in insurance coverage, that would make the Servicer
unable to comply with ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac eligibility requirements.
(f) The Servicer is a member of MERS in good standing. The
Servicer shall comply in all material respects with the rules and procedures of
MERS in connection with the servicing of each MERS Loan for as long as each such
Mortgage Loan is registered on the MERS(R) System.
Section 5.8. Customer Information
Each of the Servicer and the Owner agrees that it shall comply with all
applicable laws and regulations regarding the privacy or security of any
Customer Information. The Servicer has implemented and shall maintain security
measures designed to meet the objectives of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and the
regulations promulgated thereunder. The Servicer shall make available to the
Owner's regulator such information regarding security measures as may be
requested by the regulator, provided that such information shall not be
disclosed to the Owner, and that the Servicer may take reasonable steps to
protect proprietary business information and to comply with all applicable laws.
ARTICLE 6.
DEFAULT
Section 6.1. Events of Default
In case one or more of the following Events of Default by the Servicer
shall occur and be continuing:
(i) any failure by the Servicer to remit to the Owner
within three (3) Business Days when due any payment required to be made under
the terms of this Agreement; or
(ii) any failure by the Servicer to duly observe or
perform, in any material respect, any other covenant, obligation or agreement of
the Servicer as set forth in this Agreement, which failure continues unremedied
for a period of sixty (60) (or, in the case of any failure to pay the premium
for any insurance policy which is required to be maintained hereunder, thirty
(30)) days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer by the Owner;
provided that any failure by the Servicer to duly perform its obligations under
Section 4.4 or Section 4.5 shall be deemed to be a material breach of this
Agreement; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction for the appointment of a conservator
or receiver or liquidator 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 Servicer and
such decree or order shall have remained in force, undischarged or unstayed for
a period of sixty (60) days; or
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(iv) the Servicer shall consent to the appointment of a
conservator, receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Servicer or relating to all, or substantially all, of the Servicer's
property; or
(v) the Servicer shall admit in writing its inability to
pay its debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(vi) the Servicer shall fail to be an approved servicer
of mortgage loans for ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac, in good standing; or
(vii) the Servicer shall fail to be in compliance with
the "doing business" or licensing laws of any jurisdiction where a Mortgaged
Property is located; or
(viii) the Servicer shall attempt to assign this
Agreement or the servicing responsibilities hereunder in contravention of this
Agreement; or
(ix) the Servicer shall fail to maintain a minimum net
worth of $25,000,000; or
(x) any representation and warranty of the Servicer
contained in Section 5.7 shall be untrue in any material respect as of the
related Closing Date and such untruth shall cause the Servicer to be unable to
perform its obligations under this Agreement;
then, and in each and every such case, so long as such Event of Default shall
not have been remedied, the Owner, by notice in writing to the Servicer (in each
such instance, the "Defaulted Servicer"), may, in addition to whatever rights
the Owner may have at law or equity, including injunctive relief and specific
performance, commence termination of all of the rights and obligations of the
Defaulted Servicer under this Agreement pursuant to Section 7.2, and may
exercise any and all other remedies available at law or at equity. Upon receipt
by the Defaulted Servicer of such written notice from the Owner stating the
intent to terminate the Defaulted Servicer as servicer under this Agreement as a
result of such Event of Default, all authority and power of the Defaulted
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the successor appointed pursuant to
Section 9.1. Upon written request from the Owner, the Defaulted Servicer shall,
at its sole expense, prepare, execute, and place in such successor's possession
or control all Collateral Files and Credit Files, and do or cause to be done all
other acts or things necessary or appropriate to effect the purposes of such
notice of termination, all of which shall be undertaken immediately and shall be
completed as soon as possible and in all events by not later than forty-five
(45) Business Days following the Owner's request therefor. The Defaulted
Servicer agrees to cooperate with the Owner and such successor in effecting the
termination of the Defaulted Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to such successor of all cash
amounts that have been credited by the Defaulted Servicer to the Account or the
Escrow Account at the time of transfer, and all other amounts that may
thereafter be received with respect to the Mortgage Loans and to which the
Defaulted Servicer is not entitled pursuant to the terms of this Agreement.
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Section 6.2. Waiver of Defaults
The Owner may waive any default by the Defaulted Servicer in the
performance of its obligations hereunder and its consequences. Any such waiver
must be in writing to be effective. Upon any waiver of a past default, such
default shall cease to exist, and any Event of Default arising therefrom shall,
unless otherwise specified in such waiver, be deemed to have been remedied for
every purpose of this Agreement unless the Defaulted Servicer fails to comply
with the terms of such waiver. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived.
Section 6.3. Survival of Certain Obligations and Liabilities of the
Defaulted Servicer
The representations, warranties, covenants, indemnities and agreements
of the parties provided in this Agreement and the parties' obligations hereunder
shall survive the execution and delivery and the termination or expiration of
this Agreement. Notwithstanding any termination of the rights and obligations of
the Servicer pursuant to this Article 6, the Defaulted Servicer shall remain
liable for any actions of the Defaulted Servicer taken prior to the effective
time of such termination.
ARTICLE 7.
TERMINATION
Section 7.1. Termination of Agreement
This Agreement shall terminate upon either (i) the later of the
distribution to the Owner of final payment or liquidation with respect to the
last Mortgage Loan subject to this Agreement and each REO Property or the
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure with respect to the last Mortgage Loan subject to this Agreement and
the remittance of all funds due hereunder, or (ii) the mutual written consent of
the parties.
Section 7.2. Termination of the Servicer Upon Unremedied Event of
Default
The Owner may, at its sole option, following an unremedied Event of
Default and in accordance with Section 6.1, terminate any rights the Servicer
may have hereunder. The Owner, with full cooperation of the Servicer, shall
arrange for the transfer of servicing, at the Owner's option, to the Owner or a
third party successor servicer pursuant to Section 9.1, and the Servicer shall
continue servicing the Mortgage Loans under this Agreement, for the Servicing
Fee provided herein, until the Owner gives the Servicer notice of such transfer.
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ARTICLE 8.
PASS-THROUGH AND WHOLE LOAN TRANSFERS
Section 8.1. Pass-Through Transfers or Whole-Loan Transfers
(a) The Owner and the Servicer agree that in connection with
any Whole Loan Transfer or Pass-Through Transfer permitted under Article 6 of
the Purchase Agreement, the Owner, in its sole discretion, may assign its rights
under this Agreement with respect to the Mortgage Loans subject to such Whole
Loan Transfer or Pass-Through Transfer.
(b) The Owner shall reimburse the Servicer for all reasonable
out-of-pocket expenses, including attorneys' fees, incurred by the Servicer in
connection with any Whole Loan Transfer or Pass-Through Transfer.
(c) In connection with each Whole Loan Transfer or
Pass-Through Transfer permitted under Article 6 of the Purchase Agreement, the
Servicer shall cooperate and shall: (i) provide the Owner with information and
appropriate verification of information in its possession or control as may
reasonably be necessary in order to effect such Whole Loan Transfer or
Pass-Through Transfer (and, to the extent any such information is in the
possession or control of any third party, use commercially reasonable efforts to
cause such third party to provide any such information); and (ii) cooperate with
all reasonable requests and due diligence procedures not otherwise addressed
herein.
(d) With respect to any Whole Loan Transfer or Pass-Through
Transfer permitted under Article 6 of the Purchase Agreement in which a
prospectus, prospectus supplement or other disclosure document (a "Disclosure
Document") is prepared in connection therewith, and in which a substantial
portion of the mortgage loans in the related transaction consist of Mortgage
Loans, the Servicer shall:
(i) provide for inclusion as part of such Disclosure
Document (A) the regulatory status of the Servicer and its affiliates and (B)
delinquency and foreclosure information of the type typically provided by the
Servicer in connection with mortgage loans originated by the Sellers and
securitized by third parties (the information referred to in this sentence, in
the form provided to the Owner, being "Servicer's Information"); and
(ii) execute and deliver an Indemnification Agreement in
substantially the form attached to Exhibit C of the Purchase Agreement.
(e) With respect to any Pass-Through Transfer permitted under
Article 6 of the Purchase Agreement in which all or substantially all of the
mortgage loans in the related transaction consist of Mortgage Loans, the
Servicer shall:
(i) execute and deliver a pooling and servicing agreement
containing terms and conditions that are consistent with the terms and
conditions set forth herein and in the Purchase Agreement and that are customary
for public, rated transactions for the issuance of pass-through certificates
backed by mortgage loans similar to the Mortgage Loans included in such
Pass-Through Transfer, provided, that (A) any servicing reporting requirements
must be consistent with the standard practices of the Servicer and (B) each of
the parties to such pooling and servicing agreement negotiates in good faith any
terms or conditions in such pooling and servicing agreement not specifically
referenced or provided for under this Agreement or the Purchase Agreement; and
34
(ii) provide Owner with opinions of counsel as to the Servicer's corporate
authority and the enforceability of the pooling and servicing agreement against
the Servicer, audit letters addressing the delinquency and foreclosure
statistics of the Servicer and certificates from public officials, each as the
Servicer shall reasonably determine to be necessary to effect such Pass-Through
Transfer.
(f) With respect to any Whole Loan Transfer or Pass-Through
Transfer in which a Disclosure Document is prepared in connection therewith, the
Owner shall:
(i) provide the Servicer with all drafts of the
Servicer's Information when produced and revise the Servicer's Information in
accordance with the Servicer's comments to correct any information therein at
the Owner's cost; and
(ii) (A) indemnify and hold harmless the Servicer against
any losses, claims, damages or liabilities to which the Servicer may become
subject, under the Securities Act of 1933, as amended, or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof) (x)
arise out of or are based upon any untrue statement of any material fact
contained in such Disclosure Document (other than an untrue statement of
material fact contained in the Servicer's Information), or (y) arise out of or
are based upon the omission to state in such Disclosure Document a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(unless the material fact omitted would constitute Servicer's Information) and
(B) reimburse the Servicer for any legal or other expenses reasonably incurred
by the Servicer in connection with investigating or defending any such loss,
claim, damage, liability or action.
Section 8.2. Designation of a Master Servicer
(a) Notwithstanding anything to the contrary contained in this
Agreement, the Owner shall have the right, in its sole discretion, upon 30 days'
prior written notice to the Servicer, to appoint and designate a master servicer
(the "Master Servicer"), as master servicer of Mortgage Loans. The Servicer
acknowledges that the Purchaser has provided notice that it will appoint and
designate Aurora Loan Services, Inc. as Master Servicer of the Mortgage Loans
and that the Mortgage Loans will, subject to Section 8.2(b), be serviced in
accordance with this Agreement. The written notice required pursuant to this
Section 8.2 is deemed to have been satisfied with respect to the appointment of
Aurora Loan Services, Inc. Upon receipt of written notice of the appointment of
a Master Servicer pursuant to this Section 8.2 (other than Aurora Loan Services,
Inc.), the Servicer shall promptly enter into a servicing agreement (a "Master
Servicing Agreement") to service the Mortgage Loans for the Master Servicer in
accordance with the Master Servicer's requirements as set forth in the Master
Servicer's servicing guide; provided, however, that the Servicer shall be under
no obligation to enter into any Master Servicing Agreement unless the
obligations and duties of the Servicer as a subservicer thereunder (i) are not
materially different from than those set forth herein, (ii) do not cause undue
burden on the Servicer, (iii) do not expand in any material respect any of the
obligations, duties or liabilities of the Servicer hereunder and (iv) will not
result in any increased cost to the Servicer. If the Servicer and the Master
Servicer enter into a Master Servicing Agreement, the Servicer shall service the
Mortgage Loans, and remit and report to the Master Servicer, in accordance with
the terms of the Master Servicing Agreement and, to the extent inconsistent
therewith, the servicing provisions set forth in this Agreement shall be
superseded by the Master Servicing Agreement. If the Servicer and the Master
Servicer do not enter into a Master Servicing Agreement, the Servicer shall
service the Mortgage Loans, and remit and report to the Master Servicer, in
accordance with the terms of this Agreement.
35
(b) Upon appointment of a Master Servicer in accordance with
Section 8.2(a), the Servicer shall correspond and communicate solely with the
Master Servicer, as if the Master Servicer were the "Owner" hereunder. The
Master Servicer shall have all rights as designee of the Owner to enforce the
covenants and conditions set forth in this Agreement, and the Servicer shall
follow and shall be entitled to rely on the instructions of the Master Servicer
under this Agreement as if such instructions were the instructions of the Owner.
The Master Servicer shall have the right to give any waivers or consents
required or allowed under this Agreement on behalf of the Owner, and the
Servicer shall be entitled to rely on such waivers and consents as if such
waivers or consents were the waivers or consents of the Owner. The Master
Servicer is empowered to enter into and execute and deliver any amendments or
modifications to this Agreement as the Owner's designee hereunder, and such
amendments or modifications shall be binding upon the Owner as if the Owner had
executed and delivered the same. The Servicer shall treat the Master Servicer as
"Owner" hereunder until the Servicer receives written notice from the Owner that
the Owner has terminated the Master Servicer.
(c) Upon receipt of notice of termination of the Master
Servicer, the Servicer shall no longer deal with the Master Servicer and shall
instead deal directly with the Owner. From and after receipt of such notice of
termination of the Master Servicer, the Servicer shall service the applicable
Mortgage Loans in accordance with the provisions of this Agreement and shall
give no effect to any Master Servicing Agreement entered into with the Master
Servicer.
Section 8.3. Servicer's Purchase Right
If, at any time, either (i) the aggregate Unpaid Principal Balance of
any pool of Mortgage Loans that are transferred pursuant to a Whole Loan
Transfer ("Transferred Loans") is less than or equal to one percent (1%) of the
Unpaid Principal Balance of such Transferred Loans on the date of such Whole
Loan Transfer, or (ii) the aggregate Unpaid Principal Balance of any Mortgage
Loans purchased hereunder and retained by the Owner ("Portfolio Loans") is less
than or equal to one percent (1%) of the Unpaid Principal Balance of such
Portfolio Loans on the date of purchase from the applicable Seller, the Servicer
may elect, in its sole discretion, to purchase such Transferred Loans or
Portfolio Loans, as the case may be. The purchase price of Mortgage Loans
purchased by the Servicer pursuant to this Section 8.3 shall equal the lesser of
(i) the aggregate fair market value of such Mortgage Loans at the time of
purchase by the Servicer and (ii) the aggregate Unpaid Principal Balance of such
Mortgage Loans, plus the amount of interest on such Unpaid Principal Balance at
the applicable Net Rate from the date to which interest has last been paid and
distributed to the Owner to, and including, the last day of the month in which
such purchase occurs.
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ARTICLE 9.
MISCELLANEOUS PROVISIONS
Section 9.1. Successor to the Servicer
(a) Prior to termination of the Servicer's responsibilities
and duties under this Agreement pursuant to Sections 5.4, 6.1, 7.1, or 7.2, the
Owner shall either (i) succeed to and assume all of the Servicer's
responsibilities, rights, duties, and obligations under this Agreement from and
after the date of such succession, or (ii) appoint a successor to the Servicer
that shall succeed to all rights and assume all of the responsibilities, duties
and liabilities of the Servicer under this Agreement prior to the termination of
the Servicer's responsibilities, duties, and liabilities under this Agreement.
If the Servicer's duties, responsibilities, and liabilities under this Agreement
shall be terminated pursuant to any of the foregoing Sections, the Servicer
shall discharge such duties and responsibilities with the same degree of
diligence and prudence that it is obligated to exercise under this Agreement,
from the date it acquires knowledge of such termination until the effective date
thereof.
(b) The Servicer shall promptly deliver to its successor (i)
the funds in the Account and the Escrow Account to which the Owner is entitled
pursuant to the terms of this Agreement and all other amounts which may
thereafter be received with respect to the Mortgage Loans and to which the
Servicer is not entitled pursuant to the terms of this Agreement and (ii) all
Collateral Files and Credit Files and related documents and statements held by
it hereunder. The Servicer shall account for all funds and shall execute and
deliver such instruments and do such other things as may reasonably be required
to more fully and definitively vest in the successor all such rights, powers,
duties, responsibilities, obligations and liabilities of the Servicer.
(c) Upon a successor's acceptance of appointment as such, the
Owner shall notify the Servicer of such appointment.
(d) Notwithstanding any termination pursuant to this
Agreement, the Servicer shall continue to be entitled to receive all amounts
accrued or owing to it under this Agreement on or prior to the effective date of
such termination, whether in respect of (i) unreimbursed Servicing Advances or
Monthly Advances, (ii) unpaid Servicing Fees or REO Management Fees, or (iii)
other servicing compensation, and shall continue to be entitled to the benefits
of Section 5.3 notwithstanding any such termination, with respect to events
occurring prior to such termination.
Section 9.2. Amendment
This Agreement may be amended from time to time solely by written
agreement signed by both of the parties.
37
Section 9.3. Recordation of Agreement; Perfection of Security Interest;
Further Assurances
(a) To the extent necessary under applicable law to protect
the interests of the Owner, this Agreement, or a memorandum thereof, is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Owner at the Owner's
expense.
(b) The Servicer agrees to execute or cause to be executed
such documents and take or cause to be taken such actions as may be necessary to
effect the intent of this Agreement, including, without limitation, the
execution and delivery of instruments of further assurance and the execution and
delivery of such other documents, and the taking of such other actions, as may
be reasonably requested by the Owner.
Section 9.4. Duration of Agreement
This Agreement shall continue in existence and effect until terminated
as herein provided.
Section 9.5. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (including Section 5-1401 of the New York
General Obligations Law) and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws without giving effect
to conflict of laws principles other than Section 5-1401 of the New York General
Obligations Law.
Section 9.6. General Interpretive Principles
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(i) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other
gender;
(ii) accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted accounting
principles;
(iii) references herein to "Articles," "Sections,"
"Subsections," "Paragraphs," and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, Paragraphs, and
other subdivisions of this Agreement;
(iv) a reference to a Subsection without further
reference to a Section is a reference to such Subsection as contained in the
same Section in which the reference appears, and this rule shall also apply to
Paragraphs and other subdivisions;
(v) the words "herein," "hereof," "hereunder," and other
words of similar import refer to this Agreement as a whole and not to any
particular provision; and
(vi) the term "include" or "including" shall mean without
limitation by reason of enumeration.
38
Section 9.7. Reproduction of Documents
This Agreement and all documents relating hereto, including, without
limitation, (i) consents, waivers, and modifications that may hereafter be
executed, (ii) documents received by any party on any Closing Date, and (iii)
financial statements, certificates, and other information previously or
hereafter furnished, may be reproduced by any photographic, photostatic,
microfilm, microcard, miniature photographic, or other similar process. Any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business. Any enlargement, facsimile or further reproduction
of such reproduction shall likewise be admissible in evidence.
Section 9.8. Notices
All demands, notices, consents, waivers and other communications
hereunder shall be in writing and shall be deemed to have been duly given upon
receipt (x) in the case of any notice of an Event of Default, if mailed by
registered mail, postage prepaid and (y) in the case of any other demand,
notice, consent, waiver or other communication, if personally delivered, mailed
by registered mail, postage prepaid, delivered by air courier or sent by
facsimile to:
(i) in the case of the Servicer, at the address set forth
below or such other address as may hereafter be furnished to the Owner in
writing by the Servicer:
Washington Mutual Bank, FA
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. (Mail Stop N070205)
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President, Investor Reporting
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) in the case of the Owner, at the address set forth
below, or such other address as may hereafter be furnished to the Servicer by
the Owner:
▇▇▇▇▇▇ Brothers Bank, FSB
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ Head
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
39
and in the case of any subsequent Owner, as set forth in written notice supplied
to the Servicer by such subsequent Owner.
Notwithstanding the foregoing any demand, notice, consent, waiver or
communication (other than those referred to in clause (x) above) may be given by
any other means if the parties hereto agree to such alternative means in
writing.
Section 9.9. Severability of Provisions
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other covenants, agreements,
provisions or terms of this Agreement or the rights of the Owner hereunder. If
the invalidity of any part, provision, representation or warranty of this
Agreement shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate in good faith to
develop a new structure, the economic effect of which is nearly as possible the
same as the economic effect of this Agreement without regard to such invalidity.
Section 9.10. Exhibits and Schedules
The exhibits and schedules to this Agreement are hereby incorporated
and made an integral part of this Agreement.
Section 9.11. Counterparts; Successors and Assigns
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Sections 5.4, 5.5, 5.6, 6.1,
7.1 and 8.1, this Agreement shall inure to the benefit of and be binding upon
the Servicer, the Owner and their respective successors and assigns.
Section 9.12. Effect of Headings
The headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.
Section 9.13. Other Agreements Superseded; Entire Agreement
This Agreement supersedes all prior agreements and understandings
relating to the subject matter hereof. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof.
Section 9.14. Attorneys' Fees
If either party retains an attorney to enforce any of the provisions of
this Agreement, the prevailing party shall be entitled to reasonable attorneys'
fees from the other party, including, without limitation, fees incurred in
arbitration and in trial and appellate courts, fees incurred without suit, and
all arbitration, court and accounting costs.
[signatures follow]
40
TO WITNESS THIS, the Servicer and the Owner have caused their names to
be signed to this Servicing Agreement by their respective officers duly
authorized as of the day and year first written above.
SERVICER:
WASHINGTON MUTUAL BANK, FA
a federally chartered savings association
By:_________________________________________
Name:_______________________________________
Title:______________________________________
OWNER:
▇▇▇▇▇▇ BROTHERS BANK, FSB
a federal savings bank
By:_________________________________________
Name:_______________________________________
Title:______________________________________
41
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
This instrument was acknowledged before me on ______________________,
2003, by _____________________ as _________________________ of Washington Mutual
Bank, FA.
_________________________________________________
[Print Name]_________________________
NOTARY PUBLIC in and for the State of Washington,
residing at _____________________________________
My commission expires ___________________________
42
STATE OF ________ )
) ss.
COUNTY OF ______ )
This instrument was acknowledged before me on ______________________,
2003, by _____________________ as _________________________ of ▇▇▇▇▇▇ Brothers
Bank, FSB.
________________________________________________
[Print Name]_________________________
NOTARY PUBLIC in and for the State of _________,
residing at ____________________________________
My commission expires __________________________
43
EXHIBIT A
FORM OF REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
To: [Name/Address of Owner]
Attention: ____________________________
Telephone:__________________
Facsimile:__________________
Re: Servicing Agreement dated as of September 1, 2003 (the
"Servicing Agreement") between ▇▇▇▇▇▇ Brothers Bank, FSB (the
"Owner") and Washington Mutual Bank, FA (the "Servicer")
In connection with the administration of the Mortgage Loans that we
service on your behalf pursuant to the Servicing Agreement, we request the
release, and acknowledge receipt of the Collateral File/[specify documents]) for
the Mortgage Loan described below, for the reason indicated.
Mortgagor's Name, Address and Zip Code:
Mortgage Loan Number:
Reason for Requesting Documents: (check one)
_____ 1. Mortgage Loan paid in full. (The Servicer hereby
certifies that all amounts received in connection
therewith have been credited to the Account as provided in
the Servicing Agreement.)
_____ 2. Mortgage Loan in foreclosure.
_____ 3. Repurchase pursuant to the Servicing Agreement or the
Purchase Agreement. (The Servicer hereby certifies that
the repurchase price has been credited to the Account.)
_____ 4. Mortgage Loan liquidated by.___________________________
(The Servicer hereby certifies that all proceeds of the
foreclosure, insurance, condemnation or other liquidation
have been finally received and credited to the Account
pursuant to the Servicing Agreement.)
_____ 5. Other (Explain):__________________________________________
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If box 1, 2 or 3 above is checked, and if all or part of the Collateral
File was previously released to us, please release to us our previous request
and receipt on file with you, as well as any additional documents in your
possession relating to the specified Mortgage Loan.
If box 4 or 5 above is checked, upon our return of all of the above
documents to you, please acknowledge your reception by signing in the space
indicated below and returning this form.
WASHINGTON MUTUAL BANK, FA
By:________________________
Name:______________________
Title:_____________________
Acknowledgment of Documents
returned to the Owner:
▇▇▇▇▇▇ BROTHERS BANK, FSB
By:________________________
Name:______________________
Title:_____________________
Date:______________________
A-2
EXHIBIT B
ACCOUNT CERTIFICATION
_______________, 2003
Washington Mutual Bank, FA (the "Servicer") hereby certifies that it
has established an account meeting the requirements of Section 2.4 of the
Servicing Agreement dated as of September 1, 2003, between the Owner and the
Servicer named therein.
Title of Account: "Washington Mutual Bank, FA, in trust for ▇▇▇▇▇▇
Brothers Bank, FSB, as Owner, and any successor
Owner."
Account Number: __________________________________
Address of office or
branch of the Servicer
at which Collection Account
is maintained:
Account Number: __________________________________
__________________________________
__________________________________
WASHINGTON MUTUAL BANK, FA
By:______________________________________
Name:____________________________________
Title:___________________________________
B-1
EXHIBIT C
ACCOUNT LETTER AGREEMENT
_______________, ______
To:________________________
________________________
________________________
________________________
(the "Depository")
As the "Servicer" under the Servicing Agreement dated as of September
1, 2003, between the Servicer and the Owner named therein (the "Agreement"), we
hereby authorize and request you to establish an account, as an Account pursuant
to Section 2.4 of the Agreement, to be designated as "Washington Mutual Bank,
FA, in trust for ▇▇▇▇▇▇ Brothers Bank, FSB, as Owner, and any successor Owner."
All deposits in the account shall be subject to withdrawal therefrom by order
signed by the Servicer. You may refuse any deposit which would result in
violation of the requirement that the account be fully insured as described
below. This letter is submitted to you in duplicate. Please execute and return
one original to us.
_________________________________________
By:______________________________________
Name:____________________________________
Title:___________________________________
The undersigned, as the "Depository," hereby certifies that the
above-described account has been established under Account Number
_________________, at the office of the Depository indicated above, and agrees
to honor withdrawals on such account as provided above. The full amount
deposited at any time in the account will be insured by the Federal Deposit
Insurance Corporation.
_________________________________________
(Name of Depository)
By:______________________________________
Name:____________________________________
Title:___________________________________
C-1
EXHIBIT D
ESCROW ACCOUNT CERTIFICATION
_______________, 2003
Washington Mutual Bank, FA (the "Servicer") hereby certifies that it
has established an account meeting the requirements of Section 2.6 of the
Servicing Agreement dated as of September 1, 2003, between the Servicer and the
Owner named therein.
Title of Escrow Account: "Washington Mutual Bank, FA, in trust for
▇▇▇▇▇▇ Brothers Bank, FSB, as Owner, and any
successor Owner, and certain Mortgagors."
Account Number: ____________________________________________
Address of office or
branch of the Servicer
at which Escrow Account
is maintained: ____________________________________________
____________________________________________
____________________________________________
WASHINGTON MUTUAL BANK, FA
By:______________________________________
Name:____________________________________
Title:___________________________________
D-1
EXHIBIT E
ESCROW ACCOUNT LETTER AGREEMENT
____________________, ___
To:_________________________________
_________________________________
_________________________________
_________________________________
(the "Depository")
As the "Servicer" under the Servicing Agreement dated as of September
1, 2003, between the Servicer and the Owner named therein (the "Agreement"), we
hereby authorize and request you to establish an account, as an Escrow Account
pursuant to Section 2.6 of the Agreement, to be designated as "Washington Mutual
Bank, FA, in trust for ▇▇▇▇▇▇ Brothers Bank, FSB, as Owner, and any successor
Owner, and certain Mortgagors." All deposits in the account pursuant to the
Agreement shall be subject to withdrawal therefrom by order signed by the
Servicer. You may refuse any deposit which would result in violation of the
requirement that the account by fully insured as described below. This letter is
submitted to you in duplicate. Please execute and return one original to us.
_________________________________________
By:______________________________________
Name:____________________________________
Title:___________________________________
The undersigned, as the "Depository," hereby certifies that the
above-described account has been established under Account Number
_________________, at the office of the Depository indicated above, and agrees
to honor withdrawals on such account as provided above. The full amount
deposited at any time in the account will be insured by the Federal Deposit
Insurance Corporation.
_________________________________________
(Name of Depository)
By:______________________________________
Name:____________________________________
Title:___________________________________
E-1
EXHIBIT F
FORM OF OFFICER'S CERTIFICATE
I, [name of certifying individual], a duly elected and acting officer
of Washington Mutual Bank, FA (the "Servicer"), certify pursuant to Section
4.4(b) of the Servicing Agreement dated as of September 1, 2003 (as from time to
time amended or replaced by a reconstituted servicing or other successor
servicing agreement, the "Servicing Agreement") between the Servicer and ▇▇▇▇▇▇
Brothers Bank, FSB (the "Owner") to the Owner and each other Person entitled to
receive servicing reports provided pursuant to Section 3.2(a) of the Servicing
Agreement (the "Servicing Reports"), each Person, if any, who "controls" the
Owner or such other Person within the meaning of the Securities Act of 1933, as
amended, and their respective officers and directors, with respect to the
calendar year immediately preceding the date of this Certificate (the "Relevant
Year"), as follows:
1. For purposes of this Certificate, "Relevant Information" means the
information in the certificate provided pursuant to Section 4.4(a) of the
Servicing Agreement (the "Annual Compliance Certificate") for the Relevant Year
and the information in all Servicing Reports provided by the Servicer during the
Relevant Year. Based on my knowledge, the Relevant Information, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein which is necessary to make the
statements made therein, in light of the circumstances under which such
statements were made, not misleading as of the last day of the Relevant Year.
2. The Relevant Information has been provided to those Persons entitled
to receive it.
3. I am responsible for reviewing the activities performed by the
Servicer under the Servicing Agreement during the Relevant Year. Based upon the
review required by the Servicing Agreement and except as disclosed in the Annual
Compliance Certificate or the accountants' statement provided pursuant to
Section 4.5, to the best of my knowledge, the Servicer has fulfilled its
obligations under the Servicing Agreement throughout the Relevant Year.
DATED as of ________ __. 200_.
____________________________________________
Name:_______________________________________
Title:______________________________________
F-1
