Exhibit 10.4(A)
BANK OF AMERICA, NATIONAL ASSOCIATION
OWNER
AND
▇▇▇▇▇ FARGO BANK, N.A.
SERVICER
SERVICING AGREEMENT
DATED AS OF JULY 1, 2006
MORTGAGE LOANS SUBJECT TO A RECONSTITUTION
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.............................................................................................1
ARTICLE II POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS...........11
Section 2.01 Possession of Mortgage Files; Maintenance of Servicing Files........................11
Section 2.02 Books and Records; Transfers of Mortgage Loans......................................11
Section 2.03 Custodial Agreement; Delivery of Documents..........................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH...................................................13
Section 3.01 Servicer Representations and Warranties.............................................13
Section 3.02 Remedies............................................................................15
ARTICLE IV ADMINISTRATION AND SERVICING OF MORTGAGE LOANS........................................................16
Section 4.01 Servicer to Act as Servicer.........................................................16
Section 4.02 Liquidation of Mortgage Loans.......................................................17
Section 4.03 Collection of Mortgage Loan Payments................................................19
Section 4.04 Establishment of and Deposits to Custodial Account..................................19
Section 4.05 Permitted Withdrawals From Custodial Account........................................20
Section 4.06 Establishment of and Deposits to Escrow Account.....................................21
Section 4.07 Permitted Withdrawals From Escrow Account...........................................22
Section 4.08 Payment of Taxes, Insurance and Other Charges.......................................23
Section 4.09 Protection of Accounts..............................................................23
Section 4.10 Maintenance of Hazard Insurance.....................................................23
Section 4.11 Maintenance of Mortgage Impairment Insurance........................................25
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions Insurance.....................25
Section 4.13 Inspections.........................................................................26
Section 4.14 Restoration of Mortgaged Property...................................................26
Section 4.15 Maintenance of PMI Policy or LPMI Policy; Claims....................................26
Section 4.16 Title, Management and Disposition of REO Property...................................27
Section 4.17 Real Estate Owned Reports...........................................................29
Section 4.18 Liquidation Reports.................................................................29
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged Property......................29
Section 4.20 Application of Buydown Funds........................................................29
Section 4.21 Notification of Adjustments.........................................................30
Section 4.22 Confidentiality/Protection of Customer Information..................................30
Section 4.23 Fair Credit Reporting Act...........................................................31
Section 4.24 Use of Subservicers and Subcontractors..............................................31
Section 4.25 Automated Servicing Systems.........................................................32
Section 4.26 Disaster Recovery/Business Continuity Plan..........................................32
Section 4.27 Quality Control Procedures..........................................................32
ARTICLE V PAYMENTS TO OWNER......................................................................................32
Section 5.01 Remittances.........................................................................32
Section 5.02 Statements to Owner.................................................................33
Section 5.03 Monthly Advances by Servicer........................................................33
Section 5.04 Repurchase..........................................................................34
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ARTICLE VI GENERAL SERVICING PROCEDURES..........................................................................35
Section 6.01 Transfers of Mortgaged Property.....................................................35
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.............................35
Section 6.03 Servicing Compensation..............................................................36
Section 6.04 Annual Statements as to Compliance..................................................36
Section 6.05 [Reserved.].........................................................................37
Section 6.06 Report on Assessment of Compliance and Attestation..................................37
Section 6.07 Right to Examine Servicer Records...................................................38
Section 6.08 Compliance with REMIC Provisions....................................................38
ARTICLE VII SERVICER TO COOPERATE................................................................................38
Section 7.01 Provision of Information............................................................38
ARTICLE VIII THE SERVICER........................................................................................39
Section 8.01 Indemnification; Third Party Claims.................................................39
Section 8.02 Merger or Consolidation of the Servicer.............................................40
Section 8.03 Limitation on Liability of Servicer and Others......................................40
Section 8.04 Limitation on Resignation and Assignment by Servicer................................40
ARTICLE IX SECURITIZATION TRANSACTIONS...........................................................................41
Section 9.01 Removal of Mortgage Loans from Inclusion Under this Agreement Upon a
Securitization Transaction..................................................................41
ARTICLE X DEFAULT................................................................................................49
Section 10.01 Events of Default..................................................................49
Section 10.02 Waiver of Defaults.................................................................51
ARTICLE XI TERMINATION...........................................................................................52
Section 11.01 Termination........................................................................52
Section 11.02 Termination Without Cause..........................................................52
ARTICLE XII MISCELLANEOUS PROVISIONS.............................................................................52
Section 12.01 Successor to Servicer..............................................................52
Section 12.02 Amendment..........................................................................53
Section 12.03 Governing Law......................................................................53
Section 12.04 Arbitration........................................................................54
Section 12.05 Duration of Agreement..............................................................54
Section 12.06 Notices............................................................................54
Section 12.07 Severability of Provisions.........................................................55
Section 12.08 Relationship of Parties............................................................55
Section 12.09 Execution; Successors and Assigns..................................................55
Section 12.10 Recordation of Assignments of Mortgage.............................................55
Section 12.11 Assignment by Owner................................................................56
Section 12.12 Solicitation of Mortgagor..........................................................56
Section 12.13 Further Agreements.................................................................56
Section 12.14 Conflicts..........................................................................56
Section 12.15 Counterparts.......................................................................56
Section 12.16 Exhibits...........................................................................56
Section 12.17 Third Party Beneficiaries..........................................................57
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EXHIBITS
Exhibit A Reserved
Exhibit B Form of Assignment and Assumption
Exhibit C Reserved
Exhibit D Servicing System Guidelines and Requirements
Exhibit E Form of Custodial Account Certification
Exhibit F Form of Escrow Account Certification
Exhibit G Form of Power of Attorney
Exhibit H Servicing Criteria
Exhibit I Sarbanes Certification
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This is a Servicing Agreement for fixed-rate and adjustable-rate
residential first and second lien mortgage loans, dated and effective as of July
1, 2006, and is executed between Bank of America, National Association, as owner
(the "Owner"), and ▇▇▇▇▇ Fargo Bank, N.A., as servicer (the "Servicer").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Owner owns certain fixed-rate and adjustable-rate mortgage
loans purchased, from time to time, by the Owner on a servicing released basis
(the "Mortgage Loans");
WHEREAS, the Owner desires to have the Servicer continue to service the
Mortgage Loans following reconstitution of the Mortgage Loans and the Servicer
desires to service and administer the Mortgage Loans at such time;
WHEREAS, the Owner has sold, from time to time, and the Servicer has
purchased, from time to time, the servicing rights related to the Mortgage Loans
pursuant to that certain Flow Servicing Rights Purchase and Sale Agreement dated
as of July 1, 2006 between the Owner and the Servicer;
WHEREAS, since the date the related servicing rights were transferred,
the Servicer has serviced the Mortgage Loans for the Owner pursuant to that
certain Warehousing Servicing Agreement, dated July 1, 2006, by and between the
Servicer and the Owner;
WHEREAS, the parties desire to set forth the terms and conditions as to
the servicing of the Mortgage Loans in which Servicer owns the servicing rights
following the date of a reconstitution;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Owner and the Servicer agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the
content otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan,
procedures (including collection procedures) that comply with applicable
federal, state and local law, and that the Servicer customarily employs and
exercises in servicing and administering mortgage loans for its own account, the
terms of the related Mortgage and Mortgage Note and accepted mortgage servicing
practices of prudent mortgage lending institutions which service mortgage loans
of the same type as the Mortgage Loans in the jurisdiction where the related
Mortgaged Property is located.
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Adjustable Rate Mortgage Loan: A Mortgage Loan that contains a
provision pursuant to which the Mortgage Interest Rate is adjusted periodically.
Adjustment Date: As to each Adjustable Rate Mortgage Loan, the date on
which the Mortgage Interest Rate is adjusted in accordance with the terms of the
related Mortgage Note and Mortgage.
Agency/Agencies: ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or GNMA, or any of them as
applicable.
Agency Sale: Any sale or transfer of some or all of the Mortgage Loans
by the Owner to an Agency which sale or transfer is not a Securitization
Transaction or Whole Loan Transfer.
Agreement: This Servicing Agreement and all exhibits and amendments
hereof and supplements hereto.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the ownership of the Mortgage to the Owner, or if the related Mortgage has been
recorded in the name of MERS or its designee, such actions as are necessary to
cause the Owner to be shown as the owner of the related Mortgage on the records
of MERS for purposes of the system of recording transfers of beneficial
ownership of mortgages maintained by MERS, including assignment of the MIN
Number which will appear either on the Mortgage or the Assignment of Mortgage to
MERS.
Assignment of Mortgage Note and Pledge Agreement: With respect to a
Cooperative Loan, an assignment of the Mortgage Note and Pledge Agreement.
Assignment of Proprietary Lease: With respect to a Cooperative Loan, an
assignment of the Proprietary Lease sufficient under the laws of the
jurisdiction wherein the related Cooperative Apartment is located to effect the
assignment of such Proprietary Lease.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking and savings and loan institutions in the states where the
parties are located are authorized or obligated by law or executive order to be
closed.
Buydown Agreement: An agreement between the originator of a Mortgage
Loan and a Mortgagor, or an agreement among the originator, a Mortgagor and a
seller of a Mortgaged Property or a third party with respect to a Mortgage Loan
which provides for the application of Buydown Funds.
Buydown Funds: In respect of any Buydown Mortgage Loan, any amount
contributed by the seller of a Mortgaged Property subject to a Buydown Mortgage
Loan, the buyer of such property, or any other source, plus interest earned
thereon, in order to enable the Mortgagor to reduce the payments required to be
made from the Mortgagor's funds in the early years of a Mortgage Loan.
Buydown Mortgage Loan: Any Mortgage Loan in respect of which, pursuant
to a Buydown Agreement, (i) the Mortgagor pays less than the full monthly
payments specified in the
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Mortgage Note for a specified period, and (ii) the difference between the
payments required under such Buydown Agreement and the Mortgage Note is provided
from Buydown Funds.
Buydown Period: The period of time when a Buydown Agreement is in
effect with respect to a related Buydown Mortgage Loan.
Code: The Internal Revenue Code of 1986, as it may be amended from time
to time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
Commission: The United States Securities and Exchange Commission.
Commitment Letter: The commitment by Servicer to purchase the Servicing
Rights from Owner, pursuant to the Purchase Agreement.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Cooperative: The entity that holds title (fee or an acceptable
leasehold estate) to all of the real property that the Project comprises,
including the land, separate dwelling units and all common areas.
Cooperative Apartment: The specific dwelling unit relating to a
Cooperative Loan.
Cooperative Loan: A Mortgage Loan that is secured by Cooperative Shares
and a Proprietary Lease granting exclusive rights to occupy the related
Cooperative Apartment.
Cooperative Shares: The shares of stock issued by a Cooperative, owned
by the Mortgagor, and allocated to a Cooperative Apartment.
Custodial Account: The separate account or accounts created and
maintained pursuant to Section 4.04.
Custodial Agreement: The agreement governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents.
Custodian: The custodian under the Custodial Agreement, or its
successor in interest or assigns, or any successor to the Custodian under the
Custodial Agreement as provided therein.
Cut-off Date: With respect to the transfer of servicing by the Owner to
the Servicer for any group of Mortgage Loans, the date so specified in the
related Recon Acknowledgement Agreement.
Depositor: The depositor, as such term is defined in Regulation AB,
with respect to any Securitization Transaction.
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Determination Date: The Business Day immediately preceding the related
Remittance Date.
Due Date: The first day of the month on which the Monthly Payment is
due on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period commencing
on the second day of the month preceding the month of such Remittance Date and
ending on the first day of the month of such Remittance Date.
Errors and Omissions Insurance Policy: An errors and omissions
insurance policy to be maintained by the Servicer pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 4.06.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other related
document.
Event of Default: Any one of the conditions or circumstances enumerated
in Section 10.01.
Exchange Act: The Securities Exchange Act of 1934, as amended.
▇▇▇▇▇▇ ▇▇▇: The entity formerly known as Federal National Mortgage
Association (FNMA), or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
Fidelity Bond: A fidelity bond to be maintained by the Servicer
pursuant to Section 4.12.
First Remittance Date: With respect to each Mortgage Loan, the 18th day
(or if such day is not a Business Day, the immediately preceding Business Day)
of the month following the month in which the related Final Transfer Date
occurs, or such other day of the month as may be specified in the related Recon
Acknowledgement Agreement.
▇▇▇▇▇▇▇ Mac: The entity also known as the Federal Home Loan Mortgage
Corporation (FHLMC), or any successor thereto.
Initial Transfer Date: Each date, set forth on the Transfer
Acknowledgement Agreement, on which Servicing Rights are transferred to the
Servicer under that certain Flow Servicing Rights Purchase and Sale Agreement
dated as of July 1, 2006 between the Owner and the Servicer.
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Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property,
including LPMI Proceeds, if applicable.
Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the
related Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio of the original loan amount of the Mortgage Loan at its origination
(unless otherwise indicated) to the Appraised Value of the Mortgaged Property.
LPMI Policy: A policy of primary mortgage guaranty insurance
issued by a Qualified Insurer pursuant to which the related premium is to be
paid by the servicer of the related Mortgage Loan from payments of interest made
by the Mortgagor.
LPMI Proceeds: Proceeds of any LPMI Policy.
Master Servicer: With respect to any Securitization Transaction, the
"master servicer," if any, identified in the related transaction documents.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
MERS Mortgage Loan: Any Mortgage Loan as to which the related Mortgage
or Assignment of Mortgage has been registered with MERS on the MERS System
MERS System: The system of recording transfers of mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number used to identify mortgage loans
registered under MERS.
Monthly Advance: The portion of each Monthly Payment that is delinquent
with respect to each Mortgage Loan at the close of business on the Determination
Date required to be advanced by the Servicer pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
Monthly Payment: The scheduled monthly payment of principal and
interest or, with respect to an interest only Mortgage Loan, payments of (i)
interest, or (ii) principal and interest, if applicable, on a Mortgage Loan.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple in real property securing the Mortgage Note or the Pledge Agreement
securing the Mortgage Note for a Cooperative Loan.
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Mortgage File: The Mortgage Loan Documents, and any additional
documents required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note in accordance with the provisions of the Mortgage Note.
Mortgage Loan: An individual mortgage loan or a Cooperative Loan which
is the subject of this Agreement, each Mortgage Loan or a Cooperative Loan
originally sold and subject to this Agreement being identified on the Mortgage
Loan Schedule, which Mortgage Loan or a Cooperative Loan includes without
limitation the Servicing File, the Monthly Payments, Principal Prepayments,
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition
Proceeds and all other rights, benefits, proceeds and obligations arising from
or in connection with such Mortgage Loan or a Cooperative Loan.
Mortgage Loan Documents: With respect to a Mortgage Loan, the original
related Mortgage Note with applicable addenda and riders, the original related
Mortgage and the originals of any required addenda and riders, the original
related Assignment of Mortgage and any original intervening related Assignments
of Mortgage, the original related title insurance policy and evidence of the
related PMI Policy.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Owner, which shall be equal to the
related Mortgage Interest Rate minus the Servicing Fee Rate and minus any lender
paid PMI Policy premiums, if applicable.
Mortgage Loan Schedule: A schedule of Mortgage Loans subject to this
Agreement, annexed to each Recon Acknowledgement Agreement.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property securing repayment of the debt
evidenced by a Mortgage Note, or with respect to a Cooperative Loan, the
Cooperative Apartment.
Mortgagor: The obligor on a Mortgage Note.
OCC: The Office of the Comptroller of the Currency.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or the President or a Vice President or
an Assistant Vice President and certified by the Treasurer or the Secretary or
one of the Assistant Treasurers or Assistant Secretaries of the Servicer, 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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Owner: Bank of America, National Association or its successor in
interest or any successor to the Owner under this Agreement as herein provided.
Person: Any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof.
Pledge Agreement: With respect to a Cooperative Loan, the specific
agreement creating a first lien on and pledge of the Cooperative Shares and the
appurtenant Proprietary Lease.
Pledge Instruments: With respect to a Cooperative Loan, the Stock
Power, the Assignment of the Proprietary Lease and the Assignment of the
Mortgage Note and Pledge Agreement.
PMI Policy: A policy of primary mortgage guaranty insurance evidenced
by an electronic form and certificate number issued by a Qualified Insurer, as
required by this Agreement with respect to certain Mortgage Loans.
Prepayment Interest Shortfall: As to any Remittance Date and each
Mortgage Loan subject to a Principal Prepayment received during the Principal
Prepayment Period preceding such Remittance Date, the amount, if any, by which
one month's interest at the related Mortgage Loan Remittance Rate on such
Principal Prepayment exceeds the amount of interest paid in connection with such
Principal Prepayment.
Prepayment Penalty: Payments calculated pursuant to the Mortgage Note
and due pursuant to the terms of the Mortgage Loan Documents as the result of a
Principal Prepayment of the Mortgage Loan, not otherwise due thereon in respect
of principal or interest.
Prime Rate: The prime rate announced to be in effect from time to time,
as published as the average rate in The Wall Street Journal.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date.
Principal Prepayment Period: As to any Remittance Date, the period
commencing on the 14th day of the month preceding the month in which that
Remittance Date occurs and ending on the 13th day of the month in which such
Remittance Date occurs or as otherwise set forth on the related Recon
Acknowledgement agreement.
Project: With respect to a Cooperative Loan, all real property owned by
the related Cooperative including the land, separate dwelling units and all
common areas.
Proprietary Lease: With respect to a Cooperative Loan, a lease on a
Cooperative Apartment evidencing the possessory interest of the Mortgagor in
such Cooperative Apartment.
Purchase Agreement: The Flow Servicing Rights Purchase and Sale
Agreement dated as of July 1, 2006 between the Owner and the Servicer;
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Qualified Depository: A deposit account or accounts maintained with a
federal or state chartered depository institution the deposits in which are
insured by the FDIC to the applicable limits and the short-term unsecured debt
obligations of which (or, in the case of a depository institution that is a
subsidiary of a holding company, the short-term unsecured debt obligations of
such holding company) are rated A-1 by Standard & Poor's Ratings Services or
Prime-1 by ▇▇▇▇▇'▇ Investors Service, Inc. (or a comparable rating if another
rating agency is specified by the Owner by written notice to the Servicer) at
the time any deposits are held on deposit therein.
Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac.
Recon Acknowledgement Agreement: The Acknowledgement Agreement between
the Owner and the Servicer as provided for in Exhibit B-1 of that certain Flow
Servicing Rights Purchase and Sale Agreement dated as of July 1, 2006 between
the Owner and the Servicer.
Reconstitution: Any Securitization Transaction or Whole Loan Transfer.
Reconstitution Agreement: The agreement or agreements entered into by
the Servicer and the Owner and/or certain third parties on the Reconstitution
Date or Dates with respect to any or all of the Mortgage Loans serviced
hereunder, in connection with a Whole Loan Transfer or Securitization
Transaction.
Reconstitution Date: The date on which any or all of the Mortgage Loans
serviced under this Agreement may be removed from this Agreement and
reconstituted as part of an Agency Sale, Securitization Transaction or Whole
Loan Transfer pursuant to Section 9.01 hereof. The Reconstitution Date shall be
such date which the Owner shall designate. On such date, the Mortgage Loans
transferred may cease to be covered by this Agreement and the Servicer's
servicing responsibilities may cease under this Agreement with respect to the
related transferred Mortgage Loans.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from time to
time, and subject to such clarification and interpretation as have been provided
by the Commission in the adopting release (Asset-Backed Securities, Securities
Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the
staff of the Commission, or as may be provided by the Commission or its staff
from time to time.
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
a REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The 18th day (or if such 18th day is not a Business
Day, the first Business Day immediately preceding the 18th day) of any month.
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REO Disposition: The final sale by the Servicer of any REO Property.
REO Disposition Fee: The REO Disposition fee shall be the greater of
one percent (1%) of the gross sales price of the REO Property or $1,500.00 per
REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 4.16.
REO Property: A Mortgaged Property acquired by the Servicer on behalf
of the Owner through foreclosure or by deed in lieu of foreclosure, as described
in Section 4.16.
Sale Date: Each date on which the Servicer acquires the right, title
and interest in and to the Servicing Rights attendant to Mortgage Loans.
Sarbanes Certifying Party: A Person who files a ▇▇▇▇▇▇▇▇-▇▇▇▇▇
certification directly with the Securities and Exchange Commission pursuant to
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933, as
amended.
Securitization Transaction: Any transaction involving either (a) a sale
or other transfer of some or all of the Mortgage Loans directly or indirectly to
an issuing entity in connection with an issuance of publicly offered or
privately placed, rated or unrated mortgage-backed securities or (b) an issuance
of publicly offered or privately placed, rated or unrated securities, the
payments on which are determined primarily by reference to one or more
portfolios of residential mortgage loans consisting, in whole or in part, of
some or all of the Mortgage Loans.
Seller: Each person who sold Mortgage Loans to the Owner
Servicer: ▇▇▇▇▇ Fargo Bank, N.A., or its successor in interest or
assigns, or any successor to the Servicer under this Agreement appointed as
herein provided.
Servicer Information: As defined in Section 9.01(h)(i)(A).
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorney's fees and
disbursements) other than Monthly Advances incurred in the performance by the
Servicer of its servicing obligations, including, but not limited to, the cost
of (a) the preservation, restoration and protection of the Mortgaged Property,
(b) any enforcement or judicial proceedings, including foreclosures, (c) the
management and liquidation of any REO Property and (d) compliance with the
obligations under Section 4.08 (excluding the Servicer's obligation to pay the
premiums on LPMI Policies).
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d)
of Regulation AB, as such may be amended from time to time.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee the Owner shall pay to the Servicer, which shall, for a period of one
full month, be equal to one-twelfth of the product of (a) the Servicing Fee Rate
and (b) the outstanding principal balance of such Mortgage Loan. Such fee shall
be payable monthly, computed on the basis of the same
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principal amount and period respecting which any related interest payment on a
Mortgage Loan is received. The obligation of the Owner to pay the Servicing Fee
is limited to, and the Servicing Fee is payable solely from, the interest
portion (including recoveries with respect to interest from Liquidation
Proceeds, to the extent permitted by Section 4.05) of such Monthly Payment
collected by the Servicer, or as otherwise provided under Section 4.05.
Servicing Fee Rate: the percentage per annum with respect to each
Mortgage Loan set forth on the related Recon Acknowledgement Agreement.
Servicing File: With respect to each Mortgage Loan, the file retained
by the Servicer consisting of originals of all documents in the Mortgage File
which are not delivered to the Owner or the Custodian and copies of the Mortgage
Loan Documents listed in the Custodial Agreement, if applicable, the originals
of which are delivered to the Custodian or the Owner pursuant to Section 2.03.
Servicing Officer: Any officer of the Servicer involved in or
responsible for the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Servicer to the
Owner upon request, as such list may from time to time be amended.
Stated Principal Balance: As to each Mortgage Loan, (i) the principal
balance of the Mortgage Loan at the Cut-off Date after giving effect to payments
of principal due on or before such date, whether or not received, minus (ii) all
amounts previously distributed to the Owner with respect to the related Mortgage
Loan representing payments or recoveries of principal.
Stock Certificate: With respect to a Cooperative Loan, a certificate
evidencing ownership of the Cooperative Shares issued by the Cooperative
Stock Power: With respect to a Cooperative Loan, an assignment of the
Stock Certificate or an assignment of the Cooperative Shares issued by the
Cooperative.
Subcontractor: Any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as "servicing" is commonly understood by
participants in the mortgage-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of Regulation
AB with respect to Mortgage Loans under the direction or authority of the
Servicer or a Subservicer.
Subservicer: Any person that services Mortgage Loans on behalf of the
Servicer or any Subservicer and is responsible for the performance (whether
directly or through Subservicers or Subcontractors) of a substantial portion of
the material servicing functions required to be performed by the Servicer under
this Agreement or any Reconstitution Agreement that are identified in Item
1122(d) of Regulation AB.
Transfer Acknowledgement Agreement: The Acknowledgement Agreement
between the Owner and the Servicer as provided for in Exhibit B-2 of that
certain Flow Servicing Rights Purchase and Sale Agreement dated as of July 1,
2006 between the Owner and the Servicer.
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Warehousing Servicing Agreement: that certain Warehousing Servicing
Agreement, dated July 1, 2006, by and between the Servicer and the Owner,
governing the servicing of the Mortgage Loans from the Initial Transfer Date to
the Reconstitution Date.
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
Securitization Transaction or Agency Sale.
ARTICLE II
POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL
AGREEMENT; DELIVERY OF DOCUMENTS
Section 2.01 Possession of Mortgage Files; Maintenance of Servicing
Files.
From and after each Initial Transfer Date or Sale Date, as applicable,
the contents of each Mortgage File not delivered to the Owner or held by the
Custodian shall be held in trust by the Servicer for the benefit of the Owner as
the owner thereof. The Servicer shall maintain a Servicing File consisting of a
copy of the contents of each Mortgage File and the originals of the documents in
each Mortgage File not delivered to the Owner or the Custodian, as applicable.
The possession of each Servicing File by the Servicer is at the will of the
Owner for the sole purpose of servicing the related Mortgage Loan, and such
retention and possession by the Servicer is in a custodial capacity only. The
ownership of each Mortgage Note, the related Mortgage and the related Mortgage
File are vested in the Owner, and the ownership of all records and documents
with respect to the related Mortgage Loan prepared by or which come into the
possession of the Servicer shall vest immediately in the Owner and shall be
retained and maintained by the Servicer, in trust, at the will of the Owner and
only in such custodial capacity. The Servicer shall release its custody of the
contents of any Servicing File 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 of any
Mortgage Loan. All such costs associated with the release, transfer and
re-delivery of any Servicing Files to the Servicer shall be the responsibility
of the Owner.
Section 2.02 Books and Records; Transfers of Mortgage Loans.
All rights arising out of the Mortgage Loans, including, but not
limited to, all funds received on or in connection with the Mortgage Loans,
shall be received and held by the Servicer in trust for the benefit of the Owner
as owner of the Mortgage Loans, and, when applicable, the Servicer shall retain
record title to the related Mortgages for the sole purpose of facilitating the
servicing and the supervision of the servicing of the Mortgage Loans.
To the extent that original documents are not required for purposes of
realization of Liquidation Proceeds or Insurance Proceeds, documents maintained
by the Servicer may be in the form of microfilm or microfiche or such other
reliable means of recreating original documents, including but not limited to,
optical imagery techniques so long as the Servicer complies with the
requirements of the ▇▇▇▇▇▇ Mae Selling and Servicing Guide, as amended from time
to time.
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The Servicer shall maintain with respect to each Mortgage Loan and
shall make available for inspection by any Owner or its designee the related
Servicing File during the time the Owner retains ownership of a Mortgage Loan
and thereafter in accordance with applicable laws and regulations.
The Servicer shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the Servicer
shall note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be
made unless such transfer is in compliance with the terms hereof. For the
purposes of this Agreement, the Servicer shall be under no obligation to deal
with any Person with respect to this Agreement or the Mortgage Loans unless the
books and records show such Person as the owner of the Mortgage Loan. The Owner
may, subject to the terms of this Agreement, sell and transfer one or more of
the Mortgage Loans. Upon receipt of notice of the transfer, the Servicer shall
▇▇▇▇ its books and records to reflect the ownership of the Mortgage Loans of
such assignee, and shall release the previous Owner from its obligations
hereunder with respect to the Mortgage Loans sold or transferred. Such
notification of a transfer shall include a final loan schedule which shall be
received by the Servicer no fewer than five (5) Business Days before the last
Business Day of the month. If such notification is not received as specified
above, the Servicer's duties to remit and report as required by Section 5 shall
begin with the following Due Period.
Upon request from the Owner, at the Owner's expense, the Servicer shall
deliver no later than thirty (30) days after such request any Servicing File or
document therein, or copies thereof, to the Owner at the direction of the Owner.
The Owner shall return any Servicing File or document therein delivered pursuant
to this Section no later than ten (10) days after receipt thereof.
Section 2.03 Custodial Agreement; Delivery of Documents.
The Servicer shall forward to the Owner or the Custodian, as
applicable, original documents evidencing an assumption, modification,
consolidation or extension of any Mortgage Loan entered into in accordance with
Section 4.01 or 6.01 within one week of their execution, provided, however, that
the Servicer shall provide the Owner or the Custodian, as applicable, with a
certified true copy of any such document submitted for recordation within ten
(10) days of its execution, and shall provide the original of any document
submitted for recordation or a copy of such document certified by the
appropriate public recording office to be a true and complete copy of the
original within sixty days of its submission for recordation.
In the event the public recording office is delayed in returning any
original document, the Servicer shall deliver to the Owner or the Custodian
within 240 days of its submission for recordation, a copy of such document and
an Officer's Certificate, which shall (i) identify the recorded document; (ii)
state that the recorded document has not been delivered to the Custodian due
solely to a delay by the public recording office, (iii) state the amount of time
generally required by the applicable recording office to record and return a
document submitted for recordation, and (iv) specify the date the applicable
recorded document will be delivered to the Custodian. The Servicer will be
required to deliver the document to the Owner or the Custodian by the date
specified in (iv) above. An extension of the date specified in (iv) above may be
requested from the Owner, which consent shall not be unreasonably withheld.
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In the event that new, replacement, substitute or additional Stock
Certificates are issued with respect to existing Cooperative Shares, the
Servicer immediately shall deliver to the Owner or the Custodian the new Stock
Certificates, together with the related Stock Powers in blank. Such new Stock
Certificates shall be subject to the related Pledge Instruments and shall be
subject to all of the terms, covenants and conditions of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01 Servicer Representations and Warranties.
The Servicer hereby represents and warrants to the Owner that, as of
each Reconstitution Date:
(a) Due Organization and Authority.
The Servicer is a national banking association duly organized,
validly existing and in good standing under the laws of the
United States and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and
in good standing in each state where a Mortgaged Property is
located if the laws of such state require licensing or
qualification in order to conduct business of the type
conducted by the Servicer, and in any event the Servicer is in
compliance with the laws of any such state to the extent
necessary to ensure the enforceability of the related Mortgage
Loan and the servicing of such Mortgage Loan in accordance
with the terms of this Agreement; the Servicer has the full
power and authority to execute and deliver this Agreement and
to perform in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments of
transfer to be delivered pursuant to 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 obligation of the
Servicer; and all requisite action has been taken by the
Servicer to make this Agreement valid and binding upon the
Servicer in accordance with its terms;
(b) Ordinary Course of Business.
The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the
Servicer, who is in the business of selling and servicing
loans, and are not subject to the bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction;
(c) No Conflicts.
Neither the execution and delivery of this Agreement, or the
transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement
will conflict with or result in a breach of any of the terms,
articles of incorporation or by-laws or any legal restriction
or any
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agreement or instrument to which the Servicer is now a party
or by which it is bound, or constitute a default or result in
the violation of any law, rule, regulation, order, judgment or
decree to which the Servicer or its property is subject, or
impair the ability of the Owner to realize on the Mortgage
Loans, or impair the value of the Mortgage Loans;
(d) Ability to Service.
The Servicer is an approved seller/servicer of conventional
residential mortgage loans for ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, with
the facilities, procedures, and experienced personnel
necessary for the sound servicing of mortgage loans of the
same type as the Mortgage Loans. The Servicer is a HUD
approved mortgagee pursuant to Section 203 of the National
Housing Act and is in good standing to sell mortgage loans to
and service mortgage loans for ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, and
no event has occurred, including but not limited to a change
in insurance coverage, which would make the Servicer unable to
comply with ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac eligibility requirements
or which would require notification to either ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac;
(e) Reasonable Servicing Fee.
The Servicer acknowledges and agrees that the Servicing Fee
represents reasonable compensation for performing such
services and that the entire Servicing Fee shall be treated by
the Servicer, for accounting and tax purposes, as compensation
for the servicing and administration of the Mortgage Loans
pursuant to this Agreement;
(f) Ability to Perform.
The Servicer does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every
covenant contained in this Agreement and the Servicer is
solvent;
(g) No Litigation Pending.
There is no action, suit, proceeding or investigation pending
or threatened against the Servicer which, either in any one
instance or in the aggregate, may result in any material
adverse change in the business, operations, financial
condition, properties or assets of the Servicer, or in any
material impairment of the right or ability of the Servicer to
carry on its business substantially as now conducted, or in
any material liability on the part of the Servicer, or which
would draw into question the validity of this Agreement or of
any action taken or to be contemplated herein, or which would
be likely to impair materially the ability of the Servicer to
perform under the terms of this Agreement;
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(h) No Consent Required.
No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution,
delivery and performance by the Servicer of or compliance by
the Servicer with this Agreement, or if required, such
approval has been obtained prior to the respective Initial
Transfer Date or Sale Date. Servicer has complied with, and is
not in default under, any law, ordinance, requirement,
regulation, rule, or order applicable to its business or
properties, the violation of which would materially and
adversely affect the operations or financial condition of
Servicer or its ability to perform its obligations hereunder;
(i) No Untrue Information.
Neither this Agreement nor any statement, report or other
document furnished or to be furnished pursuant to this
Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of fact or omits to state
a fact necessary to make the statements contained therein not
misleading;
(j) No Material Change.
There has been no material adverse change in the business,
operations, financial condition or assets of the Servicer
since the date of the Servicer's most recent financial
statements;
(k) No Brokers' Fees.
The Servicer has not dealt with any broker, investment banker,
agent or other Person that may be entitled to any commission
or compensation in the connection with the transactions
contemplated hereunder; and
(l) MERS.
The Servicer is a member of MERS in good standing; and
(m) Effective Agreement.
The execution, delivery and performance of this Agreement by
Servicer and consummation of the transactions contemplated
hereunder have been or will be duly and validly authorized by
all necessary organizational or other action; this Agreement
is valid and a legally binding agreement of Servicer
enforceable against Servicer in accordance with its terms,
subject to the effect of insolvency, liquidation,
conservatorship and similar laws administered by the Federal
Deposit Insurance Corporation affecting the contract
obligations of insured banks and the discretion of a court to
grant specific performance.
Section 3.02 Remedies.
The Servicer shall indemnify the Owner and hold it harmless against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments, and other costs and expenses resulting from
any claim, demand, defense or assertion
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based on or grounded upon, or resulting from a breach of the Servicer's
representations and warranties contained in this Agreement. It is understood and
agreed that the obligations of the Servicer to indemnify the Owner as provided
in this Section 3.02 constitute the sole remedies of the Owner respecting a
breach of the foregoing representations and warranties.
Any cause of action against the Servicer relating to or arising out of
the breach of any representations and warranties made in Section 3.01 shall
accrue as to any Mortgage Loan upon (i) discovery of such breach by the Owner or
notice thereof by the Servicer to the Owner, (ii) failure by the Servicer to
cure such breach, and (iii) demand upon the Servicer by the Owner for compliance
with this Agreement.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Servicer to Act as Servicer.
As of the Reconstitution Date, the Servicer, as an independent
contractor, shall service and administer the Mortgage Loans on behalf of the
Owner and shall have full power and authority, acting alone or through the
utilization of a Subservicer or a Subcontractor, to do any and all things in
connection with such servicing and administration which the Servicer may deem
necessary or desirable, consistent with the terms of this Agreement and with
Accepted Servicing Practices and, in the case of any Mortgage Loan transferred
to a REMIC, with the REMIC Provisions. The Servicer shall be responsible for any
and all acts of a Subservicer and a Subcontractor, and the Servicer's
utilization of a Subservicer or a Subcontractor shall in no way relieve the
liability of the Servicer under this Agreement.
Consistent with the terms of this Agreement and subject to the REMIC
Provisions if a Mortgage Loan has been transferred to a REMIC, 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, postponement or indulgence is not
materially adverse to the Owner, provided, however, the Servicer shall not make
any future advances, other than Servicing Advances with respect to a Mortgage
Loan. The Servicer shall not permit any modification with respect to any
Mortgage Loan that would add any Servicing Advances or costs related thereto to
the outstanding principal balance. 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 principal (except for actual
payments of principal) or change the final maturity date on such Mortgage Loan,
unless the Mortgagor is in default with respect to the Mortgage Loan or such
default is, in the judgment of the Servicer, imminent. In the event that no
default exists or is imminent, the Servicer shall request written consent from
the Owner to permit such a modification and the Owner shall provide written
consent or notify the Servicer of its objection to such modification within
three (3) Business Days of its receipt of the Servicer's request. In the event
of any such modification which permits the deferral of interest or principal
payments on any Mortgage Loan, the Servicer shall, on the Business Day
immediately preceding the Remittance Date in any month in which any such
principal or interest payment has been deferred, deposit in the Custodial
Account from its own funds, in accordance with Section 5.03.
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Without limiting the generality of the foregoing, the Servicer shall continue,
and is hereby authorized and empowered, to execute and deliver on behalf of
itself and the Owner, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties. If
reasonably required by the Servicer, the Owner shall furnish the Servicer,
within three (3) Business Days of Servicer's request, 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.
The Servicer is authorized and empowered by the Owner, in its own name,
when the Servicer believes it appropriate in its reasonable judgment to register
any Mortgage Loan on the MERS System, or cause the removal from MERS
registration of any Mortgage Loan on the MERS System, to execute and deliver, on
behalf of the Owner, any and all instruments of assignment and other comparable
instruments with respect to such assignment or re-recording of a Mortgage in the
name of MERS, solely as nominee for the Owner and its successors and assigns.
In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures (including collection procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering similar
mortgage loans for similar investors, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, and the Owner's reliance on the Servicer.
The Servicer shall cause to be maintained for each Cooperative Loan a
copy of the financing statements and shall file any such financing statements
and continuation statements as necessary, in accordance with the Uniform
Commercial Code applicable in the jurisdiction in which the related Cooperative
Apartment is located, to perfect and protect the security interest and lien of
the Owner.
Notwithstanding anything to the contrary contained herein, the Servicer
shall not waive a Prepayment Penalty except under the following circumstances:
(i) such waiver relates to a reasonably foreseeable default and would, in the
reasonable judgment of the Servicer, maximize recovery of total proceeds taking
into account the value of such Prepayment Penalty and the related Mortgage Loan;
or (ii) the Servicer obtains a written Opinion of Counsel, which may be in-house
counsel for the Servicer, opining that any Prepayment Penalty or charge is not
legally enforceable in the circumstances under which the related Principal
Prepayment occurs. In the event the Servicer waives any Prepayment Penalty,
other than as set forth in (i) and (ii) above, the Servicer shall deposit the
amount of any such Prepayment Penalty in the Custodial Account for distribution
to the Owner on the next Remittance Date.
Section 4.02 Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 4.01 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 take such action as (1) the Servicer
would take under similar circumstances with respect to a similar mortgage loan
held
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for its own account for investment, (2) shall be consistent with Accepted
Servicing Practices, (3) the Servicer shall determine prudently to be in the
best interest of Owner, and (4) is consistent with any related PMI Policy or
LPMI Policy or any other primary mortgage guaranty insurance policies obtained
and paid for by the Owner. In the event that any payment due under any Mortgage
Loan is not postponed pursuant to Section 4.01 and remains delinquent for a
period of 90 days or any other default continues for a period of 90 days beyond
the expiration of any grace or cure period, the Servicer shall commence
foreclosure proceedings and shall provide such information regarding the
Mortgage Loan and such foreclosure as the Owner reasonably may request, provided
that the Servicer shall cease or not commence foreclosure proceedings if the
Owner objects to such action. The Servicer shall follow any written directions
of the Owner with respect to the foreclosure proceedings of such Mortgage Loan,
as long as such directions are in accordance with Accepted Servicing Practices
and do not violate applicable law. In the event the Owner objects to such
foreclosure action, the Servicer shall not be required to make Monthly Advances
with respect to such Mortgage Loan, pursuant to Section 5.03, and the Servicer's
obligation to make such Monthly Advances shall terminate on the 90th day
referred to above. In such connection, the Servicer shall from its own funds
make all necessary and proper Servicing Advances, provided, however, that the
Servicer shall not be required to expend its own funds in connection with any
foreclosure or towards the restoration or preservation of any Mortgaged
Property, unless it shall determine (a) that such preservation, restoration
and/or foreclosure will increase the proceeds of liquidation of the Mortgage
Loan to Owner after reimbursement to itself for such expenses and (b) that such
expenses will be recoverable by it either through Liquidation Proceeds
(respecting which it shall have priority for purposes of withdrawals from the
Custodial Account pursuant to Section 4.05) or through Insurance Proceeds
(respecting which it shall have similar priority).
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure, in
the event the Servicer has reasonable cause to believe that a Mortgaged Property
is contaminated by hazardous or toxic substances or wastes, or if the Owner
otherwise requests an environmental inspection or review of such Mortgaged
Property, such an inspection or review is to be conducted by a qualified
inspector. The cost for such inspection or review shall be borne by the Owner.
Upon completion of the inspection or review, the Servicer shall promptly provide
the Owner with a written report of the environmental inspection.
After reviewing the environmental inspection report, the Owner shall
determine how the Servicer shall proceed with respect to the Mortgaged Property.
In the event (a) the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes
and (b) the Owner directs the Servicer to proceed with foreclosure or acceptance
of a deed in lieu of foreclosure, the Servicer shall be reimbursed for all
reasonable costs associated with such foreclosure or acceptance of a deed in
lieu of foreclosure and any related environmental clean up costs, as applicable,
from the related Liquidation Proceeds, or if the Liquidation Proceeds are
insufficient to fully reimburse the Servicer, the Servicer shall be entitled to
be reimbursed from amounts in the Custodial Account pursuant to Section 4.05
hereof. In the event the Owner directs the Servicer not to proceed with
foreclosure or acceptance of a deed in lieu of foreclosure, the Servicer shall
be reimbursed for all Servicing Advances made with respect to the related
Mortgaged Property from the Custodial Account pursuant to Section 4.05 hereof.
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Section 4.03 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on
all 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 and shall take special care in ascertaining and
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loan and the Mortgaged Property, to the end
that the installments payable by the Mortgagors will be sufficient to pay such
charges as and when they become due and payable.
Section 4.04 Establishment of and Deposits to Custodial Account.
The Servicer shall segregate and hold all funds collected and received
in connection with a Mortgage Loan separate and apart from any of its own funds
and general assets and shall establish and maintain one or more Custodial
Accounts, in the form of time deposit or demand accounts, titled "▇▇▇▇▇ Fargo
Bank, N.A., in trust for Bank of America, National Association, its successors
or assigns and/or subsequent Owners of Mortgage Loans, and various Mortgagors -
P & I." The Custodial Account shall be established with a Qualified Depository.
Upon request of the Owner and within ten (10) days thereof, the Servicer shall
provide the Owner with written confirmation of the existence of such Custodial
Account in the form attached hereto as Exhibit E. The Custodial Account shall at
all times be insured to the fullest extent allowed by applicable law. Funds
deposited in the Custodial Account may be drawn on by the Servicer in accordance
with Section 4.05.
The Servicer shall deposit in the Custodial Account within two (2)
Business Days of Servicer's receipt, and retain therein, the following
collections received by the Servicer and any other amounts required to be
deposited by the Servicer pursuant to this Agreement after the Cut-off Date, or
received by the Servicer prior to the Cut-off Date but allocable to a period
subsequent thereto, other than payments of principal and interest due on or
before the Cut-off Date, as follows:
(a) all payments on account of principal on the Mortgage
Loans, including all Principal Prepayments (including Prepayment Penalties paid
by the Mortgagor or other amounts paid by the Servicer pursuant to Section 4.01
of this Agreement);
(b) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate along with any Prepayment Interest
Shortfall;
(c) all Liquidation Proceeds;
(d) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 4.10 (other than proceeds to be held in the Escrow
Account and applied to the restoration or repair of the Mortgaged Property or
released to the Mortgagor in accordance with Section 4.14), Section 4.11 and
Section 4.15;
(e) all Condemnation Proceeds which are not applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor in
accordance with Section 4.14;
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(f) any amount required to be deposited in the Custodial
Account pursuant to Sections 4.01, 5.03, 6.01 or 6.02;
(g) any amounts payable in connection with the repurchase of
any Mortgage Loan pursuant to Section 5.04;
(h) any amounts required to be deposited by the Servicer
pursuant to Section 4.11 in connection with the deductible clause in any blanket
hazard insurance policy; and
(i) any amounts received with respect to or related to any REO
Property and all REO Disposition Proceeds pursuant to Section 4.16.
The foregoing requirements for deposit into the Custodial Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges and
assumption fees, to the extent permitted by Section 6.01, need not be deposited
by the Servicer into the Custodial Account. Any interest paid on funds deposited
in the Custodial Account by the depository institution shall accrue to the
benefit of the Servicer and the Servicer shall be entitled to retain and
withdraw such interest from the Custodial Account pursuant to Section 4.05. The
Servicer shall maintain adequate records with respect to all deposits made
pursuant to this Section 4.04. All funds required to be deposited in the
Custodial Account shall be held in trust for the Owner until withdrawn in
accordance with Section 4.05.
Section 4.05 Permitted Withdrawals From Custodial Account.
The Servicer shall, from time to time, withdraw funds from the
Custodial Account for the following purposes:
(a) to make payments to the Owner in the amounts and in the
manner provided for in Section 5.01;
(b) to reimburse itself for Monthly Advances of the Servicer's
funds made pursuant to Section 5.03, the Servicer's right to reimburse itself
pursuant to this sub-clause (b) being limited to amounts received on the related
Mortgage Loan which represent late payments of principal and/or interest
respecting which any such advance was made, it being understood that, in the
case of any such reimbursement, the Servicer's right thereto shall be prior to
the rights of Owner;
(c) to reimburse itself for unreimbursed Servicing Advances,
and for any unpaid Servicing Fees, the Servicer's right to reimburse itself
pursuant to this subclause (c) with respect to any Mortgage Loan being limited
to related Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds and
such other amounts as may be collected by the Servicer from the Mortgagor or
otherwise relating to the Mortgage Loan, it being understood that, in the case
of any such reimbursement, the Servicer's right thereto shall be prior to the
rights of Owner;
(d) to pay itself interest on funds deposited in the Custodial
Account if such interest amount was previously credited;
20
(e) to reimburse itself for expenses incurred and reimbursable
to it pursuant to Section 8.01;
(f) to pay any amount required to be paid pursuant to Section
4.16 related to any REO Property, it being understood that, in the case of any
such expenditure or withdrawal related to a particular REO Property, the amount
of such expenditure or withdrawal from the Custodial Account shall be limited to
amounts on deposit in the Custodial Account with respect to the related REO
Property;
(g) to reimburse itself for any Servicing Advances or REO
expenses after liquidation of the Mortgaged Property not otherwise reimbursed
above;
(h) to remove funds inadvertently placed in the Custodial
Account by the Servicer; and
(i) to clear and terminate the Custodial Account upon the
termination of this Agreement.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Servicer shall withdraw all funds from the Custodial
Account except for those amounts which, pursuant to Section 5.01, the Servicer
is not obligated to remit on such Remittance Date. The Servicer may use such
withdrawn funds only for the purposes described in this Section 4.05. The
Servicer shall keep and maintain separate accounting, on a Mortgage Loan by
Mortgage Loan basis, for the purpose of justifying any withdrawal from the
Custodial Account, to the extent held by or on behalf of it, pursuant to
sub-clauses (c), (e), (f) and (g) above.
Section 4.06 Establishment of and Deposits to Escrow Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of time deposit or demand accounts, titled,
"▇▇▇▇▇ Fargo Bank, N.A., in trust for Bank of America, National Association, its
successors or assigns and/or subsequent Owners of Residential Mortgage Loans,
and various Mortgagors - T & I." The Escrow Accounts shall be established with a
Qualified Depository, in a manner which shall provide maximum available
insurance thereunder. Upon request of the Owner and within ten (10) days
thereof, the Servicer shall provide the Owner with written confirmation of the
existence of such Escrow Account in the form attached hereto as Exhibit F. Funds
deposited in the Escrow Account may be drawn on by the Servicer in accordance
with Section 4.07.
The Servicer shall deposit in the Escrow Account or Accounts within two
(2) Business Days of Servicer's receipt, and retain therein:
(a) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any such items as required
under the terms of this Agreement;
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(b) all amounts representing Insurance Proceeds or
Condemnation Proceeds which are to be applied to the restoration or repair of
any Mortgaged Property; and
(c) all payments on account of Buydown Funds.
The Servicer shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 4.07. The Servicer shall be entitled to retain any interest paid on
funds deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Servicer shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes.
Section 4.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the
Servicer only:
(a) to effect timely payments of ground rents, taxes,
assessments, water rates, mortgage insurance premiums, condominium charges, fire
and hazard insurance premiums or other items constituting Escrow Payments for
the related Mortgage;
(b) to reimburse the Servicer for any Servicing Advances made
by the Servicer pursuant to Section 4.08 with respect to a related Mortgage
Loan, but only from amounts received on the related Mortgage Loan which
represent late collections of Escrow Payments thereunder;
(c) to refund to any Mortgagor any funds found to be in excess
of the amounts required under the terms of the related Mortgage Loan;
(d) for transfer to the Custodial Account for application to
reduce the principal balance of the Mortgage Loan in accordance with the terms
of the related Mortgage and Mortgage Note;
(e) for application to the restoration or repair of the
Mortgaged Property in accordance with the procedures outlined in Section 4.14;
(f) to pay to the Servicer, or any Mortgagor to the extent
required by law, any interest paid on the funds deposited in the Escrow Account;
(g) to remove funds inadvertently placed in the Escrow Account
by the Servicer;
(h) to remit to Owner payments on account of Buydown Funds as
applicable; and
(i) to clear and terminate the Escrow Account on the
termination of this Agreement.
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Section 4.08 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Servicer shall maintain
accurate records reflecting the status of ground rents, taxes, assessments,
water rates, sewer rents, and other charges which are or may become a lien upon
the Mortgaged Property and the status of PMI Policy or LPMI Policy premiums and
fire and hazard insurance coverage and 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,
employing for such purpose deposits of the Mortgagor in the Escrow Account which
shall have been estimated and accumulated by the Servicer in amounts sufficient
for such purposes, as allowed under the terms of the Mortgage. The Servicer
assumes full responsibility for the timely payment of all such bills and shall
effect timely payment of all such charges irrespective of each Mortgagor's
faithful performance in the payment of same or the making of the Escrow
Payments, and the Servicer shall make advances from its own funds to effect such
payments. To the extent that a Mortgage does not provide for Escrow Payments,
the Servicer shall use its reasonable efforts in accordance with Accepted
Servicing Practices to determine whether any such payments are made by the
Mortgagor at the time they first become due. The Servicer shall make advances
from its own funds to effect such delinquent payments within such time period as
will avoid the loss of the related Mortgaged Property by foreclosure of a tax or
other lien. Advances pursuant to this Section 4.08 shall constitute Servicing
Advances hereunder; provided that the Servicer shall be required to so advance
only to the extent that the Servicer, in its good faith judgment, believes the
Servicing Advance to be recoverable from Insurance Proceeds or Liquidation
Proceeds or otherwise. The Servicing Advances and the costs incurred by the
Servicer, if any, in effecting the timely payments of taxes and assessments on
the Mortgaged Properties and related insurance premiums shall not be added to
the Stated Principal Balances of the related Mortgage Loans, notwithstanding
that the terms of such Mortgage Loans so permit.
Section 4.09 Protection of Accounts.
The Servicer may transfer the Custodial Account or the Escrow Account
to a different Qualified Depository from time to time, provided that the
Servicer shall give notice to the Owner of any proposed change of the location
of either Account not later than ten (10) Business Days prior to any change
thereof.
Section 4.10 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by an
insurer acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac against loss by fire, hazards of
extended coverage and such other hazards as are customary or required by law in
the area where the Mortgaged Property is located, in an amount which is at least
equal to the lesser of: (i) 100% of the insurable value on a replacement cost
basis of the improvements on the related Mortgaged Property and (ii) the greater
of (a) the outstanding principal balance of the Mortgage Loan and (b) an amount
such that the proceeds of such insurance shall be sufficient to prevent the
application to the Mortgagor or the loss payee of any coinsurance clause under
the policy. In the event a hazard insurance policy shall be in danger of being
terminated, or in the event the insurer shall cease to be acceptable to ▇▇▇▇▇▇
Mae or ▇▇▇▇▇▇▇ Mac, the Servicer shall notify the Owner and the related
Mortgagor, and shall use its
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best efforts, as permitted by applicable law, to obtain from another qualified
insurer a replacement hazard insurance policy substantially and materially
similar in all respects to the original policy. In no event, however, shall a
Mortgage Loan be without a hazard insurance policy at any time, subject only to
Section 4.11 hereof.
If the related Mortgaged Property is located in an area identified by
the Federal Emergency Management Agency as having special flood hazards (and
such flood insurance has been made available) the Servicer shall cause to be
maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration in effect with a generally
acceptable insurance carrier acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac in an
amount representing coverage equal to the lesser of: (i) the minimum amount
required, under the terms of coverage, to compensate for any damage or loss on a
replacement cost basis (or the unpaid balance of the mortgage if replacement
cost coverage is not available for the type of building insured) and (ii) the
maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended. If at any time during the term of the
Mortgage Loan, the Servicer determines in accordance with applicable law and
pursuant to the ▇▇▇▇▇▇ Mae Guides that a Mortgaged Property is located in a
special flood hazard area and is not covered by flood insurance or is covered in
an amount less than the amount required by the Flood Disaster Protection Act of
1973, as amended, the Servicer shall notify the related Mortgagor that the
Mortgagor must obtain such flood insurance coverage, and if said Mortgagor fails
to obtain the required flood insurance coverage within forty-five (45) days
after such notification, the Servicer shall immediately force place the required
flood insurance on the Mortgagor's behalf.
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 then 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 effect on the value of the Mortgaged Property as security.
In the event that the Owner or the Servicer shall determine that the
Mortgaged Property should be insured against loss or damage by hazards and risks
not covered by the insurance required to be maintained by the Mortgagor pursuant
to the terms of the Mortgage, the Servicer shall communicate and consult with
the Mortgagor with respect to the need for such insurance and bring to the
Mortgagor's attention the required amount of coverage for the Mortgaged Property
and if the Mortgagor does not obtain such coverage, the Servicer shall
immediately force place the required coverage on the Mortgagor's behalf.
All policies required hereunder shall name the Servicer as loss payee
and shall be endorsed with standard or union mortgagee clauses, without
contribution, which shall provide for at least 30 days prior written notice 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 his insurance carrier or agent, provided, however, that the
Servicer shall not accept any such insurance policies from insurance companies
unless such companies are acceptable to ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac and are
licensed to do business in the jurisdiction in which the
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Mortgaged Property is located. The Servicer shall determine that such policies
provide sufficient risk coverage and amounts, that they insure the property
owner, and that they properly describe the property address. The Servicer shall
furnish to the Mortgagor a formal notice of expiration, in accordance with the
Accepted Servicing Practices, of any such insurance in sufficient time for the
Mortgagor to arrange for renewal coverage by the expiration date.
Pursuant to Section 4.04, any amounts collected by the Servicer under
any such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Servicer's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05.
Section 4.11 Maintenance of Mortgage Impairment Insurance.
In the event that the Servicer shall obtain and maintain a blanket
policy insuring against losses arising from fire, flood and hazards covered
under extended coverage on all of the Mortgage Loans, then, to the extent such
policy provides coverage in an amount equal to the amount required pursuant to
Section 4.10 without coinsurance and otherwise complies with Accepted Servicing
Practices and all other requirements of Section 4.10, it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 4.10. The
Servicer shall prepare and make any claims on the blanket policy as deemed
necessary by the Servicer in accordance with Accepted Servicing Practices. Any
amounts collected by the Servicer under any such policy relating to a Mortgage
Loan shall be deposited in the Custodial Account subject to withdrawal pursuant
to Section 4.05. Such policy may contain a deductible clause, in which case, in
the event that there shall not have been maintained on the related Mortgaged
Property a policy complying with Section 4.10, and there shall have been a loss
which would have been covered by such policy, the Servicer shall deposit in the
Custodial Account at the time of such loss the amount not otherwise payable
under the blanket policy because of such deductible clause, such amount to be
deposited from the Servicer's funds, without reimbursement therefor. Upon
request of the Owner, the Servicer shall cause to be delivered to such Owner a
certificate of insurance and a statement from the insurer thereunder that such
policy shall in no event be terminated or materially modified without 30 days'
prior written notice to such Owner.
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions
Insurance.
The Servicer shall maintain with responsible companies, at its own
expense, a blanket Fidelity Bond and an Errors and Omissions Insurance Policy,
with broad coverage on all officers, employees or other Persons acting in any
capacity requiring such Persons to handle funds, money, documents or papers
relating to the Mortgage Loans ("Servicer Employees"). Any such Fidelity Bond
and Errors and Omissions Insurance Policy shall be in the form of the Mortgage
Banker's Blanket Bond and shall protect and insure the Servicer against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such Servicer Employees. Such Fidelity Bond and Errors and
Omissions Insurance Policy also shall protect and insure the Servicer against
losses in connection with the release or satisfaction of a Mortgage Loan without
having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 4.12 requiring such Fidelity Bond and Errors and
Omissions Insurance Policy
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shall diminish or relieve the Servicer from its duties and obligations as set
forth in this Agreement. The minimum coverage under any such Fidelity Bond and
Errors and Omissions Insurance Policy shall be acceptable to ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac. Upon the request of the Owner, the Servicer shall cause to be
delivered to the Owner a certificate of insurance for 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
in no event be terminated or materially modified without 30 days' prior written
notice to the Owner.
Section 4.13 Inspections.
If any Mortgage Loan is more than 60 days delinquent, the Servicer
immediately shall inspect the Mortgaged Property and shall conduct subsequent
inspections in accordance with Accepted Servicing Practices or as may be
required by the primary mortgage guaranty insurer. The Servicer shall keep a
record of each such inspection and, upon request, shall provide the Owner with
such information.
Section 4.14 Restoration of Mortgaged Property.
The Servicer need not obtain the approval of the Owner prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Accepted Servicing Practices. For claims greater than
$20,000, at a minimum the Servicer shall comply with the following conditions in
connection with any such release of Insurance Proceeds or Condemnation Proceeds:
(a) the Servicer shall receive satisfactory independent
verification of completion of repairs and issuance of any required approvals
with respect thereto;
(b) the Servicer shall take all steps necessary to preserve
the priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens;
(c) the Servicer shall verify that the Mortgage Loan is not in
default; and
(d) pending repairs or restoration, the Servicer shall place
the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
If the Owner is named as an additional loss payee, the Servicer is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Owner.
Section 4.15 Maintenance of PMI Policy or LPMI Policy; Claims.
With respect to each Mortgage Loan with an LTV in excess of 80% at the
time of origination, the Servicer shall, without any cost to the Owner maintain
or cause the Mortgagor to maintain in full force and effect a PMI Policy or LPMI
Policy insuring a portion of the unpaid principal balance of the Mortgage Loan
as to payment defaults. If the Mortgage Loan is insured by a PMI Policy for
which the Mortgagor pays all premiums, the coverage will remain in place until
(i) the LTV decreases to 78% or (ii) the PMI Policy is otherwise terminated
pursuant to the
26
Homeowners Protection Act of 1998, 12 USC ss.4901, et seq. In the event that
such PMI Policy or LPMI Policy shall be terminated other than as required by
law, the Servicer shall obtain from another Qualified Insurer a comparable
replacement policy, with a total coverage equal to the remaining coverage of
such terminated PMI Policy or LPMI Policy. If the insurer shall cease to be a
Qualified Insurer, the Servicer shall determine whether recoveries under the PMI
Policy or LPMI Policy are jeopardized for reasons related to the financial
condition of such insurer, it being understood that the Servicer shall in no
event have any responsibility or liability for any failure to recover under the
PMI Policy or LPMI Policy for such reason. If the Servicer determines that
recoveries are so jeopardized, it shall notify the Owner and the Mortgagor, if
required, and obtain from another Qualified Insurer a replacement insurance
policy. The Servicer shall not take any action which would result in noncoverage
under any applicable PMI Policy or LPMI 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 6.01, the Servicer shall promptly notify the insurer under
the related PMI Policy or LPMI Policy, if any, of such assumption or
substitution of liability in accordance with the terms of such PMI Policy or
LPMI Policy and shall take all actions which may be required by the insurer as a
condition to the continuation of coverage under the PMI Policy or LPMI Policy.
If such PMI Policy or LPMI Policy is terminated as a result of such assumption
or substitution of liability, the Servicer shall obtain a replacement PMI Policy
or LPMI Policy as provided above.
In connection with its activities as servicer, the Servicer agrees to
prepare and present, on behalf of itself and the Owner, claims to the insurer
under any PMI Policy or LPMI Policy or any other primary mortgage guaranty
insurance policies obtained and paid for by the Owner, in a timely fashion in
accordance with the terms of such PMI Policy or LPMI Policy and, in this regard,
to take such action as shall be necessary to permit recovery under any PMI
Policy or LPMI Policy or any other primary mortgage guaranty insurance policies
obtained and paid for by the Owner respecting a defaulted Mortgage Loan.
Pursuant to Section 4.04, any amounts collected by the Servicer under any PMI
Policy or LPMI Policy shall be deposited in the Custodial Account, subject to
withdrawal pursuant to Section 4.05.
Section 4.16 Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Owner or the Owner's designee, or in the event
the Owner is not authorized or permitted to hold title to real property in the
state where the REO Property is located, or would be adversely affected under
the "doing business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an Opinion of Counsel obtained by the Servicer from any
attorney duly licensed to practice law in the state where the REO Property is
located. The Person or Persons holding such title other than the Owner shall
acknowledge in writing that such title is being held as nominee for the Owner.
The Owner shall have the option to manage and operate the REO Property
provided the Owner gives written notice of its intention to do so within thirty
(30) days after such REO Property is acquired in foreclosure or by deed in lieu
of foreclosure. The election by the Owner
27
to manage the REO Property shall not constitute a termination of any rights of
the Servicer pursuant to Section 11.02.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Owner solely for the purpose of its prompt disposition and
sale. The Servicer, either itself or through an agent selected by the Servicer,
shall manage, conserve, protect and operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property for
its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. The Servicer shall attempt to sell the
same (and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the Servicer
deems to be in the best interest of the Owner.
The Servicer shall use its best efforts to dispose of the REO Property
as soon as possible and shall sell such REO Property in any event prior to the
close of the third calendar year beginning after the year in which title has
been taken to such REO Property, unless (i) a REMIC election has not been made
with respect to the arrangement under which the Mortgage Loans and the REO
Property are held, and (ii) the Servicer determines, and gives an appropriate
notice to the Owner to such effect, that a longer period is necessary for the
orderly liquidation of such REO Property. If a period longer than three (3)
years is permitted under the foregoing sentence and is necessary to sell any REO
Property, (i) the Servicer shall report monthly to the Owner as to the progress
being made in selling such REO Property and (ii) if a purchase money mortgage is
taken in connection with such sale, such purchase money mortgage shall name the
Servicer as mortgagee, and such purchase money mortgage shall not be held
pursuant to this Agreement.
The Servicer shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The disposition of REO Property shall be carried out by the Servicer at
such price, and upon such terms and conditions, as the Servicer deems to be in
the best interests of the Owner. Notwithstanding any other provision in this
Section 4.05, no REO Property shall be marketed for less than the appraisal
value of the related Mortgaged Property without the prior consent of the Owner,
and no REO Property shall be sold for less than ninety percent (90%) of its
appraised value without the prior written consent of the Owner. The proceeds of
sale of the REO Property shall be promptly deposited in the Custodial Account.
As soon as practical thereafter the expenses of such sale shall be paid and the
Servicer shall collect the related REO Disposition Fee, reimburse itself for any
related unreimbursed Servicing Advances and unpaid Servicing Fees and
unreimbursed advances made pursuant to Section 5.03. On the Remittance Date
immediately following the receipt of such sale proceeds, the net cash proceeds
of such sale remaining in the Custodial Account shall be distributed to the
Owner.
The Servicer shall withdraw from the Custodial Account funds necessary
for the proper operation management and maintenance of the REO Property,
including the cost of maintaining any hazard insurance pursuant to Section 4.10
and the fees of any managing agent of the Servicer, or the Servicer itself. The
Servicer shall make monthly distributions on each
28
Remittance Date to the Owner of the net cash flow from the REO Property (which
shall equal the revenues from such REO Property net of the expenses described in
this Section 4.16 and of any reserves reasonably required from time to time to
be maintained to satisfy anticipated liabilities for such expenses).
Section 4.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 5.02, the
Servicer shall furnish to the Owner on or before the Remittance Date each month
a statement with respect to any REO Property covering the operation of such REO
Property for the previous month and the Servicer's efforts in connection with
the sale of such REO Property and any rental of such REO Property incidental to
the sale thereof for the previous month. That statement shall be accompanied by
such other information available to the Servicer as the Owner shall reasonably
request.
Section 4.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Owner pursuant to a deed in lieu of foreclosure, the Servicer
shall submit to the Owner a liquidation report with respect to such Mortgaged
Property.
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged
Property.
Following the foreclosure sale or abandonment of any Mortgaged
Property, the Servicer shall report such foreclosure or abandonment as required
pursuant to Section 6050J of the Code. The Servicer shall file information
reports with respect to the receipt of mortgage interest received in a trade or
business and information returns relating to cancellation of indebtedness income
with respect to any Mortgaged Property as required by the Code. Such reports
shall be in form and substance sufficient to meet the reporting requirements
imposed by the Code.
Section 4.20 Application of Buydown Funds.
With respect to each Buydown Mortgage Loan, the Servicer shall have
deposited into the Escrow Account, no later than the last day of the month,
Buydown Funds in an amount equal to the aggregate undiscounted amount of
payments that, when added to the amount the Mortgagor on such Mortgage Loan is
obligated to pay on all Due Dates in accordance with the terms of the Buydown
Agreement, is equal to the full scheduled Monthly Payments which are required to
be paid by the Mortgagor under the terms of the related Mortgage Note (without
regard to the related Buydown Agreement as if the Mortgage Loan were not subject
to the terms of the Buydown Agreement). With respect to each Buydown Mortgage
Loan, the Servicer will distribute to the Owner on each Remittance Date an
amount of Buydown Funds equal to the amount that, when added to the amount
required to be paid on such date by the related Mortgagor, pursuant to and in
accordance with the related Buydown Agreement, equals the full Monthly Payment
that would otherwise be required to be paid on such Mortgage Loan by the related
Mortgagor under the terms of the related Mortgage Note (as if the Mortgage Loan
were not a Buydown Mortgage Loan and without regard to the related Buydown
Agreement).
If the Mortgagor on a Buydown Mortgage Loan defaults on such Mortgage
Loan during the Buydown Period and the Mortgaged Property securing such Buydown
Mortgage Loan is sold
29
in the liquidation thereof (either by the Servicer or the insurer under any
related Primary Insurance Policy) the Servicer shall, on the Remittance Date
following the date upon which Liquidation Proceeds or REO Disposition proceeds
are received with respect to any such Buydown Mortgage Loan, distribute to the
Owner all remaining Buydown Funds for such Mortgage Loan then remaining in the
Escrow Account. Pursuant to the terms of each Buydown Agreement, any amounts
distributed to the Owner in accordance with the preceding sentence will be
applied to reduce the outstanding principal balance of the related Buydown
Mortgage Loan. If a Mortgagor on a Buydown Mortgage Loan prepays such Mortgage
Loan in its entirety during the related Buydown Period, the Servicer shall be
required to withdraw from the Escrow Account any Buydown Funds remaining in the
Escrow Account with respect to such Buydown Mortgage Loan in accordance with the
related Buydown Agreement. If a principal prepayment by a Mortgagor on a Buydown
Mortgage Loan during the related Buydown Period, together with any Buydown Funds
then remaining in the Escrow Account related to such Buydown Mortgage Loan,
would result in a principal prepayment of the entire unpaid principal balance of
the Buydown Mortgage Loan, the Servicer shall distribute to the Owner on the
Remittance Date occurring in the month immediately succeeding the month in which
such Principal Prepayment is received, all Buydown Funds related to such
Mortgage Loan so remaining in the Escrow Account, together with any amounts
required to be deposited into the Custodial Account.
Section 4.21 Notification of Adjustments.
With respect to each Adjustable Rate Mortgage Loan, the Servicer shall
adjust the Mortgage Interest Rate on the related Adjustment Date in compliance
with the requirements of applicable law and the related Mortgage and Mortgage
Note. The Servicer shall execute and deliver any and all necessary notices
required under applicable law and the terms of the related Mortgage Note and
Mortgage regarding the Mortgage Interest Rate adjustments. Upon the discovery by
the Servicer or the receipt of notice from the Owner that the Servicer has
failed to adjust a Mortgage Interest Rate in accordance with the terms of the
related Mortgage Note, the Servicer shall immediately deposit in the Custodial
Account from its own funds the amount of any interest loss or deferral caused
the Owner thereby.
Section 4.22 Confidentiality/Protection of Customer Information.
Each party agrees that it shall comply with all applicable laws and
regulations regarding the privacy or security of Customer Information and shall
maintain appropriate administrative, technical and physical safeguards to
protect the security, confidentiality and integrity of Customer Information,
including maintaining security measures designed to meet the objectives of the
Interagency Guidelines Establishing Standards for Safeguarding Customer
Information, 66 Fed. Reg. 8616 (the "Interagency Guidelines"). For purposes of
this Section, the term "Customer Information" shall have the meaning assigned to
it in the Interagency Guidelines. The Servicer shall promptly make available to
the Owner's regulators information regarding such security measures as requested
by such regulators. For purposes of this Section, the term "Customer
Information" shall have the meaning assigned to it in the Interagency
Guidelines. Each party further agrees that any Customer Information transmitted
electronically by either party must be encrypted.
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Section 4.23 Fair Credit Reporting Act
The Servicer, in its capacity as servicer for each Mortgage Loan,
agrees to fully furnish, in accordance with the Fair Credit Reporting Act and
its implementing regulations, accurate and complete information (e.g., favorable
and unfavorable) on its borrower credit files to Equifax, Experian and Trans
Union Credit Information Servicer, on a monthly basis. The Servicer agrees to
transmit full file credit reporting data for each Mortgage Loan pursuant to
▇▇▇▇▇▇ ▇▇▇ Guide Announcement 95-19 and for each Mortgage Loan, the Servicer
shall report the status thereof in accordance with the ▇▇▇▇▇▇ Mae Single-Family
Servicing Guide. The Servicer shall comply with Title V of the
▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of 1999 and all applicable regulations promulgated
thereunder, relating to the Mortgage Loans and the related borrowers and shall
provide all required notices thereunder.
Section 4.24 Use of Subservicers and Subcontractors.
The Servicer shall not hire or otherwise utilize the services of any
Subservicer to fulfill any of the obligations of the Servicer under this
Agreement or any Reconstitution Agreement unless the Servicer complies with the
provisions of paragraph (a) of this Section 4.24. The Servicer shall not hire or
otherwise utilize the services of any Subcontractor, and shall not permit any
Subservicer to hire or otherwise utilize the services of any Subcontractor, to
fulfill any of the obligations of the Servicer under this Agreement or any
Reconstitution Agreement unless the Servicer complies with the provisions of
paragraph (b) of this Section 4.24.
(a) It shall not be necessary for the Servicer to seek the
consent of the Owner, any Master Servicer or any Depositor to the utilization of
any Subservicer. The Servicer shall cause any Subservicer used by the Servicer
(or by any Subservicer) for the benefit of the Owner and any Depositor to comply
with the provisions of this Section 4.24 and with Sections 6.04, 6.06 and 9.01
of this Agreement to the same extent as if such Subservicer were the Servicer,
and to provide the information required with respect to such Subservicer under
Section 9.01 of this Agreement. The Servicer shall be responsible for obtaining
from each Subservicer and delivering to the Owner and any Depositor any servicer
compliance statement required to be delivered by such Subservicer under Section
6.04 and any assessment of compliance and attestation required to be delivered
by such Subservicer under Section 6.06 and any certification required to be
delivered to the Person that will be responsible for signing the Sarbanes
Certification under Section 6.06 as and when required to be delivered.
(b) It shall not be necessary for the Servicer to seek the
consent of the Owner, any Master Servicer or any Depositor to the utilization of
any Subcontractor. The Servicer shall promptly upon request provide to the
Owner, any Master Servicer and any Depositor (or any designee of the Depositor,
such as a master servicer or administrator) a written description (in form and
substance satisfactory to the Owner, such Master Servicer and such Depositor) of
the role and function of each Subcontractor utilized by the Servicer or any
Subservicer, specifying (i) the identity of each such Subcontractor, (ii) which
(if any) of such Subcontractors are "participating in the servicing function"
within the meaning of Item 1122 of Regulation AB, and (iii) which elements of
the Servicing Criteria will be addressed in assessments of compliance provided
by each Subcontractor identified pursuant to clause (ii) of this paragraph.
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As a condition to the utilization of any Subcontractor determined to be
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, the Servicer shall cause any such Subcontractor used by the
Servicer (or by any Subservicer) for the benefit of the Owner, any Master
Servicer and any Depositor to comply with the provisions of Sections 6.06 and
9.01 of this Agreement to the same extent as if such Subcontractor were the
Servicer. The Servicer shall be responsible for obtaining from each
Subcontractor and delivering to the Owner, any Master Servicer and any Depositor
any assessment of compliance and attestation required to be delivered by such
Subcontractor under Section 6.06, in each case as and when required to be
delivered.
Section 4.25 Automated Servicing Systems.
The Servicer shall establish, format, maintain and transmit to the
Owner the Servicer's electronic mortgage servicing files and other electronic
data storage and transmission systems related to the Mortgage Loans
(collectively, the "Servicing Systems") in accordance with the guidelines and
requirements set forth in Exhibit D attached hereto (the "Servicer
Requirements") and the Servicer shall cooperate with the Owner to receive data
from the Owner that is to be incorporated in the Servicing Systems in accordance
with the Servicer Requirements.
Section 4.26 Disaster Recovery/Business Continuity Plan.
The Servicer shall maintain contingency plans, recovery plans and
proper risk controls to ensure Servicer's continued performance under this
Agreement. The Servicer agrees to make available to the Owner's regulators
information regarding such plans as requested by such regulators.
Section 4.27 Quality Control Procedures.
The Servicer shall have an internal quality control program that, on a
regular basis, evaluates and monitors the overall quality of the servicing
activities of the Servicer in accordance with industry standards.
ARTICLE V
PAYMENTS TO OWNER
Section 5.01 Remittances.
On each Remittance Date, the Servicer shall remit by wire transfer of
immediately available funds to the Owner (a) all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net of
charges against or withdrawals from the Custodial Account pursuant to Section
4.05), plus (b) all amounts, if any, which the Servicer is obligated to
distribute pursuant to Section 5.03, minus (c) any amounts attributable to
Principal Prepayments received after the applicable Principal Prepayment Period
which amounts shall be remitted on the following Remittance Date; and minus (d)
any amounts attributable to Buydown Funds being held in the Custodial Account,
which amounts shall be remitted on the Remittance Date next succeeding the Due
Period for such amounts.
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With respect to any remittance received by the Owner after the second
Business Day following the Business Day on which such payment was due, the
Servicer shall pay to the Owner interest on any such late payment at an annual
rate equal to the Prime Rate, adjusted as of the date of each change, plus three
percentage points, but in no event greater than the maximum amount permitted by
applicable law. Such interest shall be deposited in the Custodial Account by the
Servicer on the date such late payment is made and shall cover the period
commencing with the day following such Business Day and ending with the Business
Day on which such payment is made, both inclusive. Such interest shall be
remitted along with the distribution payable on the next succeeding Remittance
Date. The payment by the Servicer of any such interest shall not be deemed an
extension of time for payment or a waiver of any Event of Default by the
Servicer.
Section 5.02 Statements to Owner.
Not later than the first (1st) Business Day of each month, the Servicer
shall furnish to the Owner, with respect to the preceding month, a monthly
collection report, a monthly paid in full report that summarizes Mortgage Loans
paid in full during the related Due Period and a monthly trial balance report
that provides a trial balance as of the last day of the month preceding such
Remittance Date in electronic format set forth in Exhibit D, attached hereto, or
as agreed upon by the Servicer and the Owner.
Not later than the fifth (5th) Business Day of each month, the Servicer
shall furnish to the Owner in either written or electronic format, a delinquency
report and a monthly remittance advice containing the information set forth in
Exhibit D, attached hereto, each in a form mutually acceptable to the Servicer
and the Owner, as to the period ending on the last day of the preceding month.
The Servicer shall furnish to the Owner such other reports as provided for in
Exhibit D, attached hereto.
Section 5.03 Monthly Advances by Servicer.
No later than the close of business on the Determination Date, the
Servicer shall deposit in the Custodial Account from its own funds or from
amounts held for future distribution an amount equal to all Monthly Payments
(with interest adjusted to the Mortgage Loan Remittance Rate) which were due on
the Mortgage Loans during the applicable Due Period and which were delinquent at
the close of business on the immediately preceding Determination Date or which
were deferred pursuant to Section 4.01. Any amounts held for future distribution
and so used shall be replaced by the Servicer by deposit in the Custodial
Account on or before any future Remittance Date if funds in the Custodial
Account on such Remittance Date shall be less than payments to the Owner
required to be made on such Remittance Date. The Servicer's obligation to make
such Monthly Advances as to any Mortgage Loan will continue through the last
Monthly Payment due prior to the payment in full of the Mortgage Loan, or
through the last Remittance Date prior to the Remittance Date for the
distribution of all Liquidation Proceeds and other payments or recoveries
(including REO Disposition Proceeds, Insurance Proceeds and Condemnation
Proceeds) with respect to the Mortgage Loan; provided, however, that the
Servicer shall not make Monthly Advances or Servicing Advances if the Servicer
determines, in its sole reasonable opinion, that advances with respect to such
Mortgage Loan are non-recoverable by the Servicer from Liquidation Proceeds, REO
Disposition Proceeds, Insurance
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Proceeds, Condemnation Proceeds, or otherwise with respect to a particular
Mortgage Loan. In the event that the Servicer determines that any such advances
are non-recoverable, the Servicer shall provide the Owner with a certificate
signed by two officers of the Servicer evidencing such determination.
Section 5.04 Repurchase.
The Servicer shall cooperate with the Owner in facilitating the
repurchase of any Mortgage Loan by the Seller. Upon receipt by the Servicer of
notice from the Owner of a breach by the Seller of a representation or warranty
contained in any agreement between the Owner and the Seller, or a request by the
Owner for the Seller to repurchase any Mortgage Loan, the Servicer shall, at the
direction of the Owner, use its best efforts to cure and correct any such breach
related to such deficiencies of the related Mortgage Loans.
At the time of repurchase, the Owner or the Custodian, as applicable,
and the Servicer shall arrange for the reassignment of the repurchased Mortgage
Loan to the Seller according to the Owner's instructions and the delivery of any
documents held by the Servicer with respect to the repurchased Mortgage Loan.
The Servicer will facilitate the remittance of repurchase funds between the
Seller and the Owner, but shall not be required to advance any funds for such
repurchase and shall be reimbursed for any expenses incurred due to such
repurchase.
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ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Transfers of Mortgaged Property.
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. When the
Mortgaged Property has been conveyed by the Mortgagor, the Servicer shall, to
the extent it has knowledge of such conveyance, exercise its rights to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause
applicable thereto, provided, however, that the Servicer shall not exercise such
rights if prohibited by law from doing so or if the exercise of such rights
would impair or threaten to impair any recovery under the related PMI Policy or
LPMI Policy, if any.
If the Servicer reasonably believes it is unable under applicable law
to enforce such "due-on-sale" clause, the Servicer shall enter into (i) an
assumption and modification agreement with the person to whom such property has
been conveyed, pursuant to which such person becomes liable under the Mortgage
Note and the original Mortgagor remains liable thereon or (ii) in the event the
Servicer is unable under applicable law to require that the original Mortgagor
remain liable under the Mortgage Note and the Servicer has the prior consent of
the primary mortgage guaranty insurer, a substitution of liability agreement
with 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. If an
assumption fee is collected by the Servicer for entering into an assumption
agreement the fee will be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, neither the Mortgage
Interest Rate borne by the related Mortgage Note, the term of the Mortgage Loan,
the outstanding principal amount of the Mortgage Loan nor any other material
terms shall be changed without Owner's consent.
To the extent that any Mortgage Loan is assumable, the Servicer shall
inquire diligently into the credit worthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used with respect to underwriting mortgage loans of the
same type as the Mortgage Loan. If the credit worthiness of the proposed
transferee does not meet such underwriting criteria, the Servicer diligently
shall, to the extent permitted by the Mortgage or the Mortgage Note and by
applicable law, accelerate the maturity of the Mortgage Loan.
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.
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 notify the Owner in the monthly
remittance advice as provided in Section 5.02, and may request the release of
any Mortgage Loan Documents. If such Mortgage Loan is a MERS Mortgage Loan, the
Servicer is authorized to cause the removal from the registration on
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the MERS System of such Mortgage and to execute and deliver, on behalf of the
Owner, any and all instruments of satisfaction or cancellation or of partial or
full release.
If the Servicer satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or without
the Owner's prior written approval of such satisfaction or release or should the
Servicer otherwise prejudice any rights the Owner may have under the mortgage
instruments, upon written demand of the Owner, the Servicer shall deposit in the
Custodial Account the entire outstanding principal balance, plus all accrued
interest on such Mortgage Loan from the date interest was last paid to the Owner
to the day prior to the Remittance Date, on the day preceding the Remittance
Date in the month following the date of such release; provided, however, the
Servicer shall not be obligated to deposit such amount if the Owner provided the
Servicer with prior written approval of such action to be taken by the Servicer.
The Servicer shall maintain the Fidelity Bond and Errors and Omissions Insurance
Policy as provided for in Section 4.12 insuring the Servicer against any loss it
may sustain with respect to any Mortgage Loan not satisfied in accordance with
the procedures set forth herein.
Section 6.03 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall be
entitled to withdraw from the Custodial Account the amount of its Servicing Fee.
The Servicing Fee shall be payable monthly and shall be computed on the basis of
the same unpaid principal balance and for the period respecting which any
related interest payment on a Mortgage Loan is received. The obligation of the
Owner to pay the Servicing Fee is limited to, and payable solely from, the
interest portion of such Monthly Payments.
Additional servicing compensation in the form of assumption fees, to
the extent provided in Section 6.01, late payment charges and other ancillary
fees shall be retained by the Servicer to the extent not required to be
deposited in the Custodial Account. 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 thereof except as specifically
provided for herein.
Section 6.04 Annual Statements as to Compliance.
On or before March 1 of each calendar year, commencing in 2007, the
Servicer shall deliver to the Owner or any Master Servicer and Depositor a
statement of compliance addressed to the Owner, any Master Servicer and such
Depositor and signed by an authorized officer of the Servicer, to the effect
that (a) a review of the Servicer's activities during the immediately preceding
calendar year (or applicable portion thereof) and of its performance under this
Agreement and any applicable Reconstitution Agreement during such period has
been made under such officer's supervision, and (b) to the best of such
officers' knowledge, based on such review, the Servicer has fulfilled all of its
obligations under this Agreement and any applicable Reconstitution Agreement in
all material respects throughout such calendar year (or applicable portion
thereof) or, if there has been a failure to fulfill any such obligation in any
material respect, specifically identifying each such failure known to such
officer and the nature and the status thereof.
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Section 6.05 [Reserved.]
Section 6.06 Report on Assessment of Compliance and Attestation.
On or before March 1 of each calendar year, commencing in 2007, the
Servicer shall:
(a) deliver to the Owner, any Master Servicer and any
Depositor a report (in form and substance reasonably satisfactory to the Owner,
such Master Servicer and such Depositor) regarding the Servicer's assessment of
compliance with the Servicing Criteria during the immediately preceding calendar
year, as required under Rules 13a-18 and 15d-18 of the Exchange Act and Item
1122 of Regulation AB. Such report shall be addressed to the Owner, such Master
Servicer and such Depositor and signed by an authorized officer of the Servicer
and shall address each of the "Applicable Servicing Criteria" specified
substantially on Exhibit H hereto (or those Servicing Criteria otherwise
mutually agreed to by the Owner and the Servicer in response to evolving
interpretations of Regulation AB;
(b) deliver to the Owner, any Master Servicer and any
Depositor a report of a registered public accounting firm reasonably acceptable
to the Owner, such Master Servicer and such Depositor that attests to, and
reports on, the assessment of the compliance made by the Servicer and delivered
pursuant to the .preceding paragraph. Such attestation shall be in accordance
with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and
the Exchange Act;
(c) cause each Subservicer and each Subcontractor, determined
by the Servicer pursuant to Section 4.24(b) to be "participating in the
servicing function" within the meaning of Item 1122 of Regulation AB, to deliver
to the Owner, any Master Servicer and any Depositor an assessment of compliance
and accountants' attestation as and when provided in paragraphs (i) and (ii) of
this Section 6.06; and
(d) deliver, and cause each Subservicer and each Subcontractor
described in clause (iii) to deliver to the Owner, any Master Servicer, any
Depositor and any other Person that will be responsible for signing the
certification (a "Sarbanes Certification") required by Rules 13a-14(d) and
15d-14(d) under the Exchange Act (pursuant to Section 302 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act of 2002) on behalf of an asset-backed issuer with respect to a
Securitization Transaction a certification in the form attached hereto as
Exhibit I.
The Servicer acknowledges that the parties identified in clause (d)
above may rely on the certification provided by the Servicer pursuant to such
clause in signing a Sarbanes Certification and filing such with the Commission.
Each assessment of compliance provided by a Subservicer pursuant to
Section 6.06(a) shall address each of the Servicing Criteria specified
substantially in the form of Exhibit H hereto delivered to the Owner
concurrently with the execution of this Agreement or, in the case of a
Subservicer subsequently appointed as such, on or prior to the date of such
appointment. An assessment of compliance provided by a Subcontractor pursuant to
Section 6.06(c) need not address any elements of the Servicing Criteria other
than those specified by the Servicer pursuant to Section 4.24.
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Section 6.07 Right to Examine Servicer Records.
The Owner, or its designee, shall have the right to examine and audit
any and all of the books, records, or other information of the Servicer, whether
held by the Servicer or by another on its behalf, with respect to or concerning
this Agreement or the Mortgage Loans, during business hours or at such other
times as may be reasonable under applicable circumstances, upon reasonable
advance notice. The Owner shall pay its own expenses associated with such
examination.
Section 6.08 Compliance with REMIC Provisions.
If a REMIC election has been made with respect to the arrangement under
which the 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.
ARTICLE VII
SERVICER TO COOPERATE
Section 7.01 Provision of Information.
During the term of this Agreement, the Servicer shall furnish to the
Owner such periodic, special, or other reports or information, and copies or
originals of any documents contained in the Servicing File for each Mortgage
Loan provided for herein. All other special reports or information not provided
for herein as shall be necessary, reasonable, or appropriate with respect to the
Owner or any regulatory agency will be provided at the Owner's expense. All such
reports, documents or information shall be provided by and in accordance with
all reasonable instructions and directions which the Owner may give. In
addition, during the term of this Agreement, the Servicer shall provide to the
OCC and to comparable regulatory authorities supervising the Owner or any of
Owner's assigns (including beneficial owners of securities issued in
Securitization Transactions backed by the Mortgage Loans) and the examiners and
supervisory agents of the OCC and such other authorities, access to the
documentation required by applicable regulations of the OCC and such other
authorities with respect to the Mortgage Loans. Such access shall be afforded
without charge, but only upon reasonable and prior written request and during
normal business hours at the offices designated by the Servicer.
The Servicer shall execute and deliver all such instruments and take
all such action as the Owner may reasonably request from time to time, in order
to effectuate the purposes and to carry out the terms of this Agreement.
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Section 7.02 Financial Statements; Servicing Facility.
In connection with marketing the Mortgage Loans, the Owner may make
available to a prospective Owner a Consolidated Statement of Operations of the
Servicer for the most recently completed two (2) fiscal years for which such a
statement is available, as well as a Consolidated Statement of Condition at the
end of the last two (2) fiscal years covered by such Consolidated Statement of
Operations. The Servicer, upon request, also shall make available any comparable
interim statements to the extent any such statements have been prepared by or on
behalf of the Servicer (and are available upon request to members or
stockholders of the Servicer or to the public at large).
The Servicer also shall make available to the Owner or prospective
purchasers a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Servicer or the
financial statements of the Servicer, and to permit the Owner or any prospective
purchaser to inspect the Servicer's servicing facilities for the purpose of
satisfying the Owner or any such prospective purchaser that the Servicer has the
ability to service the Mortgage Loans as provided in this Agreement.
ARTICLE VIII
THE SERVICER
Section 8.01 Indemnification; Third Party Claims.
The Servicer shall indemnify and hold the Owner and its officers,
directors, successors and any permitted assigns (an "Owner Indemnified Party")
harmless against, and shall reimburse each of them for, any and all claims,
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments, and any other costs, fees and expenses that
the Owner Indemnified Party may sustain in any way related to the failure of the
Servicer to perform its duties and service the Mortgage Loans in strict
compliance with the terms of this Agreement or resulting from, a breach of the
representations and warranties contained in this Agreement. The Servicer
immediately shall notify the Owner if a claim is made by a third party with
respect to this Agreement or the Mortgage Loans, assume (with the prior written
consent of the Owner) the defense of any such claim and pay all expenses in
connection therewith, including counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or the Owner in
respect of such claim. The Servicer shall follow any written instructions
received from the Owner in connection with such claim. The Owner promptly shall
reimburse the Servicer for all amounts advanced by it pursuant to the preceding
sentence except when the claim is in any way related to the Servicer's
indemnification pursuant to Section 3.02, or the failure of the Servicer to
service and administer the Mortgage Loans in strict compliance with the terms of
this Agreement.
The Owner shall indemnify and hold the Servicer and its officers,
directors, successors and any permitted assigns harmless from, and shall
reimburse each of them for, all losses, incurred by or asserted against any of
such individuals or entities which result from any failure by the Owner to
perform its obligations in any material respect under any agreement with respect
to the Mortgage Loan. The Owner's obligations under this Section 8.01 shall be
without regard
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to qualification as to knowledge and shall survive any Reconstitution Date and
the termination of this Agreement.
Section 8.02 Merger or Consolidation of the Servicer.
The Servicer shall keep in full effect its existence, rights and
franchises and shall obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement or any of the Mortgage
Loans and to perform its duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer, 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 successor or surviving Person shall be an institution (i)
having a GAAP net worth of not less than $15,000,000 and (ii) which is a ▇▇▇▇▇▇
Mae/▇▇▇▇▇▇▇ Mac-approved servicer in good standing. Furthermore, in the event
the Servicer transfers or otherwise disposes of all or substantially all of its
assets to an affiliate of the Servicer, such affiliate shall satisfy the
condition above, and shall also be fully liable to the Owner for all of the
Servicer's obligations and liabilities hereunder.
Section 8.03 Limitation on Liability of Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall be under any liability to the Owner for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment, provided, however, that this
provision shall not protect the Servicer or any such Person against any breach
of warranties or representations made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement or any other liability which would otherwise be imposed under this
Agreement. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement and which in its opinion may involve it
in any expense or liability, provided, however, that the Servicer may, with the
consent of the Owner, undertake any such action which it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the parties
hereto. In such event, the Servicer shall be entitled to reimbursement from the
Owner of the reasonable legal expenses and costs of such action, unless any such
costs result from a breach of the Servicer's representations and warranties made
herein or its failure to perform its obligations in strict compliance with this
Agreement.
Section 8.04 Limitation on Resignation and Assignment by Servicer.
The Owner has entered into this Agreement with the Servicer and
subsequent purchasers will purchase the Mortgage Loans in reliance upon the
independent status of the Servicer, and the representations as to the adequacy
of its servicing facilities, personnel, records and
40
procedures, its integrity, reputation and financial standing, and the
continuance thereof. Therefore, the Servicer shall neither assign this Agreement
or the servicing rights hereunder or delegate its rights or duties hereunder
(other than pursuant to Sections 4.01 and 4.24) or any portion hereof or sell or
otherwise dispose of all of its property or assets without the prior written
consent of the Owner, which consent shall not be unreasonably withheld.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Servicer and the Owner or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the 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 which Opinion of
Counsel shall be in form and substance acceptable to the Owner. No such
resignation shall become effective until a successor shall have assumed the
Servicer's responsibilities and obligations hereunder in the manner provided in
Section 12.01.
Without in any way limiting the generality of this Section 8.04, in the
event that the Servicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder (other than pursuant
to Sections 4.01 and 4.24) or any portion thereof or sell or otherwise dispose
of all or substantially all of its property or assets, without the prior written
consent of the Owner, then the Owner shall have the right to terminate this
Agreement upon notice given as set forth in Section 10.01, without any payment
of any penalty or damages and without any liability whatsoever to the Servicer
or any third party.
ARTICLE IX
SECURITIZATION TRANSACTIONS
Section 9.01 Removal of Mortgage Loans from Inclusion Under this
Agreement Upon a Securitization Transaction
The Owner and the Servicer agree that with respect to some or all of
the Mortgage Loans, the Owner, at its sole option, may effect Whole Loan
Transfers, Agency Sales or Securitization Transactions, retaining the Servicer
as the servicer thereof or subservicer if a master servicer is employed, or as
applicable the "seller/servicer." On the Reconstitution Date, the Mortgage Loans
transferred may cease to be covered by this Agreement; provided, however, that,
in the event that any Mortgage Loan transferred pursuant to this Section 9 is
rejected by the transferee, the Servicer shall continue to service such rejected
Mortgage Loan on behalf of the Owner in accordance with the terms and provisions
of the Warehousing Servicing Agreement.
The Servicer shall cooperate with the Owner in connection with each
Whole Loan Transfer, Agency Sale or Securitization Transaction in accordance
with this Section 9.
(a) The Servicer shall make all representations and warranties
with respect to the servicing of the Mortgage Loans and with respect to the
Servicer itself as of the closing date of each Whole Loan Transfer, Agency Sale
or Securitization Transaction;
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(b) The Servicer shall negotiate in good faith and execute any
servicing agreements or pooling and servicing agreements required to effectuate
the foregoing provided such agreements create no greater obligation or cost on
the part of the Servicer than otherwise set forth in this Agreement and provided
such agreements are received by the Servicer within a reasonable time sufficient
for the Servicer and Servicer's counsel to review such agreements;
(c) In connection with any Securitization Transaction, the
Servicer shall (1) within five (5) Business Days following request by the Owner
or any Depositor, provide to the Owner and such Depositor (or, as applicable,
cause each Subservicer to provide), in writing and in form and substance
reasonably satisfactory to the Owner and such Depositor, the information and
materials specified in subsections (d) and (g) and (2) as promptly as
practicable following notice to or discovery by the Servicer, provide to the
Owner and any Depositor (in writing and in form and substance reasonably
satisfactory to the Owner and such Depositor) the information specified in
subsection (e).
(d) If so requested by the Owner or any Depositor, the
Servicer shall provide such information regarding the Servicer, as servicer of
the Mortgage Loans, and each Subservicer (each of the Servicer and each
Subservicer, for purposes of this paragraph, a "Servicer"), as is requested for
the purpose of compliance with Items 1108, 1117 and 1119 of Regulation AB. Such
information shall include, at a minimum:
(i) the Servicer's form of organization;
(ii) a description of how long the Servicer has been
servicing residential mortgage loans; a general discussion of the
Servicer's experience in servicing assets of any type as well as a more
detailed discussion of the Servicer's experience in, and procedures
for, the servicing function it will perform under this Agreement and
any Reconstitution Agreements; information regarding the size,
composition and growth of the Servicer's portfolio of residential
mortgage loans of a type similar to the Mortgage Loans and information
on factors related to the Servicer that may be material, in the good
faith judgment of the Owner or any Depositor, to any analysis of the
servicing of the Mortgage Loans or the related asset-backed securities,
as applicable, including, without limitation:
(1) whether any prior securitizations of
mortgage loans of a type similar to the Mortgage
Loans involving the Servicer have defaulted or
experienced an early amortization or other
performance triggering event because of servicing
during the three-year period immediately preceding
the related Securitization Transaction;
(2) the extent of outsourcing the Servicer
utilizes;
(3) whether there has been previous
disclosure of material noncompliance with the
applicable servicing criteria with respect to other
securitizations of residential mortgage loans
involving the Servicer as a servicer during the
three-year period immediately preceding the related
Securitization Transaction;
42
(4) whether the Servicer has been terminated
as servicer in a residential mortgage loan
securitization, either due to a servicing default or
to application of a servicing performance test or
trigger; and
(5) such other information as the Owner or
any Depositor may reasonably request for the purpose
of compliance with Item 1108(b)(2) of Regulation AB;
(iii) a description of any material changes during
the three-year period immediately preceding the related Securitization
Transaction to the Servicer's policies or procedures with respect to
the servicing function it will perform under this Agreement and any
Reconstitution Agreements for mortgage loans of a type similar to the
Mortgage Loans;
(iv) information regarding the Servicer's financial
condition, to the extent that there is a material risk that an adverse
financial event or circumstance involving the Servicer could have a
material adverse effect on the performance by the Servicer of its
servicing obligations under this Agreement or any Reconstitution
Agreement;
(v) information regarding advances made by the
Servicer on the Mortgage Loans and the Servicer's overall servicing
portfolio of residential mortgage loans for the three-year period
immediately preceding the related Securitization Transaction, which may
be limited to a statement by an authorized officer of the Servicer to
the effect that the Servicer has made all advances required to be made
on residential mortgage loans serviced by it during such period, or, if
such statement would not be accurate, information regarding the
percentage and type of advances not made as required, and the reasons
for such failure to advance;
(vi) a description of the Servicer's processes and
procedures designed to address any special or unique factors involved
in servicing loans of a similar type as the Mortgage Loans;
(vii) a description of the Servicer's processes for
handling delinquencies, losses, bankruptcies and recoveries, such as
through liquidation of mortgaged properties, sale of defaulted mortgage
loans or workouts;
(viii) information as to how the Servicer defines or
determines delinquencies and charge-offs, including the effect of any
grace period, re-aging, restructuring, partial payments considered
current or other practices with respect to delinquency and loss
experience; and
(ix) a description of any material legal or
governmental proceedings pending (or known to be contemplated) against
the Servicer; and
(x) a description of any affiliation or relationship
between the Servicer and any of the following parties to a
Securitization Transaction, as such parties are
43
identified to the Servicer by the Owner or any Depositor in writing in
advance of such Securitization Transaction:
(1) the sponsor;
(2) the depositor;
(3) the issuing entity;
(4) any servicer;
(5) any trustee;
(6) any originator;
(7) any significant obligor;
(8) any enhancement or support provider;
and
(9) any other material transaction
party.
(e) For the purpose of satisfying the reporting obligation
under the Exchange Act with respect to any class of asset-backed securities, the
Servicer shall (or shall cause each Subservicer to) (i) provide prompt notice to
the Owner, any Master Servicer and any Depositor in writing of (A) any material
litigation or governmental proceedings involving the Servicer or any Subservicer
, (B) any affiliations or relationships that develop following the closing date
of a Securitization Transaction between the Servicer or any Subservicer and any
of the parties specified in clause (x) of paragraph (d) of this Section (and any
other parties identified in writing by the requesting party) with respect to
such Securitization Transaction, (C) any Event of Default under the terms of
this Agreement or any Reconstitution Agreement, (D) any merger, consolidation or
sale of substantially all of the assets of the Servicer, and (E) the Servicer's
entry into an agreement with a Subservicer to perform or assist in the
performance of any of the Servicer's obligations under this Agreement or any
Reconstitution Agreement and (ii) provide to the Owner and any Depositor a
description of such proceedings, affiliations or relationships.
(f) As a condition to the succession to the Servicer or any
Subservicer as servicer or subservicer under this Agreement or any
Reconstitution Agreement by any Person (i) into which the Servicer or such
Subservicer may be merged or consolidated, or (ii) which may be appointed as a
successor to the Servicer or any Subservicer, the Servicer shall provide to the
Owner and any Depositor, at least fifteen (15) calendar days prior to the
effective date of such succession or appointment, (x) written notice to the
Owner and any Depositor of such succession or appointment and (y) in writing and
in form and substance reasonably satisfactory to the Owner and such Depositor,
all information reasonably requested by the Owner or any Depositor in order to
comply with its reporting obligation under Item 6.02 of Form 8-K with respect to
any class of asset-backed securities.
(g) (i) The Servicer shall be deemed to represent to the
Owner, to any Master Servicer and to any Depositor, as of each date on
which information is first provided to the Owner, any Master Servicer
or any Depositor under this Section 9.01 that, except as disclosed in
writing to the Owner, any Master Servicer or such Depositor prior to
such date: (1) the Servicer is not aware and has not received notice
that any default, early amortization or other performance triggering
event has occurred as to any other securitization due to any act or
failure to act of the Servicer; (2) the Servicer has not been
terminated as servicer in a residential mortgage loan securitization,
either due to a servicing default or to application of a servicing
performance test or trigger; (3) no
44
material noncompliance with the applicable servicing criteria with
respect to other securitizations of residential mortgage loans
involving the Servicer as servicer has been disclosed or reported by
the Servicer; (4) no material changes to the Servicer's policies or
procedures with respect to the servicing function it will perform under
this Agreement and any Reconstitution Agreement for mortgage loans of a
type similar to the Mortgage Loans have occurred during the three-year
period immediately preceding the related Securitization Transaction;
(5) there are no aspects of the Servicer's financial condition that
could have a material adverse effect on the performance by the Servicer
of its servicing obligations under this Agreement or any Reconstitution
Agreement; (6) there are no material legal or governmental proceedings
pending (or known to be contemplated) against the Servicer or any
Subservicer; and (7) there are no affiliations, relationships or
transactions relating to the Servicer or any Subservicer with respect
to any Securitization Transaction and any party thereto identified by
the related Depositor of a type described in Item 1119 of Regulation
AB.
(ii) If so requested by the Owner, any Master Servicer or any
Depositor on any date following the date on which information is first
provided to the Owner, any Master Servicer or any Depositor under this
Section 9.01, the Servicer shall, within five (5) Business Days
following such request, confirm in writing the accuracy of the
representations and warranties set forth in sub clause (i) above or, if
any such representation and warranty is not accurate as of the date of
such request, provide reasonably adequate disclosure of the pertinent
facts, in writing, to the requesting party.
(iii) In addition to such information as the Servicer, as
servicer, is obligated to provide pursuant to other provisions of this
Agreement, if so requested by the Owner or any Depositor, the Servicer
shall provide such information reasonably available to the Servicer
regarding the performance or servicing of the Mortgage Loans as is
reasonably required to facilitate preparation of distribution reports
in accordance with Item 1121 of Regulation AB. Such information shall
be provided concurrently with the monthly reports otherwise required to
be delivered by the servicer under this Agreement, commencing with the
first such report due not less than ten (10) Business Days following
request.
(h) The Servicer shall indemnify the Owner, each affiliate of
the Owner, and each of the following parties participating in a Securitization
Transaction: each sponsor and issuing entity; each Person, including any Master
Servicer, if applicable, responsible for the preparation, execution or filing of
any report required to be filed with the Commission with respect to such
Securitization Transaction, or for execution of a certification pursuant to Rule
13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such
Securitization Transaction; each broker dealer acting as underwriter, placement
agent or initial Owner, each Person who controls any of such parties or the
Depositor (within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act); and the respective present and former directors, officers,
employees, affiliates and agents of each of the foregoing and of the Depositor
(each an "Indemnified Party"), and shall hold each of them harmless from and
against any losses, damages, penalties, fines, forfeitures, legal fees and
expenses and related costs, judgments, and any other costs, fees and expenses
that any of them may sustain arising out of or based upon:
45
(i) (A) any untrue statement of a material fact
contained or alleged to be contained in any information, report,
certification, data, accountants' letter or other material provided
under Sections 4.24, 6.04, 6.06, 9.01(c), (d) and (h) by or on behalf
of the Servicer, or provided under Sections 4.24, 6.04, 6.06, 9.01(c),
(d) and (h) by or on behalf of any Subservicer or Subcontractor
(collectively, the "Servicer Information"), or (B) the omission or
alleged omission to state in the Servicer Information a material fact
required to be stated in the Servicer Information or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, by way of
clarification, that clause (B) of this paragraph shall be construed
solely by reference to the Servicer Information and not to any other
information communicated in connection with a sale or purchase of
securities, without regard to whether the Servicer Information or any
portion thereof is presented together with or separately from such
other information;
(ii) any breach by the Servicer of its obligations
under this Section 9.01(h), including particularly any failure by the
Servicer, any Subservicer or any Subcontractor to deliver any
information, report, certification, accountants' letter or other
material when and as required under Sections 4.24, 6.04, 6.06, 9.01(c),
(d) and (h), including any failure by the Servicer to identify any
Subcontractor "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB;
(iii) any breach by the Servicer of a representation
or warranty set forth in Section 9.01(g)(i) or in a writing furnished
pursuant to Section 9.01(g)(ii) and made as of a date prior to the
closing date of the related Securitization Transaction, to the extent
that such breach is not cured by such closing date, or any breach by
the Servicer of a representation or warranty in a writing furnished
pursuant to Section 9.01(g)(ii) to the extent made as of a date
subsequent to such closing date; or
(iv) the negligence, bad faith or willful misconduct
of the Servicer in connection with its performance under this Section
9.01.
If the indemnification provided for herein is unavailable or
insufficient to hold harmless an Indemnified party, then the Servicer agrees
that it shall contribute to the amount paid or payable by such Indemnified Party
as a result of any claims, losses, damages or liabilities incurred by such
Indemnified Party in such proportion as is appropriate to reflect the relative
fault of such Indemnified Party on the one hand and the Servicer on the other.
In the case of any failure of performance described in sub-clause (ii)
of this Section 9.01(h), the Servicer shall promptly reimburse the Owner, any
Depositor, as applicable, and each Person responsible for the preparation,
execution or filing of any report required to be filed with the Commission with
respect to such Securitization Transaction, or for execution of a certification
pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect
to such Securitization Transaction, for all costs reasonably incurred by each
such party in order to obtain the information, report, certification,
accountants' letter or other material not delivered as required by the Servicer,
any Subservicer or any Subcontractor.
46
This indemnification shall survive the termination of this Agreement or
the termination of any party to this Agreement.
(i) The Owner and each Person who controls the Owner (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act) shall indemnify the Servicer, each affiliate of the Servicer, each Person
who controls any of such parties or the Servicer (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act) and the respective
present and former directors, officers, employees and agents of each of the
foregoing and of the Servicer, and shall hold each of them harmless from and
against any losses, damages, penalties, fines, forfeitures, legal fees and
expenses and related costs, judgments, and any other costs, fees and expenses
that any of them may sustain arising out of or based upon:
(i) any untrue statement of a material fact contained
or alleged to be contained in any offering materials related to a
Securitization Transaction, including without limitation the
registration statement, prospectus, prospectus supplement, any private
placement memorandum, any offering circular, any computational
materials, and any amendments or supplements to the foregoing
(collectively, the "Securitization Materials") or
(ii) the omission or alleged omission to state in the
Securitization Materials a material fact required to be stated in the
Securitization Materials or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission is other than
a statement or omission arising out of, resulting from, or based upon
the Servicer Information.
(j) In connection with any Securitization Transaction, the
Servicer shall negotiate in good faith and execute one or more servicing
agreements between the Servicer and any master servicer which is generally
considered to be a prudent master servicer in the secondary mortgage market,
designated by the Owner in its sole discretion after consultation with the
Servicer and/or one or more custodial agreements among the Owner, the Servicer
and a third party custodian/trustee which is generally considered to be a
prudent custodian/trustee in the secondary mortgage market designated by the
Owner in its sole discretion after consultation with the Servicer, in either
case for the purpose of pooling the Mortgage Loans with other mortgage loans for
resale or securitization;
(k) In connection with any securitization of any Mortgage
Loans, the Servicer shall assign to the Investor that servicing agreement
provided for in the Recon Acknowledgement Agreement or execute a pooling and
servicing agreement, which pooling and servicing agreement may, at the Owner's
direction, contain contractual provisions including, servicer advances of
delinquent scheduled payments of principal and interest through liquidation
(unless deemed non recoverable) and Prepayment Interest Shortfalls (to the
extent of the monthly servicing fee payable thereto);
(l) In connection with any Securitization Transaction, the
Servicer shall, at the Owner's expense, make available to the Owner, its
affiliates, successors or assigns an agreed-
47
upon procedures letter concerning the aforementioned disclosures, which letter
shall be issued by an accounting firm selected by the Servicer and acceptable to
the Owner, its affiliates, successors or assigns, for inclusion in the offering
materials for the securities created in the Securitization Transaction; and
(m) In the event the Owner appoints a credit risk manager in
connection with a Securitization Transaction, the Servicer shall execute a
credit risk management agreement and provide reports and information reasonably
required by the credit risk manager.
The Owner and the Servicer acknowledge and agree that the purpose of
Section 9.01(d) is to facilitate compliance by the Owner and any Depositor with
the provisions of Regulation AB and related rules and regulations of the
Commission. Although Regulation AB is applicable by its terms only to offerings
of asset-backed securities that are registered under the Securities Act, the
Servicer acknowledges that investors in privately offered securities may require
that the Owner or any Depositor provide comparable disclosure in unregistered
offerings. References in this Agreement to compliance with Regulation AB include
provisions of comparable disclosure in private offerings.
Neither the Owner nor any Depositor shall exercise its right to request
delivery of information or other performance under these provisions other than
in good faith, or for purposes other than compliance with the Securities Act,
the Exchange Act and the rules and regulations of the Commission thereunder. The
Servicer acknowledges that interpretations of the requirements of Regulation AB
may change over time, whether due to interpretive guidance provided by the
Commission or its staff, consensus among participants in the asset-backed
securities markets, advice of counsel, or otherwise, and agrees to comply with
requests made by the Owner, any Master Servicer or any Depositor in good faith
for delivery of information under these provisions on the basis of evolving
interpretations of Regulation AB. In connection with any Securitization
Transaction, the Servicer shall cooperate fully with the Owner to deliver to the
Owner (including any of its assignees or designees) and any Depositor, any and
all statements, reports, certifications, records and any other information
necessary in the good faith determination of the Owner, any Master Servicer or
any Depositor to permit the Owner, such Master Servicer or such Depositor to
comply with the provisions of Regulation AB, together with such disclosures
relating to the Servicer, any Subservicer, and the Mortgage Loans, or the
servicing of the Mortgage Loans, reasonably believed by the Owner or any
Depositor to be necessary in order to effect such compliance.
The Owner (including any of its assignees or designees) shall cooperate
with the Servicer by providing timely notice of requests for information under
these provisions any by reasonably limiting such request to information
required, in the Owner's reasonable judgment to comply with Regulation AB.
In the event the Owner has elected to have the Servicer hold record
title to the Mortgages prior to the Reconstitution Date, the Servicer shall
prepare an Assignment of Mortgage in blank for each Mortgage Loan that is a part
of a Whole Loan Transfer or Agency Sale or prepare an Assignment of Mortgage in
blank or to the trustee from the Servicer acceptable to the trustee for each
Mortgage Loan that is part of a Securitization Transaction. The Owner shall pay
all preparation and recording costs associated therewith. The Servicer shall
execute each
48
Assignment of Mortgage, track such Assignments of Mortgage to ensure they have
been recorded and deliver them as required by the trustee upon the Servicer's
receipt thereof.
All Mortgage Loans (i) not sold or transferred pursuant to Whole Loan
Transfers, Agency Sales or Securitization Transactions or (ii) that are subject
to a Securitization Transaction for which the related trust is terminated for
any reason, shall remain subject to this Agreement and shall continue to be
serviced in accordance with the terms of this Agreement and with respect thereto
this Agreement shall remain in full force and effect.
ARTICLE X
DEFAULT
Section 10.01 Events of Default.
Each of the following shall constitute an Event of Default on the part
of the Servicer:
(a) any failure by the Servicer to remit to the Owner any
payment required to be made under the terms of this Agreement which continues
unremedied for a period of two (2) Business Days after the date upon which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer by the Owner; or
(b) failure by the Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Servicer set forth in this Agreement or in the Custodial Agreement which
continues unremedied for a period of sixty (60) 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 or by the Custodian; or
(c) failure by the Servicer to maintain its license to do
business in any jurisdiction where the Mortgaged Property is located if such
license is required; or
(d) 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, including bankruptcy,
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 60 days; or
(e) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Servicer or of or relating to all or substantially all of its property; or
(f) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an assignment
for the benefit of its creditors, voluntarily suspend payment of its obligations
or cease its normal business operations for three Business Days; or
49
(g) the Servicer ceases to meet the qualifications of a ▇▇▇▇▇▇
▇▇▇/▇▇▇▇▇▇▇ Mac servicer; or
(h) failure by the Servicer to maintain with each rating
agency a primary servicer rating with respect to the Servicer's residential Alt
A and subprime mortgage loan products no lower than the average rating for each
respective rating agency; or
(i) the Servicer attempts to assign its right to servicing
compensation hereunder or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any portion
thereof in violation of Section 8.04;
(j) failure by the Servicer to duly perform, within the
required time period, its obligations under Sections 6.04 and 6.06 which failure
continues unremedied for a period of fifteen (15) 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 any party to this Agreement or by any master
servicer responsible for master servicing the Mortgage Loans pursuant to a
securitization of such Mortgage Loans; or
(k) failure by the Servicer, any Subservicer or any
Subcontractor to deliver any information, report, certification or other
material when and as required under Article IX or Section 4.24, or any breach by
the Servicer of a representation or warranty set forth in Section 9.01(g)(i), or
in a writing furnished pursuant to Section 9.01(g)(ii) and made as of a date
prior to the closing date of the related Securitization Transaction, to the
extent that such breach is not cured by such closing date, within the time
period required, without notice or grace period.
If the Servicer obtains knowledge of an Event of Default, the Servicer
shall promptly notify the Owner.
In each and every such case, so long as an Event of Default shall not
have been remedied, in addition to whatever rights the Owner may have at law or
equity to damages, including injunctive relief and specific performance, the
Owner, by notice in writing to the Servicer (except in the case of clause (j)
above, where termination shall be immediate and automatic), may terminate all
the rights and obligations of the Servicer under this Agreement and in and to
the Mortgage Loans and the proceeds thereof; provided that to the extent that
any provision of this Agreement expressly provides for the survival of certain
rights or obligations following termination of the Servicer as servicer, such
provision shall be given effect. An Event of Default shall entitle the Owner in
its sole discretion to terminate the rights and obligations of the Servicer as
servicer under this Agreement without payment (notwithstanding anything in this
Agreement to the contrary) of any compensation to the Servicer. The Owner shall
not be entitled to terminate the rights and obligations of the Servicer in the
event of an Event of Default under clause (j) above if a failure of the Servicer
to identify a Subcontractor "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB was attributable solely to the role or
functions of such Subcontractor with respect to mortgage loans other than the
Mortgage Loans.
Upon receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall
50
pass to and be vested in the successor appointed pursuant to Section 12.01. Upon
written request from any Owner, the Servicer shall prepare, execute and deliver
to the successor entity designated by the Owner any and all documents and other
instruments, place in such successor's possession all Mortgage Files, and do or
cause to be done all other acts or things reasonably necessary or appropriate to
effect the purposes of such notice of termination, including but not limited to
the transfer and endorsement or assignment of the Mortgage Loans and related
documents, all at the Servicer's sole expense, including, without limitation,
any costs or expenses associated with the complete transfer of all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the Owner to correct any errors or insufficiencies caused by
the Servicer to enable the Owner to service the Mortgage Loans properly and
effectively. The Servicer shall cooperate with the Owner and such successor in
effecting the termination of the Servicer's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Servicer to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
If any of the Mortgage Loans are MERS Mortgage Loans, in connection
with the termination or resignation (as described in Section 8.04) of the
Servicer hereunder, either (i) the successor servicer shall represent and
warrant that it is a member of MERS in good standing and shall agree to comply
in all material respects with the rules and procedures of MERS in connection
with the servicing of the Mortgage Loans that are registered with MERS, or (ii)
the Servicer shall cooperate with the successor servicer either (x) in causing
MERS to execute and deliver an Assignment of Mortgage in recordable form to
transfer the Mortgage from MERS to the Owner and to execute and deliver such
other notices, documents and other instruments as may be necessary to remove
such Mortgage Loan(s) from the MERS(R) System or (y) in causing MERS to
designate on the MERS(R) System the successor servicer as the servicer of such
Mortgage Loan.
Section 10.02 Waiver of Defaults.
By a written notice, the Owner may waive any default by the Servicer in
the performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
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ARTICLE XI
TERMINATION
Section 11.01 Termination.
This Agreement shall terminate upon either: (i) the later of the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or the disposition of any REO Property with respect to the last
Mortgage Loan and the remittance of all funds due hereunder; or (ii) mutual
consent of the Servicer and the Owner in writing; or (iii) termination pursuant
to Section 10.01 or 11.02.
Upon written request from the Owner in connection with any such
termination, the Servicer shall prepare, execute and deliver, any and all
documents and other instruments, place in the Owner's possession all Mortgage
Files, and do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and endorsement or assignment of the Mortgage Loans and related
documents, or otherwise, at the Servicer's sole expense. The Servicer agrees to
cooperate with the Owner and such successor in effecting the termination of the
Servicer's responsibilities and rights hereunder as servicer, including, without
limitation, the transfer to such successor for administration by it of all cash
amounts which shall at the time be credited by the Servicer to the Custodial
Account or Escrow Account or thereafter received with respect to the Mortgage
Loans. The provisions of this paragraph shall not limit whatever rights the
Owner may have under other provisions of this Agreement or otherwise, whether in
equity or at law, such as an action for damages, specific performance or
injunctive relief.
Section 11.02 Termination Without Cause.
The Owner may terminate, at its sole option, any rights the Servicer
may have hereunder, without cause as provided in this Section 11.02. Any such
notice of termination shall be in writing and delivered to the Servicer by
registered mail as provided in Section 12.05.
The Servicer shall be entitled to receive, as such liquidated damages,
upon the transfer of the servicing rights, an amount equal to 2.25% of the
aggregate outstanding principal amount of the Mortgage Loans as of the
termination date, paid by the Owner to the Servicer with respect to all of the
Mortgage Loans so terminated.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Servicer.
Prior to termination of the Servicer's responsibilities and duties
under this Agreement pursuant to Sections 8.04, 10.01, 11.01(ii) or pursuant to
Section 11.02 the Owner shall, (i) succeed to and assume all of the Servicer's
responsibilities, rights, duties and obligations under this Agreement, or (ii)
appoint a successor having the characteristics set forth in Section 8.02 and
which shall succeed to all rights and assume all of the responsibilities, duties
and liabilities of the
52
Servicer under this Agreement prior to the termination of Servicer's
responsibilities, duties and liabilities under this Agreement. In connection
with such appointment and assumption, the Owner may make such arrangements for
the compensation of such successor out of payments on Mortgage Loans as it and
such successor shall agree. In the event that the Servicer's duties,
responsibilities and liabilities under this Agreement should be terminated
pursuant to the aforementioned sections, the Servicer shall discharge such
duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of the Servicer pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 12.01
and shall in no event relieve the Servicer of the representations and warranties
made pursuant to Section 3.01 and the remedies available to the Owner under
Sections 3.02 and 8.01, it being understood and agreed that the provisions of
such Sections 3.01, 3.02 and 8.01 shall be applicable to the Servicer
notwithstanding any such sale, assignment, resignation or termination of the
Servicer, or the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Servicer and to the Owner an instrument accepting such
appointment, wherein the successor shall make the representations and warranties
set forth in Section 3.01, whereupon such successor shall become fully vested
with all the rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer, with like effect as if originally named as a party
to this Agreement. Any termination or resignation of the Servicer or termination
of this Agreement pursuant to Section 8.04, 10.01, 11.01 or 11.02 shall not
affect any claims that any Owner may have against the Servicer arising out of
the Servicer's actions or failure to act prior to any such termination or
resignation.
The Servicer shall deliver promptly to the successor servicer the funds
in the Custodial Account and Escrow Account and all Mortgage Files and related
documents and statements held by it hereunder and 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.
Upon a successor's acceptance of appointment as such, the Servicer
shall notify by mail the Owner of such appointment in accordance with the
procedures set forth in Section 12.05.
Section 12.02 Amendment.
This Agreement may be amended from time to time by written agreement
signed by the Servicer and the Owner.
Section 12.03 Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
53
Each of the Servicer and the Owner hereby knowingly, voluntarily and
intentionally waives any and all rights it may have to a trial by jury in
respect of any litigation based on, or arising out of, under, or in connection
with this Agreement, or any other documents and instruments executed in
connection herewith, or any course of conduct, course of dealing, statements
(whether oral or written), or actions of the Servicer or the Owner. This
provision is a material inducement for the Owner to enter into this Agreement.
Section 12.04 Arbitration.
In the event a claim or controversy arises concerning the
interpretation or enforcement of the terms of this Agreement, the Owner and the
Servicer agree that such claim or controversy may be settled by final, binding
arbitration if the Owner and the Servicer, as applicable, consent to such
arbitration at the time such claim or controversy arises which consent may be
withheld by the Owner or the Servicer in each party's sole discretion.
Section 12.05 Duration of Agreement.
This Agreement shall continue in existence and effect until terminated
as herein provided. This Agreement shall continue notwithstanding transfers of
the Mortgage Loans by the Owner.
Section 12.06 Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or mailed
by registered mail, postage prepaid, addressed as follows:
(i) if to the Servicer with respect to servicing and investor reporting
issues:
▇▇▇▇▇ Fargo Bank, N.A.
1 Home ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, MAC X2401-042
Fax: 515/▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ Fargo Bank, N.A.
1 Home Campus
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel MAC X2401-06T
or such other address as may hereafter be furnished to the
Owner in writing by the Servicer;
(ii) if to Owner:
Bank of America, National Association
54
Hearst Tower
NC1-027-21-04
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Managing Director
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as may hereafter be furnished to the Servicer in
writing by the Owner.
Section 12.07 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
Section 12.08 Relationship of Parties.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Servicer shall be rendered as an independent contractor and not as agent for the
Owner.
Section 12.09 Execution; 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 Section 8.04, this Agreement
shall inure to the benefit of and be binding upon, and shall be enforceable by,
the Servicer and the Owner and their respective successors and assigns,
including without limitation, any trustee or master servicer appointed by the
Owner with respect any Whole Transfer or Securitization Transaction.
Section 12.10 Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, as to each Mortgage Loan
which is not a MERS Mortgage Loan, each of the Assignments of Mortgage 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 at the
Servicer's expense in the event recordation is either necessary under applicable
law or requested by the Owner at its sole option.
55
Section 12.11 Assignment by Owner.
The Owner shall have the right, without the consent of the Servicer to
assign, in whole or in part, its interest under this Agreement with respect to
some or all of the Mortgage Loans, and designate any person to exercise any
rights of the Owner hereunder, by executing an Assignment and Assumption
Agreement substantially in the form attached as Exhibit B hereto, and the
assignee or designee shall accede to the rights and obligations hereunder of the
Owner with respect to such Mortgage Loans. All references to the Owner in this
Agreement shall be deemed to include its assignee or designee. In the event the
Owner assigns this Agreement, and the assignee assumes any and all of the
Owner's obligations hereunder, the Servicer acknowledges and agrees to look
solely to such assignee, and not the Owner, for performance of the obligations
so assumed and the Owner shall be relieved from any liability to the Servicer
with respect thereto.
Section 12.12 Solicitation of Mortgagor.
Neither party shall, after the Sale Date, take any action to solicit
the refinancing of any Mortgage Loan. It is understood and agreed that neither
(i) promotions undertaken by either party or any affiliate of either party which
are directed to the general public at large, including, without limitation, mass
mailings based upon commercially acquired mailing lists, newspaper, radio,
television advertisements nor (ii) serving the refinancing needs of a Mortgagor
who, without solicitation, contacts either Party in connection with the
refinance of such Mortgage or Mortgage Loan, shall constitute solicitation under
this Section.
Section 12.13 Further Agreements.
The Owner and the Servicer each agree to execute and deliver to the
other such additional documents, instruments or agreements as may be necessary
or appropriate to effectuate the purposes of this Agreement.
Section 12.14 Conflicts.
If any conflicting terms shall exist between this Agreement, the
Purchase Agreement, and any Commitment Letter, the terms and conditions of the
Commitment Letter shall govern over all other documents; the Purchase Agreement
shall govern over this Agreement.
Section 12.15 Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
Section 12.16 Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
56
Section 12.17 Third Party Beneficiaries.
For purposes of Sections 4.24, 6.04, 6.06 and 9.01 and any related
provisions thereto, each Master Servicer shall be considered a third-party
beneficiary of this Agreement, entitled to all the rights and benefits hereof as
if it were a direct party to this Agreement.
[Intentionally Blank - Next Page Signature Page]
57
IN WITNESS WHEREOF, the Servicer and the Owner have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
BANK OF AMERICA,
NATIONAL ASSOCIATION, ▇▇▇▇▇ FARGO BANK, N.A.,
OWNER SERVICER
By: /s/ ▇▇▇▇▇ ▇. Good By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------- -------------------------------------------------
Name: ▇▇▇▇▇ ▇. Good Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------- --------------------------------------
Title: Vice President Title: Vice President
------------------------------------- ----------------------------------------------
[Reconstitution Servicing Agreement]
58
EXHIBIT A
---------
[RESERVED]
A-1
EXHIBIT B
---------
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
____________, 20__
ASSIGNMENT AND ASSUMPTION, dated ___________________, 20__ among BANK
OF AMERICA, NATIONAL ASSOCIATION, a national banking association having an
office at Charlotte, North Carolina ("Assignor") and _________________, having
an office at _________________ ("Assignee") and ▇▇▇▇▇ FARGO BANK, N.A. (the
"Servicer"), having an ▇▇▇▇▇▇ ▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇:
For and in consideration of the sum of one dollar ($1.00) and other
valuable consideration the receipt and sufficiency of which are hereby
acknowledge, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee all of
the right, title and interest of Assignor, as Owner, in, to and under that
certain Servicing Agreement, (the "Agreement"), dated as of _________________,
by and between _________________ (the "Owner"), and _________________ (the
"Servicer"), [and that certain Custodial Agreement, (the "Custodial Agreement"),
dated as of _________________, by and among the Servicer, the Owner and
_________________ (the "Custodian")].
2. The Assignor warrants and represents to, and covenants with, the
Assignee that:
a. The Assignor is the lawful owner of the Mortgage
Loans with the full right to transfer the Mortgage Loans free from any and all
claims and encumbrances whatsoever;
b. The Assignor has not received notice of, and has no
knowledge of, any offsets, counterclaims or other defenses available to the
Servicer with respect to the Servicing Agreement or the Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver
under, or agreed to any amendment or other modification of, the Servicing
Agreement, the Custodial Agreement or the Mortgage Loans, including without
limitation the transfer of the servicing obligations under the Servicing
Agreement. The Assignor has no knowledge of, and has not received notice of, any
waivers under or amendments or other modifications of, or assignments of rights
or obligations under, the Servicing Agreement or the Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise disposed of the Mortgage
Loans, any interest in the Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other disposition of
the Mortgage Loans, any interest in the Mortgage Loans or any other similar
security from, or otherwise approached or negotiated with respect to the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action which
would constitute a distribution of the Mortgage Loans under the Securities Act
of 1933 (the "33 Act") or which would render the disposition of the Mortgage
Loans a violation of Section 5 of the 33 Act or require registration pursuant
thereto.
B-1
3. That Assignee warrants and represent to, and covenants with, the
Assignor and the Servicer pursuant to Section 12.10 of the Servicing Agreement
that:
a. The Assignee agrees to be bound, as Owner, by all of
the terms, covenants and conditions of the Servicing Agreement, the Mortgage
Loans and the Custodial Agreement, and from and after the date hereof, the
Assignee assumes for the benefit of each of the Servicer and the Assignor all of
the Assignor's obligations as purchaser thereunder;
b. The Assignee understands that the Mortgage Loans have
not been registered under the 33 Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the
Mortgage Loans are in excess of $250,000.00 and will be paid by cash remittance
of the full purchase price within 60 days of the sale;
d. The Assignee is acquiring the Mortgage Loans for
investment for its own account only and not for any other person. In this
connection, neither the Assignee nor any person authorized to act therefor has
offered to sell the Mortgage Loans by means of any general advertising or
general solicitation within the meaning of Rule 502(c) of US Securities and
Exchange Commission Regulation D, promulgated under the 1933 Act;
e. The Assignee considers itself a substantial
sophisticated institutional investor having such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of investment in the Mortgage Loans;
f. The Assignee has been furnished with all information
regarding the Mortgage Loans that it has requested from the Assignor or the
Servicer;
g. Neither the Assignee nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise disposed of the Mortgage
Loans, any interest in the Mortgage Loans or any other similar security to, or
solicited any offer to buy or accepted a transfer, pledge or other disposition
of the Mortgage Loans, any interest in the Mortgage Loans or any other similar
security from, or otherwise approached or negotiated with respect to the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
with, any person in any manner which would constitute a distribution of the
Mortgage Loans under the 33 Act or which would render the disposition of the
Mortgage Loans a violation of Section 5 of the 33 Act or require registration
pursuant thereto, nor will it act, nor has it authorized or will it authorize
any person to act, in such manner with respect to the Mortgage Loans; and
h. Either (1) the Assignee is not an employee benefit
plan ("Plan") within the meaning of section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or a plan (also "Plan") within
the meaning of section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code"),
and the Assignee is not directly or indirectly purchasing the Mortgage Loans on
behalf of, investment manager of, as named fiduciary of, as Trustee of, or with
assets of, a Plan; or (2) the Assignee's purchase of the Mortgage Loans will not
result in a prohibited transaction under section 406 of ERISA or section 4975 of
the Code.
i. The Assignee's address for purposes of all notices
and correspondence related to the Mortgage Loans and the Servicing Agreements
is:
B-2
Attention: _________________
The Assignee's wire transfer instructions for purposes of all
remittances and payments related to the Mortgage Loans and the Servicing
Agreement is:
Attention: _________________
4. From and after the date hereof, the Servicer shall note the transfer
of the Mortgage Loans to the Assignee in its books and records, the Servicer
shall recognize the Assignee as the owner of the Mortgage Loans and the Servicer
shall service the Mortgage Loans for the benefit of the Assignee pursuant to the
Servicing Agreement, the terms of which are incorporated herein by reference. It
is the intention of the Assignor, the Servicer and the Assignee that the
Servicing Agreement shall be binding upon and inure to the benefit of the
Servicer and the Assignee and their respective successors and assigns.
[Signatures Follow]
B-3
IN WITNESS WHEREOF, the parties have caused this Assignment, Assumption
and Recognition Agreement to be executed by their duly authorized officers as of
the date first above written.
------------------------------------------- ----------------------------------
Assignor Assignee
By: By:
--------------------------------------- ----------------------------------------
Name: Name:
------------------------------------- --------------------------------------
Its: Its:
-------------------------------------- ---------------------------------------
Tax Payer Identification No.: Tax Payer Identification No.:
------------------------------------------- --------------------------------------------
▇▇▇▇▇ FARGO BANK, N.A.
Servicer
By:
----------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
B-4
EXHIBIT C
---------
RESERVED
C-1
EXHIBIT D
----------
SERVICING SYSTEM GUIDELINES AND REQUIREMENTS
Loading/Updating Investor Headers
1. Bank of America will provide investor header matrix for input on MSP
by Servicer. Updates/additions will occur monthly, including new
investor header detail for each new deal that is settled.
2. The Servicer will load investor headers upon receipt or before month
end. The following fields will need to be updated on IN03: MS OPT, MS
INV CNTRL NO, MS MO DELQ, and MS JUST FL.
3. The Servicer will update the investor headers on the first business
day of the next/following month to ensure that the correct loan
accounts will appear on the corresponding 413 file that will
represent the new month's activity.
Loading Account Numbers
1. Upon receipt of a funding schedule, Bank of America will deliver a
cross reference of Servicer-to-Bank of America account numbers to the
servicer. The account numbers will be delivered in the ▇▇▇▇ 55 layout
for loading in the next Servicer MSP cycle.
2. The Servicer will load account numbers on the first business day of
the month to ensure that the correct Bank of America account numbers
will appear on the corresponding 413 file that will represent the new
month's activity.
Automated Monetary Transaction File - 413
1. Call Fidelity PowerCell and request installation of IP 770
2. On the first business day of the month, the financial transactions
for the LSBO portfolio will transmit from the Servicer MSP system to
the Bank of America MSP system.
Monthly Servicer File - Automated
1. Call Fidelity PowerCell and initiate an SSR for the installation of
IP 1804 and the interchange set-up required to host and transmit this
file. This enhancement will provide an automated month-end feed from
the Servicer to Bank of America for the LSBO portfolio identified by
the corresponding investor headers. The feed will include all new
loans purchased by Bank of America in the previous month, as well as
a maintenance file for all existing loans in the LSBO portfolio
2. Once installed, populate XX flag on the IN03 screen. This flag will
assist with synchronizing the feeds received in the Monthly Servicer
File and the corresponding 413 file.
3. Bank of America will receive and process the electronic file on the
first business day of the month for the previous month-end file.
Note: This file comes from the servicer automatically with the
installation of the IP.
Exhibit D-1
Monthly Servicer File - Manual
For testing purposes, and in the event that the IP is not installed prior to
initial conversion, a manual process is in place to provide the Monthly Servicer
File data feed for REMOTE MSP clients.
1. The Servicer will load/update investor header information received
from Bank of America.
2. The Servicer will send an email granting permission to Fidelity to
provide the manual feed of accounts in the assigned investor headers
identified. The email will contain the MSP client and corresponding
investor/categories to be included in the feed.
3. Bank of America will receive and process the file on the first
business day of the month for the previous month-end file.
Note: For LICENSED MSP clients, the servicer will install and use the
existing work-around EZTrieve process. (This will require the
installation, testing, and implementation of the EZTrieve until the IP is
ready.) The servicer will be required to develop a test file and
production files until the IP is available.
Reporting Requirements
Required reports for the LSBO project are as follows:
o S214 - Report summarizes paid in full loans made during the reporting
period
o P139 - Monthly statement of mortgage accounts or a trial balance
as of the cutoff date
o SCHEDULED REMITTANCE REPORTS - Servicers send on a monthly basis. We
would like this report by the 5th business day.
o DELINQUENCY REPORT - Report from the servicer to be sent by the 5th
business day. If the servicer is a Fidelity client, we would like a
P4DL report. Otherwise, a similar report will suffice. LSBO would like
this report sent via e-mail or fax.
NOTE: These S215, S214, and P139 reports will be provided in an electronic
format. These reports are automatically generated when the 951/139 cutoff is
calendared. The reports are required for the LSBO project; reports in addition
to these may be reasonably required in a format mutually agreed by the Owner and
the Servicer.
Exhibit D-2
EXHIBIT E
---------
FORMS OF CUSTODIAL ACCOUNT CERTIFICATION
CUSTODIAL ACCOUNT CERTIFICATION
, 20
--------------------------
▇▇▇▇▇ Fargo Bank, N.A. hereby certifies that it has established the
account described below as a Custodial Account pursuant to Section 4.04 of the
Servicing Agreement, dated as of __________________, 20____m,
Title of Account: ▇▇▇▇▇ Fargo Bank, N.A. in trust for the Owner and/or
subsequent purchasers of Mortgage Loans - P & I
Address of office or branch of the Servicer at which Account is maintained:
▇▇▇▇▇ FARGO BANK, N.A.
Servicer
By:
Name:
Title:
Exhibit E-1
EXHIBIT F
---------
FORMS OF ESCROW ACCOUNT CERTIFICATION
ESCROW ACCOUNT CERTIFICATION
, 20
--------------------------
▇▇▇▇▇ Fargo Bank, N.A. hereby certifies that it has established the
account described below as an Escrow Account pursuant to Section 4.06 of the
Servicing Agreement, dated as of __________________, 20___,.
Title of Account: ▇▇▇▇▇ Fargo Bank, N.A. in trust for the Owner and/or
subsequent purchasers of Mortgage Loans, and various
Mortgagors - T & I
Address of office or branch of the Servicer at which Account is maintained:
▇▇▇▇▇ FARGO BANK, N.A.
Servicer
By:
Name:
Title:
Exhibit F-1
EXHIBIT G
---------
FORM OF POWER OF ATTORNEY
When Recorded Mail To:
_____________________________________________________ Space above this line for
Recorders Use
LIMITED POWER OF ATTORNEY
Name of Servicer (hereinafter called "Owner") hereby appoints ▇▇▇▇▇ Fargo Bank,
N.A. (hereinafter called "Servicer"), as its true and lawful attorney-in-fact to
act in the name, place and stead of Owner for the purposes set forth below. This
limited power of attorney is given pursuant to a certain Servicing Agreement and
solely with respect to the assets serviced pursuant to such agreement by and
between Owner and Servicer dated July 1, 2006 to which reference is made for the
definition of all capitalized terms herein.
The said attorneys-in-fact, and said person designated by the Servicer, as the
attorney-in-fact, is hereby authorized, and empowered, as follows:
1. To execute, acknowledge, seal and deliver deed of trust/mortgage note
endorsements, lost note affidavits, assignments of deed of trust/mortgage
and other recorded documents, satisfactions/releases/reconveyances of deed
of trust/mortgage, subordinations and modifications, tax authority
notifications and declarations, deeds, bills of sale, and other instruments
of sale, conveyance and transfer, appropriately completed, with all
ordinary or necessary endorsements, acknowledgements, affidavits, and
supporting documents as may be necessary or appropriate to effect its
execution, delivery, conveyance, recordation or filing.
2. To execute and deliver insurance filings and claims, affidavits of debt,
substitutions of trustee, substitutions of counsel, non-military
affidavits, notices of rescission, foreclosure deeds, transfer tax
affidavits, affidavits of merit, verifications of complaints, notices to
quit, bankruptcy declarations for the purpose of filing motions to lift
stays, and other documents or notice filings on behalf of Seller in
connection with insurance, foreclosure, bankruptcy and eviction actions.
3. To endorse any checks or other instruments received by Servicer with
respect to assets serviced pursuant to the Servicing Agreement and made
payable to Owner.
Exh. G-1
Dated: Name of Servicer
---------------------------------------
Witness: Name:
----------------------------------------- -------------------------------------
Title: _____________________________
Name & Title: ___________________________
Witness:
-----------------------------
Name & Title: ___________________________
State of
County of
Before me, ______________________, a Notary Public in and for the jurisdiction
aforesaid, on this _____ day of ____________________, _______, personally
appeared ___________________________, who is personally known to me (or
sufficiently proven) to be a __________________________________ of
_______________________________ and the person who executed the foregoing
instrument by virtue of the authority vested in him/her and he/she did
acknowledge the signing of the foregoing instrument to be his/her free and
voluntary act and deed as a _________________________________ for the uses,
purposes and consideration therein set forth.
Witness my hand and official seal this _____ day of _____________________,
_______.
--------------------------------------------
My Commission Expires: ________________________
Exh. G-2
EXHIBIT H
---------
IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the
Company][Name of Subservicer] shall address, as a minimum,
the criteria identified below as "Applicable Servicing
Criteria"
-------------------- --------------------------------------------------------------------- ------------------ --------------
REG AB REFERENCE SERVICING CRITERIA APPLICABLE INAPPLICABLE
SERVICING SERVICING
CRITERIA CRITERIA
-------------------- --------------------------------------------------------------------- ------------------ --------------
GENERAL SERVICING CONSIDERATIONS
-------------------- --------------------------------------------------------------------- ------------------ --------------
Policies and procedures are instituted to monitor any
performance X or other triggers and events of default in
1122(d)(1)(i) accordance with the transaction agreements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
If any material servicing activities are outsourced to third X
parties, policies and procedures are instituted to monitor the
third party's performance and compliance with such servicing
1122(d)(1)(ii) activities.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Any requirements in the transaction agreements to maintain a X
1122(d)(1)(iii) back-up servicer for the mortgage loans are maintained.
-------------------- --------------------------------------------------------------------- ------------------ --------------
A fidelity bond and errors and omissions policy is in effect on the X
party participating in the servicing function throughout the
reporting period in the amount of coverage required by and
otherwise in accordance with the terms of the transaction
1122(d)(1)(iv) agreements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
CASH COLLECTION AND ADMINISTRATION
-------------------- --------------------------------------------------------------------- ------------------ --------------
Payments on mortgage loans are deposited into the appropriate X
custodial bank accounts and related bank clearing accounts no more
than two business days following receipt, or such other number of
1122(d)(2)(i) days specified in the transaction agreements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Disbursements made via wire transfer on behalf of an obligor or to X
1122(d)(2)(ii) an investor are made only by authorized personnel.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Advances of funds or guarantees regarding collections, cash
flows X or distributions, and any interest or other fees
charged for such advances, are made, reviewed and approved
as specified in the
1122(d)(2)(iii) transaction agreements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
The related accounts for the transaction, such as cash
reserve X accounts or accounts established as a form of
overcollateralization, are separately maintained (e.g.,
with respect to commingling of cash) as set forth in the
1122(d)(2)(iv) transaction agreements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Each custodial account is maintained at a federally insured
X depository institution as set forth in the transaction
agreements. For purposes of this criterion, "federally
insured depository institution" with respect to a foreign
financial institution means a foreign financial institution
that meets the requirements of Rule 13k-1(b)(1) of the
1122(d)(2)(v) Securities Exchange Act.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Unissued checks are safeguarded so as to prevent unauthorized X
1122(d)(2)(vi) access.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Reconciliations are prepared on a monthly basis for all X
asset-backed securities related bank accounts, including custodial
accounts and related bank clearing accounts. These reconciliations
are (A) mathematically accurate; (B) prepared within 30 calendar
days after the bank statement cutoff date, or such other number of
days specified in the transaction agreements; (C) reviewed and
approved by someone other than the person who prepared the
reconciliation; and (D) contain explanations for reconciling items.
These reconciling items are resolved within 90 calendar days of
1122(d)(2)(vii) their
-------------------- --------------------------------------------------------------------- ------------------ --------------
Exh. H-1
-------------------- --------------------------------------------------------------------- ------------------ --------------
original identification, or such other number of days
specified in the transaction agreements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
INVESTOR REMITTANCES AND REPORTING
-------------------- --------------------------------------------------------------------- ------------------ --------------
Reports to investors, including those to be filed with the X
Commission, are maintained in accordance with the transaction
agreements and applicable Commission requirements. Specifically,
such reports (A) are prepared in accordance with timeframes and
other terms set forth in the transaction agreements; (B) provide
information calculated in accordance with the terms specified in
the transaction agreements; (C) are filed with the Commission as
required by its rules and regulations; and (D) agree with
investors' or the trustee's records as to the total unpaid
principal balance and number of mortgage loans serviced by the
1122(d)(3)(i) Servicer.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Amounts due to investors are allocated and remitted in accordance X
with timeframes, distribution priority and other terms set forth in
1122(d)(3)(ii) the transaction agreements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Disbursements made to an investor are posted within two business X
days to the Servicer's investor records, or such other number of
1122(d)(3)(iii) days specified in the transaction agreements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Amounts remitted to investors per the investor reports
agree with X cancelled checks, or other form of payment, or
custodial bank
1122(d)(3)(iv) statements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Pool Asset Administration
-------------------- --------------------------------------------------------------------- ------------------ --------------
Collateral or security on mortgage loans is maintained as required X
1122(d)(4)(i) by the transaction agreements or related mortgage loan documents.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Mortgage loan and related documents are safeguarded as required by X
1122(d)(4)(ii) the transaction agreements
-------------------- --------------------------------------------------------------------- ------------------ --------------
Any additions, removals or substitutions to the asset pool are X
made, reviewed and approved in accordance with any conditions or
1122(d)(4)(iii) requirements in the transaction agreements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Payments on mortgage loans, including any payoffs, made in
X accordance with the related mortgage loan documents are
posted to the Servicer's obligor records maintained no more
than two business days after receipt, or such other number
of days specified in the transaction agreements, and
allocated to principal, interest or other items (e.g.,
escrow) in accordance with the related mortgage
1122(d)(4)(iv) loan documents.
-------------------- --------------------------------------------------------------------- ------------------ --------------
The Servicer's records regarding the mortgage loans agree
with the X Servicer's records with respect to an obligor's
unpaid principal
1122(d)(4)(v) balance.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Changes with respect to the terms or status of an obligor's X
mortgage loans (e.g., loan modifications or re-agings) are made,
reviewed and approved by authorized personnel in accordance with
1122(d)(4)(vi) the transaction agreements and related pool asset documents.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Loss mitigation or recovery actions (e.g., forbearance
plans, X modifications and deeds in lieu of foreclosure,
foreclosures and repossessions, as applicable) are
initiated, conducted and concluded in accordance with the
timeframes or other requirements established by the transaction
1122(d)(4)(vii) agreements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Records documenting collection efforts are maintained during the X
period a mortgage loan is delinquent in accordance with the
transaction agreements. Such records are maintained on at least a
monthly basis, or such other period specified in the transaction
agreements, and describe the entity's activities in monitoring
1122(d)(4)(viii) delinquent mortgage loans including, for example, phone calls,
-------------------- --------------------------------------------------------------------- ------------------ --------------
Exh. H-2
-------------------- --------------------------------------------------------------------- ------------------ --------------
letters and payment rescheduling plans in cases where delinquency
is deemed temporary (e.g., illness or unemployment).
-------------------- --------------------------------------------------------------------- ------------------ --------------
Adjustments to interest rates or rates of return for
mortgage loans X with variable rates are computed based on
1122(d)(4)(ix) the related mortgage loan documents.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Regarding any funds held in trust for an obligor (such as escrow X
accounts): (A) such funds are analyzed, in accordance with the
obligor's mortgage loan documents, on at least an annual basis, or
such other period specified in the transaction agreements; (B)
interest on such funds is paid, or credited, to obligors in
accordance with applicable mortgage loan documents and state laws;
and (C) such funds are returned to the obligor within 30 calendar
days of full repayment of the related mortgage loans, or such other
1122(d)(4)(x) number of days specified in the transaction agreements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Payments made on behalf of an obligor (such as tax or
insurance X payments) are made on or before the related
penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments, provided
that such support has been received by the servicer at
least 30 calendar days prior to these dates, or such
1122(d)(4)(xi) other number of days specified in the transaction agreements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Any late payment penalties in connection with any payment
to be X made on behalf of an obligor are paid from the
Servicer's funds and not charged to the obligor, unless the
1122(d)(4)(xii) late payment was due to the obligor's error or omission.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Disbursements made on behalf of an obligor are posted
within two X business days to the obligor's records
maintained by the servicer, or such other number of days
1122(d)(4)(xiii) specified in the transaction agreements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Delinquencies, charge-offs and uncollectible accounts are X
recognized and recorded in accordance with the transaction
1122(d)(4)(xiv) agreements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Any external enhancement or other support, identified in
Item X 1114(a)(1) through (3) or Item 1115 of Regulation
1122(d)(4)(xv) AB, is maintained as set forth in the transaction agreements.
-------------------- --------------------------------------------------------------------- ------------------ --------------
Exh. H-3
EXHIBIT I
---------
SARBANES CERTIFICATION
Re: The [ ] agreement dated as of [ ], 200[ ] (the "Agreement"),
among [IDENTIFY PARTIES]
I, ________________________________, the _______________________ of [Name of
Servicer] (the "Servicer"), certify to [the Owner], [the Depositor], and the
[Master Servicer] [Securities Administrator] [Trustee], and their officers, with
the knowledge and intent that they will rely upon this certification, that:
(1) I have reviewed the servicer compliance statement of the Servicer
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Servicer's compliance with
the servicing criteria set forth in Item 1122(d) of Regulation AB (the
"Servicing Criteria"), provided in accordance with Rules 13a-18 and
15d-18 under Securities Exchange Act of 1934, as amended (the "Exchange
Act") and Item 1122 of Regulation AB (the "Servicing Assessment"), the
registered public accounting firm's attestation report provided in
accordance with Rules 13a-18 and 15d-18 under the Exchange Act and
Section 1122(b) of Regulation AB (the "Attestation Report"), and all
servicing reports, officer's certificates and other information
relating to the servicing of the Mortgage Loans by the Servicer during
200[ ] that were delivered by the Servicer to the [Depositor] [Master
Servicer] [Securities Administrator] [Trustee] pursuant to the
Agreement (collectively, the "Servicer Servicing Information");
(2) Based on my knowledge, the Servicer Servicing Information, taken as
a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in
the light of the circumstances under which such statements were made,
not misleading with respect to the period of time covered by the
Servicer Servicing Information;
(3) Based on my knowledge, all of the Servicer Servicing Information
required to be provided by the Servicer under the Agreement has been
provided to the [Depositor] [Master Servicer] [Securities
Administrator] [Trustee];
(4) I am responsible for reviewing the activities performed by the
Servicer under the Agreement, and based on my knowledge and the
compliance review conducted in preparing the Compliance Statement and
except as disclosed in the Compliance Statement, the Servicing
Assessment or the Attestation Report, the Servicer has fulfilled its
obligations under the Agreement; and
(5) The Compliance Statement required to be delivered by the Servicer
pursuant to the Agreement, and the Servicing Assessment and Attestation
Report required to be provided by the Servicer and by each Subservicer
ad Subcontractor pursuant to the Agreement have been provided to the
[Depositor] [Master
Exh. I-1
Servicer]. Any material instances of noncompliance described in such
reports have been disclosed to the [Depositor] [Master Servicer]. Any
material instance of noncompliance with the Servicing Criteria has been
disclosed in such reports.
Date:
By:
Name:
Title: