EXHIBIT 99.2
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BEAR ▇▇▇▇▇▇▇ ASSET BACKED SECURITIES, INC.,
as Depositor,
▇▇▇▇▇ FUNDING CORP.,
as Transferor,
▇▇▇▇▇ UNION BANK AND TRUST COMPANY,
as Master Servicer,
THE ▇▇▇▇▇ HOME EQUITY LOAN TRUST 1999-2,
as Issuer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Indenture Trustee
SALE AND SERVICING AGREEMENT
Dated as of April 30, 1999
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS................................................3
Section 1.01. Definitions................................................3
Section 1.02. Interpretive Provisions....................................3
Section 1.03. Interest Calculations......................................3
ARTICLE II CONVEYANCE OF MORTGAGE LOANS...............................5
Section 2.01. Conveyance of Initial Mortgage Loans.......................5
Section 2.02. Conveyance of Subsequent Mortgage Loans....................5
Section 2.03. Treatment of Transfer......................................7
Section 2.04. Mortgage File..............................................8
Section 2.05. Representations and Warranties
of the Master Servicer.....................................9
Section 2.06. Representations and Warranties of the Issuer..............10
Section 2.07. Representations and Warranties of the Depositor...........10
Section 2.08. Representations and Warranties of the Transferor
Regarding the Mortgage Loans; Retransfer of
Certain Mortgage Loans....................................11
Section 2.09. Enforcement of Representations and Warranties.............12
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS............14
Section 3.01. Appointment of the Master Servicer........................14
Section 3.02. Subservicing Agreements Between
the Master Servicer and Subservicers......................15
Section 3.03. Collection of Mortgage Loan Payments......................16
Section 3.04. Permitted Withdrawals from the Collection Account.........17
Section 3.05. Maintenance of Insurance..................................18
Section 3.06. Fidelity Bond; Errors and Omissions Policy................19
Section 3.07. Enforcement of Due-on-Sale Clauses;
Assumption Agreements.....................................20
Section 3.08. Realization upon Defaulted Mortgage Loans.................21
Section 3.09. Indenture Trustee to Cooperate; Release of
Mortgage Files; Trust Estates; Related Documents..........22
Section 3.10. Servicing Fee; Payment of Certain Expenses
by Master Servicer........................................23
Section 3.11. Access to Certain Documentation and Information
Regarding the Mortgage Loans..............................24
Section 3.12. Optional Repurchase of Defaulted Loans....................24
Section 3.13. Recordation of Assignments................................24
Section 3.14. Annual Statement as to Compliance.........................24
Section 3.15. Annual Independent Public Accountants'
Servicing Report..........................................25
Section 3.16. Interest Carry-Forward Amounts............................25
Section 3.17. Indemnification; Third-Party Claims.......................25
Section 3.18. Maintenance of Existence and Licenses; Merger or
Consolidation of the Master Servicer......................26
Section 3.19. Letters of Credit.........................................26
Section 3.20. Periodic Advances.........................................25
ARTICLE IV SERVICING CERTIFICATE.....................................29
Section 4.01. Servicing Certificate.....................................29
ARTICLE V THE ACCOUNTS..............................................32
Section 5.01. Accounts..................................................32
Section 5.02. Collection Account........................................32
Section 5.03. Trustee Collection Account................................32
Section 5.04. Pre-Funding Account.......................................34
Section 5.05. Capitalized Interest Account..............................35
ARTICLE VI THE MASTER SERVICER.......................................36
Section 6.01. Liability of the Master Servicer..........................36
Section 6.02. Merger or Consolidation or Assumption of the Obligations
of the Master Servicer....................................36
Section 6.03. Limitation on Liability of the Master Servicer
and Others................................................36
Section 6.04. Master Servicer Not to Resign.............................37
Section 6.05. Delegation of Duties......................................37
Section 6.06. Indenture Trustee Fees and Expenses;
Indemnification...........................................37
ARTICLE VII DEFAULT...................................................40
Section 7.01. Default...................................................40
Section 7.02. Indenture Trustee to Act; Appointment of Successor........41
Section 7.03. Notification to Securityholders...........................42
ARTICLE VIII MISCELLANEOUS PROVISIONS..................................43
Section 8.01. Amendment.................................................43
Section 8.02. Governing Law.............................................43
Section 8.03. Notices...................................................43
Section 8.04. Severability of Provisions................................43
Section 8.05. Third-Party Beneficiaries.................................44
Section 8.06. Counterparts..............................................44
Section 8.07. Effect of Headings and Table of Contents..................44
Section 8.08. Termination; Clean-Up Call................................44
Section 8.09. Certain Matters Affecting the Indenture Trustee...........45
Section 8.10. Owner Trustee Not Liable for Mortgage
Documents or Related Documents............................45
Section 8.11. Policy....................................................45
This Sale and Servicing Agreement (the "Agreement"), dated as of April
30, 1999, is among Bear Steams Asset Backed Securities, Inc., as depositor
(the "Depositor"), ▇▇▇▇▇ Funding Corp., as Transferor (the "Transferor"),
▇▇▇▇▇ Union Bank and Trust Company, as master servicer (the "Master
Servicer"), ▇▇▇▇▇ Home Equity Loan Trust 1999-2, as issuer (the "Issuer"), and
Norwest Bank Minnesota, National Association, as indenture trustee (the
"Indenture Trustee").
WITNESSETH:
WHEREAS, pursuant to the terms of the Mortgage Loan Sale Agreement, ▇▇▇▇▇
Union Bank and Trust Company will sell to ▇▇▇▇▇ Funding Corp. and pursuant to
the terms of the Purchase and Sale Agreement, ▇▇▇▇▇ Funding Corp. will sell to
Bear ▇▇▇▇▇▇▇ Asset Backed Securities, Inc. the Initial Mortgage Loans,
together with the applicable Mortgage Documents and Related Documents on the
Closing Date;
WHEREAS, the Depositor will sell the Initial Mortgage Loans and all of
its rights under the Purchase and Sale Agreement to the Issuer, together with
the applicable Mortgage Documents and Related Documents on the Closing Date;
WHEREAS, pursuant to the terms of one or more Subsequent Transfer
Agreements, the Transferor will sell to the Issuer Subsequent Mortgage Loans,
together with the applicable Mortgage Documents and Related Documents on one
or more Subsequent Transfer Dates;
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer will
issue the Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer will issue
the Notes; and
WHEREAS, pursuant to the terms of this Agreement, the Master Servicer
will service the Mortgage Loans directly or through one or more Subservicers.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For all purposes of this Agreement, except as
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otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in Appendix A to the indenture dated as of April 30,
1999 (the "Indenture"), between the Issuer and the Indenture Trustee, which is
incorporated by reference herein. All other capitalized terms used herein
shall have the meanings specified herein.
Section 1.02. Interpretive Provisions. All terms defined in this
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Agreement shall have the defined meanings when used in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(a) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document, to the extent not defined, shall have the respective meanings given
to them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(b) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement; Section and Exhibit references
contained in this Agreement are references to Sections and Exhibits in or to
this Agreement unless otherwise specified; the term "including" shall mean
"including without limitation"; and "or" includes "and/or".
(c) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as the feminine and neuter genders of such terms.
(d) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes in the case of agreements or instruments references
to all attachments thereto and instruments incorporated therein; references to
a Person are also to its permitted successors and assigns.
Section 1.03. Interest Calculations. All calculations of interest
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hereunder that are made in respect of a Mortgage Loan shall be made on a daily
basis using a 365-day year; provided, that all calculations on certain
Mortgage Loans identified on the Mortgage Loan Schedule shall be made on the
basis of a 360-day year assumed to consist of twelve 30-day months. All
calculations of interest on the Class A-1 and Class A-3 Notes shall be made on
the basis of the actual number of days in the related Interest Period and a
year assumed to consist of 360 days. All calculations of interest on the Class
A-2 and Class A-4 Notes shall be made on the basis of a 360-day year assumed
to consist of twelve 30-day months. The calculation of the Servicing Fee shall
be made on the basis of the actual number of days in the related Interest
Period and a 360-day year.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Conveyance of Initial Mortgage Loans. In consideration of
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the Issuer's delivery to or upon the order of the Depositor of executed and
authenticated Notes and Certificates, in authorized denominations and in
aggregate amounts equal to the aggregate Initial Security Balance, the
Depositor does hereby sell, transfer, assign and otherwise convey to the
Issuer, in trust for the benefit of the Securityholders and the Enhancer,
without recourse, subject to the Depositor's obligations herein:
(a) all right, title and interest of the Depositor in and to the Initial
Mortgage Loans listed in Schedule A hereto and all interest accrued after the
Initial Cut-Off Date and principal received relating to the Initial Cut-Off
Date Principal Balances of the Initial Mortgage Loans;
(b) all right, title and interest of the Depositor in the Lien on the
Mortgaged Properties created by the related Mortgage Documents;
(c) all right, title and interest of the Depositor in any Liquidation
Proceeds and Insurance Proceeds covering the Initial Mortgage Loans or the
related Mortgaged Properties or Mortgagors;
(d) all right, title and interest (but none of the obligations) of the
Depositor under the Purchase and Sale Agreement; and
(e) any proceeds of the foregoing and all other assets included or to be
included in the Trust for the benefit of the Securityholders or the Enhancer.
Section 2.02. Conveyance of Subsequent Mortgage Loans.
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(a) Subject to the conditions set forth in Section 2.02(b), in
consideration of the Issuer's delivery to or upon the order of the Transferor
of the purchase price for the Subsequent Mortgage Loans, in each case as
described below and set forth in the related Subsequent Transfer Agreement,
the Transferor shall, on each Subsequent Transfer Date, sell, transfer, assign
and otherwise convey to the Issuer, in trust for the benefit of the
Securityholders and the Enhancer, without recourse, subject to the
Transferor's obligations herein and in the Purchase and Sale Agreement:
(i) all right, title and interest of the Transferor in and to the
Subsequent Mortgage Loans listed on the Mortgage Loan Schedule to the
related Subsequent Transfer Agreement, and all interest accrued after the
related Subsequent Cut-Off Date and principal received relating to the
Principal Balances of the Subsequent Mortgage Loans as of the related
Subsequent Cut-Off Date, and any Additional Balances relating thereto;
(ii) all right, title and interest of the Transferor in the Lien on
the related Mortgaged Properties created by the related Mortgage
Documents;
(iii) all right, title and interest of the Transferor in any
Liquidation Proceeds and Insurance Proceeds relating to the Subsequent
Mortgage Loans or the related Mortgagors; and
(iv) any proceeds of the foregoing and all other assets included or
to be included in the Trust for the benefit of the Securityholders or the
Enhancer.
The purchase price to be paid by the Trust on each Subsequent Transfer
Date for the Subsequent Mortgage Loans so sold and the allocation of such
purchase price between monies reserved for Group I and Group II shall be set
forth in the related Subsequent Transfer Agreement, and shall be paid from
monies released from the Pre-Funding Account pursuant to Section 5.04. Such
purchase price shall equal the aggregate Principal Balance of such Subsequent
Mortgage Loans as of the related Subsequent Cut-Off Date.
(b) The Transferor shall transfer to the Issuer, and the Issuer shall
accept transfer of, Subsequent Mortgage Loans and the other property and
rights relating thereto described in paragraph (a) above on the related
Subsequent Transfer Date only upon the satisfaction of each of the following
conditions:
(i) the Transferor shall have, on the Business Day following the
Determination Date preceding the Subsequent Transfer Date, delivered to
the Issuer an executed Subsequent Transfer Agreement substantially in the
form of Exhibit D hereto, which shall include a list of the Subsequent
Mortgage Loans to be so transferred;
(ii) the Transferor shall have, on the Business Day following the
Determination Date preceding the Subsequent Transfer Date, delivered to
the Enhancer a data file in a format reasonably acceptable to the
Enhancer with respect to the Subsequent Mortgage Loans, which shows that
the composition of the Mortgage Loans in the aggregate following such
proposed Subsequent Transfer Date is substantially similar to the
composition of the Mortgage Loans in the aggregate as of the Closing
Date;
(iii) the Enhancer shall not have objected in writing to the
transfer of such Subsequent Mortgage Loans by the Business Day preceding
the proposed Subsequent Transfer Date;
(iv) the Transferor shall have caused the Master Servicer to deposit
into the Collection Account all collections on or in respect of such
Subsequent Mortgage Loans accrued after the related Subsequent Cut-Off
Date but received prior to the related Subsequent Transfer Date;
(v) as of the related Subsequent Transfer Date, neither the Master
Servicer nor the Transferor shall be insolvent nor shall either of them
be made insolvent by such transfer nor is either of them aware of any
pending insolvency;
(vi) such addition shall not result in a material adverse federal
tax consequence to the Trust or the Securityholders;
(vii) the Pre-Funding Period shall not have ended;
(viii) the Transferor shall have delivered to the Issuer, the
Indenture Trustee and the Enhancer an Officer's Certificate confirming
the satisfaction of each condition precedent specified in this paragraph
and in Section 7 of the related Subsequent Transfer Agreement;
(ix) the Transferor shall have delivered to the Issuer, the
Indenture Trustee and the Enhancer an Opinion of Counsel relating to all
Subsequent Mortgage Loans transferred to the Trust;
(x) the Transferor shall have taken all actions required to maintain
the ownership interest of the Trust in the Trust Estate, including such
Subsequent Mortgage Loans;
(xi) the Transferor or the Issuer shall not have been advised in
writing by any Rating Agency (after prior notice thereto) on or before
the Business Day immediately preceding the related Subsequent Transfer
Date that the conveyance of such Subsequent Mortgage Loans would result
in a Rating Event;
(xii) the Transferor shall have provided the Issuer with a
supplement to the Mortgage Loan Schedule setting forth the Subsequent
Mortgage Loans to be transferred on such Subsequent Transfer Date; and
(xiii) as of any Subsequent Transfer Date, taking into account the
Subsequent Mortgage Loans being transferred, no more than 45% (by
aggregate Principal Balance) of the Mortgage Loans in each of Loan Group
I and Loan Group II constitute "real estate mortgages" for the purposes
of Treasury Regulation ss.301.7701(i)-1(d) under the Code, and the
Transferor shall have provided the Issuer with an executed copy of a
certificate to that effect substantially in the form of Exhibit E hereto.
Neither the Issuer nor the Indenture Trustee shall be required to
investigate or otherwise verify compliance with the conditions specified
above, except in respect of its own receipt of documents specified above, and
shall be entitled to rely upon the Officer's Certificates and Opinions of
Counsel to be delivered pursuant to clauses (vii) and (viii) above for such
purposes.
Section 2.03. Treatment of Transfer. It is the intention of the Depositor
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that the transfer and assignment contemplated by this Agreement shall
constitute, as of its execution, a sale of all of its right, title and
interest in and to the Initial Mortgage Loans and other property of the Trust
Estate from the Depositor to the Issuer and the beneficial interest in and
title to the Initial Mortgage Loans and the other property shall not be part
of the Depositor's estate in the event of the filing of a bankruptcy petition
by or against the Depositor under any bankruptcy law. In the event that,
notwithstanding the intent of the Depositor, the transfer and assignment
contemplated hereby is held not to be a sale, this Agreement shall be deemed
to have constituted a grant of a security interest in the property referred to
in this Section for the benefit of the Securityholders.
Notwithstanding the characterization of the Notes as debt for federal,
state and local income and franchise tax purposes, the parties hereto intend
to treat the transfer of the Initial Mortgage Loans to the Trust as provided
herein as a sale, for certain non-tax purposes, of all the Depositor's right,
title and interest in and to the Initial Mortgage Loans, whether now existing
or hereafter created, and the other property described above and all proceeds
thereof. In the event such transfer is deemed not to be a sale for such
purposes, the Depositor shall be deemed to have granted to the Trust a
security interest in all of the Depositor's right, title and interest in, to
and under the Initial Mortgage Loans, whether now existing or hereafter
created, and the other property described above and all proceeds thereof; and
this Agreement shall constitute a security agreement under applicable law.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Loans by the Transferor to the Depositor as contemplated by the
Purchase Agreement is, and is to be treated for all purposes as, a sale by the
Transferor to the Depositor of the Mortgage Loans and that as stated above,
the Depositor intends to, and does, sell all its right, title and interest in
what it received from the Transferor to the Issuer. However, in the event
that, notwithstanding the intent of the parties, the Mortgage Loans, or any
portion thereof, are held to continue to be property of the Transferor then
(a) this Agreement shall also be deemed to be a security agreement within the
meaning of Articles 8 and 9 of the Uniform Commercial Code; (b) the transfer
of the Mortgage Loans provided for herein shall be deemed to be a grant by the
Transferor to the Depositor and the Issuer of, and the Transferor hereby does
grant, a security interest in all of the Transferor's right, title and
interest in and to the Mortgage Loans and all amounts payable on the Mortgage
Loans in accordance with the terms thereof and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, instruments, securities
or other property to secure a loan from the Issuer in the amount equal to the
Principal Balance of such Mortgage Loans; (c) the possession by the Indenture
Trustee on behalf of the Issuer of the Mortgage Notes and such other items of
property as constitute instruments, money, negotiable documents or chattel
paper shall be deemed to be "possession by the secured party" for purposes of
perfecting the security interest pursuant to Section 9-305 of the Uniform
Commercial Code; and (d) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as
applicable) of the Depositor and the Issuer for the purpose of perfecting such
security interest under applicable law. Any assignment of the interest of the
Depositor in the Mortgage Loans pursuant to any provision hereof shall also be
deemed to be an assignment of any security interest created hereby or by the
Purchase Agreement. The Transferor, the Depositor and the Issuer shall, to the
extent consistent with this Agreement, take such actions as may be necessary
to ensure that, if this Agreement were deemed to create a security interest in
the Mortgage Loans, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement.
Issuer hereby appoints the Indenture Trustee as its custodian for
purposes of taking possession of the Trust Estate in order to perfect any
security interest arising as a result of the operation of this Section 2.03.
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Section 2.04. Mortgage File. In connection with such transfer and
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assignment, the Master Servicer shall deliver to the Indenture Trustee the
Mortgage File with respect to each Initial Mortgage Loan on the Closing Date,
and shall deliver the Mortgage File with respect to each Subsequent Mortgage
Loan on the related Subsequent Transfer Date. In connection with the transfer
of the Initial Mortgage Loans on the Closing Date, the Indenture Trustee will
deliver an initial certification, certifying that it has received a Mortgage
File containing a Mortgage Note for each such Mortgage Loan listed on the
Mortgage Loan Schedule to the Depositor and the Enhancer. Within 90 days
following each such delivery of Mortgage Files, the Indenture Trustee shall
review each such Mortgage File to ascertain that the Mortgage Documents (or,
in the case of the Initial Mortgage Loans the Mortgage Note) are contained
therein and that such Mortgage Documents relate to the Mortgage Loans
identified on the Mortgage Loan Schedule. Furthermore, the Indenture Trustee
shall review the following data elements contained in the Mortgage Loan
Schedule (a) the Originator's loan number, (b) the Mortgagor's name, (c) the
address (including state and ZIP code) of the related Mortgaged Property, (d)
the original principal balance, (e) the initial interest rate and (f) the
maturity of the related Mortgage Note. In so doing, the Indenture Trustee may
rely on the purported due execution and genuineness of any signature thereon.
If, within such 90 day period, the Indenture Trustee finds any Mortgage
Document constituting a part of a Mortgage File not to have been executed or
received or to be unrelated to the Mortgage Loan identified in the Mortgage
Loan Schedule, the Indenture Trustee shall, promptly upon the conclusion of
its review, notify the Transferor in the form of the certificate attached as
Exhibit F hereto, and the Transferor shall have a period of 120 days after
such notice within which to correct or cure any such defect or to cause such
defect to be corrected or cured.
The Indenture Trustee shall have no responsibility for reviewing any
Mortgage File except as expressly provided in this Section. In reviewing any
Mortgage File pursuant to this Section, the Indenture Trustee shall have,
without limitation, no responsibility for determining whether any document is
valid and binding, whether the text of any assignment or endorsement is in
proper or recordable form (except, if applicable, to determine if the
Indenture Trustee is the assignee or endorsee thereof), whether any document
has been recorded in accordance with the requirements of any applicable
jurisdiction, whether a blanket assignment is permitted in any applicable
jurisdiction, whether any Person executing any document is authorized to do so
or whether any signature thereon is genuine, but shall only be required to
determine whether a document has been executed and that it appears to be what
it purports to be.
Section 2.05. Representations and Warranties of the Master Servicer. The
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Master Servicer represents and warrants to the Issuer and for the benefit of
the Enhancer and the Indenture Trustee, as pledgee of the Mortgage Loans, as
of the Closing Date and as of each Subsequent Transfer Date:
(a) the Master Servicer is a bank duly organized, validly existing and in
good standing under the laws of the State of Indiana, and has full power and
authority to own its assets and to transact the business in which it is
currently engaged. The Master Servicer is duly qualified to do business and is
in good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such
qualification and in which the failure to so qualify would have a material
adverse effect on the business, properties, assets or condition (financial or
otherwise) of the Master Servicer;
(b) the Master Servicer has full power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated
hereunder, and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement;
(c) the Master Servicer is not required to obtain the consent of any
other Person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consent, license, approval
or authorization or registration or declaration as shall have been obtained or
filed, as the case may be;
(d) the execution and delivery of this Agreement and the performance of
the transactions contemplated hereby by the Master Servicer will not violate
any material provision of any existing law or regulation or any order or
decree of any court applicable to the Master Servicer or any provision of the
articles or bylaws of the Master Servicer, or constitute a material breach of
any mortgage, indenture, contract or other agreement to which the Master
Servicer is a party or by which it may be bound;
(e) no Proceeding of or before any court, tribunal or governmental body
is currently pending or, to the knowledge of the Master Servicer, threatened
against the Master Servicer or any of its properties or with respect to this
Agreement or the Securities that in the opinion of the Master Servicer has a
reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by this Agreement; and
(f) the Master Servicer is presently engaged in various procedures with
the goal of attaining year 2000 compliance for its computer systems and
software.
The foregoing representations and warranties shall survive the transfer
of the Mortgage Loans to the Trust and any termination of the Master Servicer
hereunder. Upon discovery of a breach of any representation or warranty that
materially and adversely affects the interests of the Securityholders or the
Enhancer, the party discovering such breach shall give prompt written notice
to the other parties hereto and to the Enhancer. Within 90 days of its
discovery or its receipt of notice of such breach or, with the prior written
consent of a Responsible Officer of the Indenture Trustee, such longer period
specified in such consent, the Master Servicer shall cure such breach in all
material respects.
Section 2.06. Representations and Warranties of the Issuer. The Issuer
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hereby represents and warrants to the Master Servicer and for the benefit of
the Enhancer and the Indenture Trustee, as pledgee of the Mortgage Loans, as
of the Initial Cut-Off Date and each Subsequent Cut-Off Date, that:
(a) the Issuer is a business trust duly formed and in good standing under
the laws of the State of Delaware and has full power, authority and legal
right to execute and deliver this Agreement and to perform its obligations
under this Agreement, and has taken all necessary action to authorize the
execution, delivery and performance by it of this Agreement; and
(b) the execution and delivery by the Issuer of this Agreement and the
performance by the Issuer of its obligations under this Agreement will not
violate any provision of any law or regulation governing the Issuer or any
order, writ, judgment or decree of any court, arbitrator or governmental
authority or agency applicable to the Issuer or any of its assets. Such
execution, delivery, authentication and performance will not require the
authorization, consent or approval of, the giving of notice to, the filing or
registration with, or the taking of any other action with respect to, any
governmental authority or agency regulating the activities of business trusts.
Such execution, delivery, authentication and performance will not conflict
with, or result in a breach or violation of, any mortgage, deed of trust,
lease or other agreement or instrument to which the Issuer is a party or by
which it may be bound.
Section 2.07. Representations and Warranties of the Depositor. The
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Depositor represents and warrants to the Indenture Trustee and the Enhancer,
as of the Closing Date and as of each Subsequent Transfer Date, that:
(a) Depositor is a corporation, validly existing and in good standing
under the laws of the State of Delaware, and has full power and authority to
own its assets and to transact the business in which it is currently engaged.
The Depositor is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the character of the business
transacted by it or any properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets or condition (financial or
otherwise) of the Depositor;
(b) Depositor has full power and authority to make, execute, deliver and
perform this Agreement and all of the transactions contemplated hereunder, and
has taken all necessary corporate action to authorize the execution, delivery
and performance of this Agreement. When executed and delivered, this Agreement
will constitute the legal, valid and binding obligation of the Depositor
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, and by the
availability of equitable remedies;
(c) Depositor is not required to obtain the consent of any other Person
or any consent, license, approval or authorization from, or registration or
declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement;
(d) the execution, delivery and performance of this Agreement by the
Depositor will not violate any provision of any existing law or regulation or
any order decree of any court applicable to the Depositor or any provision of
the articles of incorporation or bylaws of the Depositor, or constitute a
material breach of any mortgage, indenture, contract or other agreement to
which the Depositor is a party or by which it may be bound;
(e) no Proceeding of or before any court, tribunal or governmental body
is currently pending or, to the knowledge of the Depositor, threatened against
the Depositor or any of its properties or with respect to this Agreement or
the Securities; and
(f) this Agreement (i) constitutes a valid transfer and assignment to the
Trust of all right, title and interest of the Depositor in and to the Initial
Mortgage Loans, all monies due or to become due with respect thereto, all
proceeds of such Initial Mortgage Loans, such funds as are from time to time
on deposit in the Collection Account or Trustee Collection Account and all
other property specified in the definition of "Trust Estate" as being part of
the Trust Estate; or (ii) constitutes a grant of a security interest, as
defined in the UCC as in effect in the State of New York, in such property in
favor of the Trust or the Owner Trustee on behalf of the Trust; provided, that
if the Indenture Trustee obtains and maintains possession of the Mortgage File
for each Mortgage Loan, the Trust shall have a first priority perfected
security interest in such property.
The representations and warranties set forth in this Section shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representation or warranty that materially and
adversely affects the interests of the Securityholders or the Enhancer, the
party discovering such breach shall give prompt written notice to the other
parties hereto and to the Enhancer. Within 90 days of its discovery or its
receipt of notice of such breach or, with the prior written consent of a
Responsible Officer of the Indenture Trustee, such longer period specified in
such consent, the Depositor shall cure such breach in all material respects.
Section 2.08. Representations and Warranties of the Transferor Regarding
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the Mortgage Loans; Retransfer of Certain Mortgage Loans.
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(a) The Transferor hereby reaffirms, for the benefit of the Depositor,
the Enhancer and the Issuer, the representations and warranties as to the
Mortgage Loans contained in Section 3.1 and Section 3.2 of the Purchase and
Sale Agreement, which are hereby incorporated by reference herein, and upon
which the Issuer is deemed to have relied in acquiring the Mortgage Loans.
Such representations and warranties shall speak as of the execution and
delivery of this Agreement and, unless otherwise specified, as of the Closing
Date in the case of the Initial Mortgage Loans and as of the related
Subsequent Transfer Date in the case of the Subsequent Mortgage Loans and any
Eligible Substitute Mortgage Loans, but shall survive the sale, transfer and
assignment of the Mortgage Loans to the Issuer (and, in the case of the
Initial Mortgage Loans, the Depositor) and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
With respect to the representations and warranties set forth in this
Section or incorporated by reference herein that are made to the best of
Transferor's knowledge or as to which the Transferor has no knowledge, if it
is discovered by the Depositor, the Master Servicer or a Responsible Officer
of the Indenture Trustee that the substance of such representation or warranty
is inaccurate, and such inaccuracy materially and adversely affects the value
of the related Mortgage Loan, then, notwithstanding the Transferor's lack of
knowledge with respect to the substance of such representation or warranty
being inaccurate at the time such representation or warranty was made, such
inaccuracy shall be deemed to be a breach of such representation or warranty.
Upon discovery by the Transferor or upon notice from the Depositor, the
Issuer, the Owner Trustee, the Indenture Trustee, the Enhancer or any
Custodian, as applicable, of a breach of any representation or warranty
referred to in paragraph (a) above that materially and adversely affects the
interests of the Issuer, the Enhancer or the Securityholders in any Initial
Mortgage Loan (or upon the occurrence of a Repurchase Event), the Transferor
shall, within 90 days of its discovery or its receipt of notice thereof
(notice of which shall be given to the Issuer by the Transferor, if it
discovers the same), (i) cure such breach or Repurchase Event in all material
respects or (ii) (A) repurchase such Initial Mortgage Loan from the Issuer at
the Repurchase Price thereof or (B) substitute one or more Eligible Substitute
Mortgage Loans for such Initial Mortgage Loan, in each case in the manner and
subject to the conditions and limitations set forth in Section 3.4 of the
Purchase and Sale Agreement.
(b) The representations and warranties set forth in this Section shall
survive delivery of the Mortgage Files to the Indenture Trustee pursuant to
Section 2.04 and the termination of the rights and obligations of the Master
Servicer pursuant to Section 6.04 or Article VII.
Section 2.09. Enforcement of Representations and Warranties. The Master
---------------------------------------------
Servicer, on behalf of and subject to the direction of the Indenture Trustee,
as pledgee of the Mortgage Loans, or the Issuer, shall enforce the
representations and warranties of the Transferor in Section 3.1 and Section
3.2 of the Purchase and Sale Agreement. Upon the discovery by the Transferor,
the Depositor, the Master Servicer, the Issuer, the Indenture Trustee, the
Enhancer or the Custodian of a breach of any of the representations and
warranties made by the Transferor in such Section in respect of any Mortgage
Loan that materially and adversely affects the interests of any Securityholder
or the Enhancer, the Person discovering such breach shall give prompt written
notice to the other foregoing Persons and to the Enhancer. The Master Servicer
shall promptly demand of the Transferor that it (i) cure such breach in all
material respects within, with respect to a breach of the representations and
warranties contained in Section 3.1 of the Purchase and Sale Agreement, 45
days, and with respect to a breach of the representations and warranties
contained in Section 3.2 of the Purchase and Sale Agreement, 90 days, in each
case from the date the Transferor was notified of such breach or (ii) purchase
the related Mortgage Loan from the Issuer or substitute an Eligible Substitute
Mortgage Loan (and remit to the Trustee Collection Account any concomitant
Substitution Adjustment Amount), in each case in the manner set forth in
Section 3.2 of the Purchase and Sale Agreement.
The obligation of the Transferor to accept a retransfer of a Mortgage
Loan as to which a breach has occurred and is continuing and to make any
required deposit into the Collection Account or Trustee Collection Account or
to substitute an Eligible Substitute Mortgage Loan, as the case may be, shall
constitute the sole and exclusive remedy hereunder against the Transferor
respecting such breach available therefor; provided, that the Transferor shall
defend and indemnify the Issuer, the Owner Trustee and the Indenture Trustee
against all reasonable costs and expenses, and all losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel and the amount
of any settlement entered into with the consent of the Transferor, such
consent not to be unreasonably withheld, that may be asserted against or
incurred by any of them as a result of any third-party action arising out of
any breach of any such representation or warranty. Notwithstanding the
foregoing, with regard to any breach of the representation and warranty set
forth in Section 3.2(y) of the Purchase and Sale Agreement, the sale and
assignment of the affected Mortgage Loans to the Trust shall be deemed void,
and the Transferor shall pay to the Trust the sum (i) the amount of the
related Principal Balances, plus accrued and unpaid interest thereon at the
applicable Mortgage Interest Rate to the date of payment, (ii) the amount of
any loss suffered by the Securityholders or the Enhancer with respect to the
affected Mortgage Loans and (iii) all amounts owing to the Enhancer pursuant
to the Insurance Agreement.
In connection with the purchase or substitution of any Mortgage Loan, the
Issuer shall assign to the Transferor all of its right, title and interest in
and to such Mortgage Loan. Upon receipt of the Repurchase Price, or upon the
completion of such substitution, the Master Servicer shall notify the
Custodian thereof, and the Custodian shall deliver the Mortgage Files to the
Master Servicer, together with all relevant endorsements and assignments
prepared by the Master Servicer that the Indenture Trustee shall execute.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. Appointment of the Master Servicer.
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(a) ▇▇▇▇▇ Union Bank and Trust Company agrees to act as the Master
Servicer and to perform all servicing duties under this Agreement, subject to
the terms hereof.
(b) The Master Servicer shall service and administer the Mortgage Loans
in a manner consistent with the terms of this Agreement and as shall be normal
and usual in its general mortgage servicing activities, and shall have full
power and authority, acting alone or through Subservicers, to do any and all
things in connection with such servicing and administration as it may deem
necessary or desirable; provided, that the Master Servicer shall at all times
remain responsible to the Issuer and the Indenture Trustee, as pledgee of the
Mortgage Loans, for the performance of its duties and obligations hereunder in
accordance with the terms hereof. Without limiting the generality of the
foregoing, the Master Servicer shall continue, and is hereby authorized and
empowered by the Issuer and the Indenture Trustee, as pledgee of the Mortgage
Loans, to execute and deliver, on behalf of itself, the Issuer, the Indenture
Trustee or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments with respect to the Mortgage Loans and the Mortgaged
Properties. The Issuer, the Indenture Trustee and the Custodian, as
applicable, shall furnish the Master Servicer with any powers of attorney or
other documents necessary or appropriate to enable the Master Servicer to
carry out its servicing and administrative duties hereunder. In addition, the
Master Servicer may, at its own discretion and on behalf of the Issuer, obtain
credit information in the form of a "credit score" from a credit repository.
On the Closing Date, the Indenture Trustee shall deliver to the Master
Servicer a limited power of attorney substantially in the form of Exhibit B
hereto.
In servicing and administering the Mortgage Loans, the Master Servicer
(i) shall employ procedures consistent with the Master Servicer's normal
servicing practices and in a manner consistent with recovery under any
insurance policy required to be maintained by a Mortgagor pursuant to the
related Mortgage Documents or by the Master Servicer pursuant to this
Agreement, and (ii) may take reasonable actions to encourage or effect the
termination of Loan Agreements that have not had an outstanding Principal
Balance for at least 6 months.
The relationship of the Master Servicer, and of any successor to the
Master Servicer as master servicer hereunder, to the Issuer under this
Agreement is intended by the parties to be that of an independent contractor
and not that of a joint venturer, partner or agent.
Any expenses incurred by the Master Servicer in effectuating the timely
payment of taxes and assessments on Mortgaged Property and foreclosure costs
may be added by the Master Servicer to the amount owing in respect of the
related Mortgage Loan where the terms of the related Mortgage Documents so
permit; provided, that the addition of any such expenses shall not be taken
into account for purposes of calculating the Principal Balance of such
Mortgage Loan or distributions to be made to the Securityholders. Such
expenses shall be recoverable by the Master Servicer pursuant to Section
3.04(c). Notwithstanding any other provision of this Agreement, the Master
Servicer shall at all times service the Mortgage Loans in a manner consistent
with the provisions of this paragraph.
(c) On and after such time as the Owner Trustee receives the resignation
of, or notice of the removal of, the Master Servicer from its rights and
obligations under this Agreement, and with respect to a resignation pursuant
to Section 6.04, after receipt by the Owner Trustee of the Opinion of Counsel
required pursuant to Section 6.04, the Indenture Trustee or its designee shall
assume all of the rights and obligations of the Master Servicer, subject to
Section 7.02. The Master Servicer shall, upon request of the Indenture Trustee
and at the expense of the Master Servicer, deliver to the Indenture Trustee
all documents and records relating to the Mortgage Loans and an accounting of
amounts collected and held by the Master Servicer, and shall otherwise use its
best efforts to effect the orderly and efficient transfer of servicing rights
and obligations to the assuming Person.
(d) The Master Servicer shall deliver a list of Servicing Officers to the
Issuer and the Indenture Trustee by the Closing Date, which list may from time
to time be amended, modified or supplemented by the subsequent delivery to the
Issuer and the Indenture Trustee of any superseding list of Servicing
Officers.
Section 3.02. Subservicing Agreements Between the Master Servicer and
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Subservicers.
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(a) The Master Servicer may enter into Subservicing Agreements with
Subservicers for the servicing and administration of certain of the Mortgage
Loans and for the performance of any and all other activities of the Master
Servicer hereunder. References in this Agreement to actions taken or to be
taken by the Master Servicer in servicing the Mortgage Loans include actions
taken or to be taken by a Subservicer on behalf of the Master Servicer, and
any amount actually received by such Subservicer in respect of a Mortgage Loan
shall be deemed to have been received by the Master Servicer, whether or not
actually received by the Master Servicer. Each Subservicing Agreement shall be
upon such terms and conditions as are not inconsistent with this Agreement and
as the Master Servicer and the Subservicer shall have agreed. With the
approval of the Master Servicer, a Subservicer may delegate its servicing
obligations to third-party servicers, but such Subservicers shall remain
obligated under the related Subservicing Agreements. The Master Servicer and
the related Subservicers may enter into amendments to the Subservicing
Agreements; provided, that any such amendments shall not cause the Mortgage
Loans to be serviced in a manner that would be materially inconsistent with
the standards set forth in this Agreement. The Master Servicer shall be
entitled to terminate any Subservicing Agreement in accordance with the terms
and conditions thereof and without any limitation by virtue of this Agreement;
provided, that in the event of the termination of any Subservicing Agreement
by the Master Servicer or the related Subservicer, the Master Servicer shall
either act as servicer of the related Mortgage Loans or enter into a
Subservicing Agreement with a successor Subservicer that will be bound by the
terms of the related Subservicing Agreement. The Master Servicer shall be
entitled to enter into any agreement with a Subservicer for indemnification of
the Master Servicer, and nothing contained herein shall be deemed to limit or
modify such indemnification.
Each Subservicer shall be (i) a depository institution the accounts of
which are insured by the FDIC or (ii) another entity that engages in the
business of originating, acquiring or servicing mortgage loans, and in either
case shall be authorized to transact business in those States in which (x) the
related Mortgaged Properties are situated and (y) qualification is required to
conduct a subservicing business operation. In addition, each Subservicer shall
obtain and preserve its qualifications to do business as a foreign corporation
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Securities or
any Mortgage Loan, and to perform or cause to be performed its duties under
the related Subservicing Agreement, which shall provide that the Subservicer's
rights will automatically terminate upon the termination, resignation or other
removal of the Master Servicer under this Agreement. Each account used by any
Subservicer for the deposit of payments on any Mortgage Loan shall be an
Eligible Account. ▇▇▇▇▇ Home Equity Corporation shall be the initial
Subservicer.
(b) Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer and a Subservicer or any references to actions taken through a
Subservicer or otherwise, the Master Servicer shall remain obligated and
primarily liable to the Issuer and the Indenture Trustee for the servicing and
administration of the Mortgage Loans in accordance with the provisions of this
Agreement, without diminution of such obligation or liability by virtue of
such Subservicing Agreements or arrangements or by virtue of indemnification
from the related Subservicer, and to the same extent and under the same terms
and conditions as if the Master Servicer alone were servicing and
administering the Mortgage Loans.
As part of its servicing activities hereunder, the Master Servicer, for
the benefit of the Issuer and the Indenture Trustee, shall use reasonable
efforts to enforce the obligations of each Subservicer under the related
Subservicing Agreement to the extent that the non-performance of any such
obligation would have a material adverse effect on any Mortgage Loan. Such
enforcement, including the legal prosecution of claims, termination of
Subservicing Agreements and the pursuit of other appropriate remedies, shall
be in such form and carried out to such an extent and at such time as the
Master Servicer, in its good faith business judgment, would require were it
the owner of the related Mortgage Loans. The Master Servicer shall pay the
costs of such enforcement at its own expense, and shall be reimbursed therefor
only from (i) a general recovery resulting from such enforcement to the
extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loan or (ii) a specific recovery of costs, expenses or
attorneys' fees against the Person against whom such enforcement is directed.
In the event the Master Servicer shall for any reason no longer be the
Master Servicer, the Indenture Trustee or its designee may (i) assume all of
the rights and obligations of the Master Servicer under each Subservicing
Agreement that the Master Servicer may have entered into, which assumption
shall not violate the terms of the related Subservicing Agreement, (ii)
notwithstanding anything to the contrary contained in each such Subservicing
Agreement, terminate the related Subservicer without being required to pay any
fee in connection therewith or (iii) assume the terminated Master Servicer's
rights and obligations under such subservicing arrangements, which termination
or assumption shall not violate the terms of the related Subservicing
Agreement.
(c) Prior to the close of business on the tenth calendar day of each
month in which the related Payment Date is to occur, the Master Servicer shall
furnish a statement to the Indenture Trustee, in writing or in an electronic
format as the Indenture Trustee shall reasonably request, setting forth all
information reasonably necessary to allow the Indenture Trustee to perform the
calculations for the distributions contemplated by Section 3.05 of the
Indenture and to prepare the statement required to be delivered pursuant to
Section 3.25 of the Indenture and Section 4.01 hereof.
Section 3.03. Collection of Mortgage Loan Payments. The Master Servicer
------------------------------------
shall use its best efforts to collect all payments called for under the terms
and provisions of the Mortgage Documents and shall, to the extent such
procedures shall be consistent with this Agreement and any applicable primary
mortgage insurance policy, follow such collection procedures as shall
constitute the Master Servicer's normal servicing practices. Consistent with
the foregoing, and without limiting the generality of the foregoing, the
Master Servicer may in its discretion (i) waive any late payment charge,
overlimit fee or other fees that may be collected in the ordinary course of
servicing a Mortgage Loan and (ii) arrange with a Mortgagor a schedule for the
payment of principal and interest due and unpaid; provided, that such
arrangement is consistent with the Master Servicer's policies with respect to
mortgage loans; and provided further, that notwithstanding such arrangement,
such Mortgage Loans shall be included in the information regarding delinquent
Mortgage Loans set forth in the Servicing Certificate. The Master Servicer may
also extend the Due Date for payment due on a Mortgage Loan in accordance with
its normal servicing practices; provided, that the Master Servicer shall first
determine that any such waiver or extension will not materially adversely
affect the Lien of the related Mortgage Documents or the interests of the
Issuer, the Enhancer or the Indenture Trustee. Consistent with the terms of
this Agreement, the Master Servicer may waive, modify or vary any term of any
Mortgage Loan, subject, if applicable, to the second paragraph of Section
3.01(b).
Consistent with the terms of this Agreement, the Master Servicer may
consent to the postponement of strict compliance with any such term or in any
manner grant indulgence to any Mortgagor; provided, that in the Master
Servicer's determination, such waiver, modification, postponement or
indulgence relates to a reasonable business purpose; and provided further,
that such waiver, modification, postponement or indulgence shall not
materially and adversely affect the interests of the Securityholders or the
Enhancer. Notwithstanding the foregoing, the Master Servicer may consent to
the postponement of strict compliance with any such term or in any manner
grant indulgence to any Mortgagor with the consent of the Enhancer.
Section 3.04. Permitted Withdrawals from the Collection Account. The
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Master Servicer is hereby authorized from time to time to make withdrawals
from the Collection Account for the following purposes:
(a) on each Master Servicer Remittance Date, to deposit the amount
required by Section 5.03 hereof for the related Payment Date into the Trustee
Collection Account;
(b) to the extent deposited into the Collection Account, to reimburse
itself or the related Subservicer for previously unreimbursed expenses
incurred in maintaining insurance policies pursuant to Section 3.05, for
Liquidation Expenses paid pursuant to Section 3.08 or for expenses otherwise
reimbursable pursuant to the terms of this Agreement to the extent not payable
pursuant to Section 3.08; such withdrawal right being limited to amounts
received in respect of the Mortgage Loans, other than any Repurchase Price in
respect thereof, that represent late recoveries of the payments for which such
advances were made, or from Liquidation Proceeds or the proceeds of the
purchase of such Mortgage Loans;
(c) to pay to itself out of each payment received in respect of interest
on a Mortgage Loan as contemplated by the last paragraph of Section 3.08, an
amount equal to the Servicing Fee, to the extent not retained pursuant to
Section 5.02;
(d) in respect of Periodic Advances previously made by the Master
Servicer, to reimburse itself out of late collections, Liquidation Proceeds,
or to the extent that it has determined such Periodic Advance is
nonrecoverable from other funds on deposit in the Collection Account or
collected on the Mortgage Loans;
(e) to pay to the Transferor, with respect to any Mortgage Loan or
Mortgaged Property that has been purchased or otherwise transferred to the
Transferor, all amounts received thereon that are not required to be
distributed to the Securityholders as of the date on which the related
Purchase Price or Repurchase Price is determined; and
(f) to withdraw any other amount deposited into the Collection Account
that was not required to be deposited therein pursuant to Section 5.02.
On each Master Servicer Remittance Date, the Master Servicer shall
transfer from the Collection Account to the Trustee Collection Account the
amount necessary for the Indenture Trustee to make the required distributions
pursuant to Section 3.05(a) of the Indenture. The Master Servicer shall keep
and maintain separate accounting on a loan-by-loan basis for the purpose of
justifying any withdrawal from the Collection Account pursuant to the
foregoing paragraphs. Notwithstanding any other provision of this Agreement,
the Master Servicer shall be entitled to reimburse itself for any previously
unreimbursed expenses relating to a Mortgage Loan incurred pursuant to Section
3.08 or otherwise reimbursable pursuant to the terms of this Agreement that
the Master Servicer determines to be otherwise nonrecoverable, except with
respect to any Mortgage Loan as to which the Purchase Price or Repurchase
Price shall have been paid, by withdrawal from the Collection Account, on any
Business Day prior to the Payment Date succeeding the date of such
determination, of amounts on deposit therein attributable to the Mortgage
Loan.
Section 3.05. Maintenance of Insurance.
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(a) With respect to each Mortgage Loan, the Master Servicer shall
maintain accurate records reflecting the fire and casualty insurance coverage
maintained by the related Mortgagors with respect to the Mortgaged Properties
in accordance with its normal servicing practices. The Master Servicer shall,
if it has received notice of a default or deficiency in respect of the payment
of any ground rents, taxes, assessments, water rates or casualty insurance
premiums or other charges that are or may become a Lien upon the related
Mortgaged Property, notify the related Mortgagor and the holder of the first
Lien on the related Mortgaged Property.
(b) To the extent permitted under the related Mortgage Documents, and to
the extent the Master Servicer receives notice that a hazard insurance policy
has been cancelled, the Master Servicer shall, to the extent consistent with
its normal servicing practices, cause to be maintained for each Mortgage Loan
hazard insurance naming the Master Servicer or the related Subservicer as loss
payee thereunder, and providing extended coverage in an amount at least equal
to the lesser of (i) the maximum insurable value of the improvements securing
such Mortgage Loan from time to time or (ii) the combined principal balance
owing on such Mortgage Loan and any mortgage loan senior to such Mortgage Loan
from time to time. The Master Servicer shall monitor the maintenance of any
such hazard insurance so obtained in accordance with its normal servicing
practices.
(b) The Master Servicer shall cause to be maintained with respect to any
REO Property fire insurance with extended coverage in an amount at least equal
to the amount necessary to avoid the application of any co-insurance clause
contained in the related hazard insurance policy. Amounts collected by the
Master Servicer under any such policies, other than amounts to be applied to
the restoration or repair of Mortgaged Property or REO Property or amounts
released to the Mortgagor in accordance with the Master Servicer's normal
servicing practices, shall be deposited into the Collection Account to the
extent provided in Section 5.02.
(c) If, upon the origination of a Mortgage Loan, the related Mortgaged
Property was in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, and flood
insurance has been made available, the Master Servicer shall cause to be
maintained, to the extent required by the related Mortgage Documents, a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration with a generally acceptable insurance
carrier, in an amount representing coverage at least equal to the lesser of
(i) the unpaid Principal Balance of such Mortgage Loan, (ii) the full
insurable value of such Mortgaged Property or (iii) the maximum amount of
insurance available under the Flood Disaster Protection Act of 1973, as
amended. With respect to any REO Property, the Master Servicer shall also
maintain, if applicable, flood insurance in an amount at least equal to the
lesser of (i) the maximum insurable value of the improvements that are a part
of such property and (ii) the Principal Balance owing on the related Mortgage
Loan at the time of foreclosure or grant of deed in lieu of foreclosure plus
accrued interest and related Liquidation Expenses.
(d) Pursuant to Section 3.03, any amounts collected by the Master
Servicer under any insurance policy maintained pursuant to this Section, other
than amounts to be applied to the restoration or repair of Mortgaged Property
or released to a Mortgagor in accordance with the Master Servicer's normal
servicing practices, shall be deposited into the Collection Account, subject
to withdrawal pursuant to Section 3.04. Any cost incurred by the Master
Servicer in maintaining any such insurance shall be added to the amount owing
under the related Mortgage Loan where the terms of the related Mortgage
Documents so permit; provided, that the addition of any such cost shall not be
taken into account for purposes of calculating the Principal Balance of such
Mortgage Loan or distributions to be made to Securityholders. Such costs shall
be recoverable by the Master Servicer pursuant to Section 3.04.
(e) The Master Servicer shall be under no obligation to maintain or
require any Mortgagor to maintain earthquake, title or other additional
insurance, and shall be under no obligation itself to maintain any such
additional insurance on property acquired in respect of any Mortgage Loan,
other than pursuant to such applicable laws and regulations as shall at any
time be in force and as shall require such additional insurance.
Section 3.06. Fidelity Bond; Errors and Omissions Policy.
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(a) The Master Servicer shall maintain with a responsible company, and at
its own expense, a blanket fidelity bond (a "Fidelity Bond") and an errors and
omissions insurance policy (an "Errors and Omissions Policy"), in amounts as
are commercially available and at costs that are not generally regarded as
excessive by industry standards, with broad coverage with respect to all
officers, employees or other individuals acting in any capacity to handle
funds, money, documents or papers relating to the Mortgage Loans. Any Fidelity
Bond and Errors and Omissions Policy shall protect and insure the Master
Servicer against, without limitation, losses resulting from forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of such officers,
employees or other individuals. Such Fidelity Bond shall also protect and
insure the Master Servicer against losses incurred 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
requiring such Fidelity Bond and Errors and Omissions Policy shall diminish or
relieve the Master Servicer from its duties and obligations as set forth in
this Agreement. Upon the request of the Issuer or the Indenture Trustee, the
Master Servicer shall cause to be delivered to the Issuer or the Indenture
Trustee, as the case may be, a certified true copy of such Fidelity Bond or
Errors and Omissions Policy. The Master Servicer shall specify the underwriter
or underwriters with which any such insurance is maintained in writing to the
Issuer and the Indenture Trustee from time to time. Any such Fidelity Bond or
Errors and Omissions Policy shall not be canceled or modified in a manner
materially adverse to the Securityholders without the prior written consent of
the Issuer and the Indenture Trustee.
(b) The Master Servicer shall be deemed to have complied with this
provision if any of its Affiliates has such a Fidelity Bond and Errors and
Omissions Policy and, by the terms of such policy, the coverage afforded
thereunder extends to the Master Servicer. The Master Servicer shall cause
each Subservicer to maintain an Errors and Omissions Policy and a Fidelity
Bond meeting the requirements of this Section.
Section 3.07. Enforcement of Due-on-Sale Clauses; Assumption Agreements.
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In any case in which a Mortgaged Property is about to be conveyed by the
related Mortgagor, whether by absolute conveyance, contract of sale or
otherwise, and whether or not such Mortgagor remains liable thereon, and the
Master Servicer has knowledge of such prospective conveyance, the Master
Servicer shall effect assumptions in accordance with the terms of any
due-on-sale provision contained in the related Mortgage Documents. The Master
Servicer shall enforce any due-on-sale provision contained in such Mortgage
Documents to the extent the requirements thereunder for an assumption of the
related Mortgage Loan have not been satisfied, to the extent permitted by such
Mortgage Documents, unless such provision is not exercisable under applicable
law or governmental regulations or, in the Master Servicer's judgment, such
exercise is reasonably likely to result in legal action by such Mortgagor, or
such conveyance is in connection with a permitted assumption of such Mortgage
Loan.
The Master Servicer or the related Subservicer, as the case may be, shall
be entitled to (i) execute assumption agreements, substitution agreements and
instruments of satisfaction or cancellation or of partial or full release or
discharge, or any other document contemplated by this Agreement or other
comparable instruments with respect to the Mortgage Loans and the related
Mortgaged Properties; and the Issuer and the Indenture Trustee each shall
promptly execute any such documents upon the request of the Master Servicer,
and (ii) approve the granting of an easement on Mortgaged Property in favor of
another Person, any alteration or demolition of such Mortgaged Property or
other similar matters, if it has determined, exercising its good faith
business judgment in the same manner as it would if it were the owner of the
related Mortgage Loan, that the security for, and the timely and full
collectability of, such Mortgage Loan would not be adversely affected thereby.
The Master Servicer shall notify the Indenture Trustee that any such
assumption or substitution agreement has been completed by forwarding to the
Indenture Trustee the original copy of such assumption or substitution
agreement, which the Indenture Trustee shall add to the related Mortgage File
and which shall, for all purposes, be considered part of such Mortgage File to
the same extent as all other documents and instruments constituting a part
thereof. Any fee collected by the Master Servicer for entering into an
assumption or substitution of liability agreement shall be retained by the
Master Servicer as servicing compensation. A partial release pursuant to this
Section shall be permitted only if the Combined Loan-to-Value Ratio for the
related Mortgage Loan after such partial release does not exceed the Combined
Loan-to-Value Ratio for such Mortgage Loan as of the related Cut-Off Date.
Notwithstanding the provisions of this Section or any other provision of
this Agreement, the Master Servicer shall not be deemed to be in default,
breach or violation of any of its obligations hereunder by reason of any
conveyance by a Mortgagor of the related Mortgaged Property or any assumption
of a Mortgage Loan by operation of law with respect to which the Master
Servicer determines in good faith that it may be restricted by law from
preventing, for any reason whatsoever, or if the exercise of such right would
impair or threaten to impair any recovery under any applicable insurance
policy or, in the Master Servicer's judgment, would be reasonably likely to
result in legal action by such Mortgagor.
Section 3.08. Realization upon Defaulted Mortgage Loans. With respect to
-----------------------------------------
each Mortgage Loan that comes into and continues in default, the Master
Servicer shall exercise its reasonable judgment to determine whether to (a)
foreclose on the related Mortgaged Property, (b) write off the unpaid
Principal Balance thereof as bad debt, (c) take a deed in lieu of foreclosure,
(d) accept a short sale, (e) arrange for a repayment plan, (f) agree to a
modification thereof in accordance with this Agreement or (g) take an
unsecured note in each case subject to the rights of any related senior
lienholder; provided, that in connection with the foregoing, if the Master
Servicer has actual knowledge that any Mortgaged Property is affected by
hazardous or toxic wastes or substances and that the acquisition of such
Mortgaged Property would not be commercially reasonable, then the Master
Servicer shall not cause the Issuer or the Indenture Trustee to acquire title
to such Mortgaged Property in foreclosure or any similar Proceeding. In
connection with such decision, the Master Servicer shall follow such practices
and procedures, including, in the case of any default on a related senior
mortgage loan, the advancing of funds to correct such default if deemed to be
appropriate by the Master Servicer, as it shall deem necessary or advisable
and as shall be normal and usual in its general mortgage servicing activities;
provided, that the Master Servicer shall not be liable in any respect
hereunder if it is acting in connection with any such foreclosure or attempted
foreclosure or other conversion that is not completed in a manner that is
consistent with the provisions of this Agreement; and provided further, that
the Master Servicer shall in no event expend funds in connection with any
foreclosure or attempted foreclosure that is not completed or towards the
correction of any default on a related senior mortgage loan or restoration of
any property if it shall determine that such expenditure would not increase
the related Liquidation Proceeds. In the event of a determination by the
Master Servicer that any such expenditure previously made pursuant to this
Section will not be reimbursable from Liquidation Proceeds, the Master
Servicer shall be entitled to reimbursement of its funds so expended pursuant
to Section 3.04(b).
Notwithstanding any other provision of this Agreement, a defaulted
Mortgage Loan may be deemed to be finally liquidated if substantially all
amounts expected by the Master Servicer to be received in connection therewith
have been received; provided, that any subsequent collections with respect to
any such Mortgage Loan shall be deposited into the Collection Account. For
purposes of determining the amount of any Liquidation Proceeds or Insurance
Proceeds, or other unscheduled collections, the Master Servicer may take into
account amounts of additional receipts expected to be received or any
estimated additional Liquidation Expenses expected to be incurred in
connection with such Mortgage Loan.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Indenture Trustee, which shall hold the same on behalf
of the Issuer in accordance with Section 3.13 of the Indenture.
Notwithstanding any such acquisition of title and cancellation of the related
Mortgage Loan, such Mortgaged Property shall, except as otherwise expressly
provided herein, be considered to be an outstanding Mortgage Loan held as part
of the Trust Estate until such time as such Mortgaged Property shall be sold.
Consistent with the foregoing, for purposes of all calculations hereunder, so
long as such Mortgaged Property shall be considered to be an outstanding
Mortgage Loan, it shall be assumed that, notwithstanding that the indebtedness
evidenced by the related Mortgage Documents shall have been discharged, such
Mortgage Documents in effect at the time of any such acquisition of title
before any adjustment thereto by reason of any bankruptcy or similar
Proceeding or any moratorium or similar waiver or grace period will remain in
effect.
Any proceeds from foreclosure Proceedings or the purchase or repurchase
of any Mortgage Loan pursuant to the terms of this Agreement and any recovery
resulting from a collection of Liquidation Proceeds or Insurance Proceeds,
shall be applied in the following order of priority: (a) to reimburse the
Master Servicer or the related Subservicer in accordance with this Section;
(b) to pay to the Master Servicer or the related Subservicer all Servicing
Fees payable therefrom; (c) as accrued and unpaid interest on such Mortgage
Loan at the related Mortgage Interest Rate to the Payment Date in respect of
which such amounts are to be deposited into the Trustee Collection Account;
and (d) as a recovery of principal on such Mortgage Loan.
Section 3.09. Indenture Trustee to Cooperate; Release of Mortgage Files;
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Trust Estates; Related Documents.
--------------------------------
(a) On or before each Payment Date, the Master Servicer shall notify the
Indenture Trustee or the Custodian (with a copy to the Issuer) of the
termination or payment in full of any Mortgage Loan during the preceding
Collection Period. Upon receipt of payment in full, the Master Servicer shall
be authorized to execute, pursuant to the authorization contained in the first
paragraph of Section 3.01 (b), if the Assignments of Mortgage have been
recorded if required pursuant hereto or pursuant to the Mortgage Loan Sale
Agreement or Purchase Agreement, an instrument of satisfaction regarding the
related Mortgage Documents, which instrument of satisfaction shall be recorded
by the Master Servicer if required by applicable law, and shall be delivered
to the Person entitled thereto. Any expenses incurred in connection with such
instrument of satisfaction or transfer shall be reimbursable from amounts on
deposit in the Collection Account. From time to time and as appropriate for
the servicing or foreclosure of any Mortgage Loan, the Indenture Trustee or
the Custodian shall, upon request of the Master Servicer and delivery to the
Indenture Trustee or the Custodian (with a copy to the Issuer) of two copies
of a Request for Release in the form of Exhibit C hereto, which shall be
signed by a Servicing Officer or be in a mutually agreeable electronic format
that, in lieu of being manually signed by a Servicing Officer, emanate from a
Servicing Officer, release or cause to be released the related Mortgage File
to the Master Servicer, and the Issuer and the Indenture Trustee or the
Custodian shall promptly execute such documents, in the forms provided by the
Master Servicer, as shall be necessary for the prosecution of any such
Proceedings or the taking of other servicing actions. The Request for Release
shall obligate the Master Servicer to return such Mortgage File to the
Indenture Trustee or the Custodian (as specified therein) when the need
therefor by the Master Servicer no longer exists, unless such Mortgage Loan
shall have been liquidated. In such case, upon receipt of a certificate of a
Servicing Officer similar to that specified above, such Request for Release
shall be released to the Master Servicer.
If an Assignment of Mortgage has been recorded, in order to facilitate
the foreclosure of the Mortgaged Property securing a Mortgage Loan that is in
default following such recordation, the Indenture Trustee or the Issuer shall,
if so requested in writing by the Master Servicer, promptly execute an
appropriate assignment in the form provided by the Master Servicer to assign
such Mortgage Loan for the purpose of collection to the Master Servicer, and
any such assignment shall unambiguously indicate that such assignment is for
the purpose of collection only. Upon such assignment, the Master Servicer, as
assignee for collection, will thereupon bring all required actions in its own
name and otherwise enforce the terms of such Mortgage Loan and deposit into or
credit to the Collection Account any Liquidation Proceeds received with
respect thereto. In the event that all delinquent payments due under any such
Mortgage Loan are paid by the related Mortgagor and any other defaults are
cured, then the Master Servicer, as assignee for collection, shall promptly
reassign such Mortgage Loan to the Indenture Trustee and return all Mortgage
Documents and Related Documents to the place where the related Mortgage File
was being maintained.
The Indenture Trustee, as pledgee of the Mortgage Loans and as assignee
of record of the Mortgage Loans on behalf of the Issuer pursuant to Section
3.13 of the Indenture, shall, on behalf of the Issuer, take all such actions
on behalf of the Issuer and promptly execute and return all instruments
reasonably required by the Master Servicer in connection therewith; provided,
that if the Master Servicer requests a signature of the Indenture Trustee on
behalf of the Issuer, the Master Servicer shall deliver to the Indenture
Trustee an Officer's Certificate stating that such signature is necessary or
appropriate to enable the Master Servicer to carry out its servicing and
administrative duties under this Agreement.
(b) Where the Issuer or the Indenture Trustee is required by this
Agreement to execute instruments to release property from the terms of the
Trust Agreement or the Indenture, as applicable, or convey the Issuer's or the
Indenture Trustee's interests in the same, the Issuer or the Indenture
Trustee, as applicable, shall do so in a manner and under circumstances that
are not inconsistent with the provisions of this Agreement. No Person relying
upon any instrument executed by the Issuer or the Indenture Trustee shall be
bound to ascertain the Issuer's or the Indenture Trustee's authority in
connection therewith, inquire into the satisfaction of any conditions
precedent or see to the application of any monies.
(c) If from time to time the Master Servicer shall deliver to the
Custodian copies of any written assurance, assumption agreement or
substitution agreement or other similar agreement pursuant to Section 3.07,
the Custodian shall check that each of such documents purports to be an
original executed copy or, if the original executed copy has been submitted
for recordation and has not yet been returned, a copy of the original executed
document; and if so, shall file such documents, and upon receipt of the
original executed copy from the applicable recording office or receipt of a
copy thereof certified by the applicable recording office, shall file such
originals or certified copies in the related Mortgage File. If any such
documents submitted by the Master Servicer shall not meet the above
qualifications, then such documents shall promptly be returned by the
Custodian to the Master Servicer, with a direction to the Master Servicer to
forward the correct documentation.
(d) Upon receipt of two copies of a Request for Release from the Master
Servicer, substantially in the form of Exhibit C hereto, to the effect that a
Mortgage Loan has been the subject of a final payment or a prepayment in full
and has been terminated or that substantially all Liquidation Proceeds
determined by the Master Servicer in its reasonable judgment to be finally
recoverable have been recovered, and upon deposit into the Collection Account
of such final payment, prepayment in full or Liquidation Proceeds, the
Custodian shall promptly release the related Mortgage Documents and Related
Documents to the Master Servicer, and the Indenture Trustee shall execute the
same, along with such documents as the Master Servicer or the related
Mortgagor may request to evidence satisfaction and discharge of such Mortgage
Loan.
Section 3.10. Servicing Fee; Payment of Certain Expenses by Master
----------------------------------------------------
Servicer. The Master Servicer shall be entitled to receive the Servicing Fee
--------
in accordance with Section 3.04(c) as compensation for its services in
connection with servicing the Mortgage Loans. Moreover, additional servicing
compensation in the form of late payment charges and other receipts not
required to be deposited into the Collection Account as specified in Section
5.02 may be retained by the Master Servicer. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder, including payment of all fees and expenses not expressly stated
hereunder to be for the account of the Securityholder, and shall not be
entitled to reimbursement therefor. The Issuer shall pay the initial fees and
expenses of the Indenture Trustee from the Trust Estate.
Section 3.11. Access to Certain Documentation and Information Regarding
---------------------------------------------------------
the Mortgage Loans. Whenever required by statute or regulation, the Master
------------------
Servicer shall provide each Securityholder or any regulator therefor or the
Indenture Trustee with reasonable access to all documentation relating to the
Mortgage Loans, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Master Servicer. Nothing in this Section shall limit the obligation of the
Master Servicer to observe any applicable law prohibiting disclosure of
information regarding Mortgagors, and the failure of the Master Servicer to
provide access as provided in this Section as a result of such obligation
shall not constitute a breach of this Section.
Section 3.12. Repurchase of Defaulted Loans. Notwithstanding any other
-----------------------------
provision of this Agreement, the Transferor, at its option and in its sole
discretion, may purchase any Mortgage Loan delinquent in payment for a period
of 60 days or more for a price equal to the Repurchase Price; provided that
the aggregate Principal Balance of the Mortgage Loans so purchased does not
exceed 10% of the aggregate Principal Balance of all Mortgage Loans
transferred to the Issuer. Notwithstanding any other provision of this
Agreement, the Transferor shall, upon notice from the Issuer received on or
before July 31, 1999, purchase any Mortgage Loan assigned to Pool B that is
delinquent in payment for a period of 60 days or more as of July 31, 1999 for
a price equal to the Repurchase Price. Notwithstanding any other provision of
this Agreement, the Transferor shall, upon notice from the Issuer received on
or before October 31, 1999, purchase any Mortgage Loan assigned to Pool C that
is delinquent in payment for a period of 60 days or more as of October 31,
1999 for a price equal to the Repurchase Price. Notice of any such purchase
shall be given to the Enhancer.
Section 3.13. Recordation of Assignments. The Master Servicer shall, at
--------------------------
its own expense, complete and submit for recordation in the appropriate public
office for real property records the Assignment of Mortgage for each Mortgage
Loan within 90 days of the Closing Date or the related Subsequent Transfer
Date, as the case may be. While such assignment is being recorded, the
Custodian shall retain a photocopy thereof. If any assignment is lost or
returned unrecorded to the Custodian because of any defect therein, the Master
Servicer shall prepare a substitute assignment or cure such defect, and the
Master Servicer shall cause such assignment to be recorded in accordance with
this Section. Notwithstanding the foregoing, no recordation of an Assignment
of Mortgage shall be required in any State with respect to which the Master
Servicer obtains an Opinion of Counsel acceptable to the Enhancer to the
effect that such recordation is not necessary to protect the Issuer's right,
title and interest in the related Mortgage Loans in such State.
Section 3.14. Annual Statement as to Compliance. The Master Servicer
---------------------------------
shall deliver to the Issuer, the Indenture Trustee, the Enhancer and each
Rating Agency, not later than May 31 of each year, commencing in 2000, an
Officer's Certificate stating as to each signer thereof that (i) a review of
the activities of the Master Servicer during the preceding calendar year and
of its performance under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Master Servicer has fulfilled all of its obligations under this
Agreement throughout such year, or if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof. Such Officer's Certificate shall be
accompanied by the statement required pursuant to Section 3.15.
Section 3.15. Annual Independent Public Accountants' Servicing Report.
-------------------------------------------------------
Not later than May 31 of each year, commencing in 2000, the Master Servicer
shall deliver or cause to be delivered to the Issuer and the Enhancer a
report, prepared by the Independent Accountants of the Master Servicer,
stating that such Independent Accountants have examined the financial
statements of the Master Servicer (or an appropriate Affiliate thereof) for
the preceding 12 months ended December 31 (or such shorter period in the case
of the first such report) in accordance with generally accepted auditing
standards, which examination included such tests of the accounting records and
such other auditing procedures as they considered necessary in the
circumstances, and that as a part of such examination, certain standards,
documents and records of the Master Servicer or such Affiliate relating to the
servicing of the Mortgage Loans were reviewed and tested and nothing came to
the attention of such Independent Accountants that caused them to believe that
the servicing of the Mortgage Loans was not being conducted in accordance with
this Agreement, except for such exceptions as such firm shall believe to be
immaterial and such other exceptions as shall be set forth in such statement.
In the event such firm requires the Indenture Trustee to agree to the
procedures performed by such firm, the Master Servicer shall direct the
Indenture Trustee in writing to so agree; it being understood and agreed that
the Indenture Trustee shall deliver such letter of agreement in conclusive
reliance upon the direction of the Master Servicer, and the Indenture Trustee
need not make any independent inquiry or investigation as to, and shall have
no obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
Section 3.16. Interest Carry-Forward Amounts. The amount of any
-----------------------------
distributions to be made to the Certificateholders pursuant to Section
3.05(a)(x) of the Indenture shall be reduced on each Payment Date by an amount
equal to the aggregate Interest Carry-Forward Amount. The amount of any such
reduction shall be applied toward such Interest Carry-Forward Amount, and
shall be limited to the aggregate amount of such amounts otherwise payable to
the Certificateholders without adjustment on account of Interest Carry-Forward
Amounts.
Section 3.17. Indemnification; Third-Party Claims. Each of the Master
-----------------------------------
Servicer and the Transferor (solely for the purpose of this Section, the
"Indemnifying parties") agrees to indemnify and to hold each of the Depositor,
the Issuer, the Enhancer, the Owner Trustee and the Indenture Trustee (solely
for the purpose of this Section, the "Indemnified Parties") harmless against
any and all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses that the
Indemnified Parties may sustain in any way related to the failure of any one
or more of the Indemnifying Parties to perform their respective duties in
compliance with the terms of this Agreement. Each Indemnified Party and the
Master Servicer shall immediately notify the other Indemnified Parties if a
claim is made by a third party with respect to this Agreement, and the Master
Servicer shall assume the defense of any such claim and pay all expenses in
connection therewith, including reasonable attorneys' fees, and promptly pay,
discharge and satisfy any judgment or decree that may be entered against the
Indemnified Parties in respect of such claim. The Indenture Trustee shall
reimburse the Master Servicer out of the Trust Estate in accordance with
Section 3.04(b) for all amounts advanced by it pursuant to the preceding
sentence, except where a claim relates directly to the failure of the Master
Servicer to service and administer the Mortgage Loans in compliance with the
terms hereof; provided, that the Master Servicer's indemnity hereunder shall
not be in any manner conditioned upon the availability of funds for such
reimbursement. If the Master Servicer or the Transferor is unable to pay any
such amounts owed to the Indenture Trustee, such amounts shall be paid to the
Indenture Trustee out of the Trust Estate pursuant to Section 3.05 of the
Indenture.
Section 3.18. Maintenance of Existence and Licenses; Merger or
------------------------------------------------
Consolidation of the Master Servicer. The Master Servicer shall keep in full
------------------------------------
force and effect its existence, rights and franchises, shall obtain and
preserve its qualification to do business in each jurisdiction necessary to
protect the validity and enforceability of this Agreement or any Mortgage Loan
and to perform its duties hereunder, and shall otherwise operate its business
so as to cause the representations and warranties under Section 2.05 to be
true and correct at all times.
Section 3.19. Letters of Credit.
-----------------
(a) At any time and from time to time the Master Servicer may cause to be
delivered to the Indenture Trustee, upon written notice to the Enhancer, one
or more Letters of Credit for deposit into the Capitalized Interest Account,
to be held by the Indenture Trustee in lieu of cash or Permitted Investments
otherwise required to be on deposit therein or in replacement of any other
Letter of Credit. The Indenture Trustee shall accept any such Letter of Credit
only if such Letter of Credit is accompanied by (i) an Opinion of Counsel to
the issuer thereof reasonably satisfactory to the Enhancer, the Indenture
Trustee, Standard and Poor's and Moody's to the effect that (A) such Letter of
Credit has been duly authorized, executed and delivered by the issuer thereof
and constitutes a valid and binding obligation of such issuer, subject only to
laws affecting creditors' rights generally, (B) such Letter of Credit does not
require registration under the Securities Act and (C) payments by the
Indenture Trustee in respect of the Securities, as provided in the Indenture,
derived from a draw by the Indenture Trustee under the Letter of Credit and
held in non-commingled funds would not constitute transfers avoidable under 11
U.S.C. Section 547(b) and recoverable from the Indenture Trustee or the
Securityholders under 11 U.S.C. Section 550(a) should the account party be a
debtor in a case under the United Stated Bankruptcy Code (U.S.C. Title 11) and
(ii) an opinion of tax counsel reasonably acceptable to the Enhancer and the
Indenture Trustee to the effect that delivery of such Letter of Credit either
in lieu of cash of Permitted Investments, or in replacement of any other
Letter of Credit, as the case may be, will not cause any tax to be imposed
upon the Trust Estate, including any tax imposed on "prohibited transactions"
under Section 860F(a)(1) of the Code or on "contributions after the startup
date" under Section 860G(d)(1) of the Code.
The Indenture Trustee may from time to time accept cash in replacement of
any Letter of Credit, but only upon the prior written consent of the Enhancer,
and upon delivery of any Opinion of Counsel that may be required by the
Enhancer, which Opinion of Counsel shall be furnished by, and shall be an
expense of, the Master Servicer. The Indenture Trustee shall give prompt
written notice of the delivery of any such cash to each Rating Agency.
Upon receipt of such Letter of Credit and Opinions of Counsel, the amount
available to be drawn under the Letter of Credit shall be deemed to be on
deposit in the Capitalized Interest Account for all purposes of this
Agreement. As soon as practicable after the delivery of any Letter of Credit,
or, in any event within two Business Days after the effective date thereof,
the Indenture Trustee shall surrender to the issuer of any Letter of Credit
being replaced, such Letter of Credit that is being replaced, or, if such
Letter of Credit is being delivered in replacement of amounts (other than
amounts represented by Letters of Credit) then on deposit in the Capitalized
Interest Account, withdraw from the Capitalized Interest Account and pay to
Master Servicer an amount equal to the amount then available to be drawn under
such Letter of Credit, up to the amount then on deposit in the Capitalized
Interest Account.
(b) If, as of any date that is five Business Days prior to the stated
expiration date of any such Letter of Credit, a Letter of Credit (which may be
a renewal or extension of the expiring Letter of Credit) in the same amount as
the amount then available for drawing under the expiring Letter of Credit has
not been delivered to the Indenture Trustee, the Indenture Trustee shall, on
the next Business Day thereafter, cause to be presented to the issuer of the
expiring Letter of Credit a draft in proper form for payment thereunder and
otherwise in conformity with the terms thereof for the full amount then
available to be drawn thereunder. Proceeds received in payment of each such
draft shall be deposited and held in the Capitalized Interest Account, at the
direction of the Indenture Trustee upon consultation with the Master Servicer
and the Enhancer.
(c) Upon discovery by the Enhancer or the Indenture Trustee that the
short-term or longterm debt obligations, if any, of any Letter of Credit Bank
have a rating lower than that required pursuant to the definition of the term
"Letter of Credit", the Person discovering such rating shall give prompt
written notice to the other such Person. If, within 15 days of its giving or
receipt of such notice, as the case may be, the Indenture Trustee has not
received a substitute Letter of Credit meeting the requirements of this
Agreement in replacement of such Letter of Credit, the Indenture Trustee shall
cause to be presented to the issuer of such Letter of Credit a draft in proper
form for payment thereunder and otherwise in conformity with the terms thereof
for the full amount available to be drawn thereunder. Proceeds received in
payment of each such draft shall be deposited and held in the payment of each
such draft shall be deposited and held in the Capitalized Interest Account, as
directed by the Enhancer.
(d) If any notice of acceleration pursuant to terms of any Letter of
Credit is delivered, (i) the Master Servicer shall replace or cause to be
replaced such accelerated Letter of Credit with a replacement Letter of Credit
(and the Indenture Trustee shall cause to be presented to the issuer of such
Letter of Credit a draft in proper form for payment thereunder and otherwise
in conformity with the terms thereof for the full amount available to be drawn
thereunder) within ten Business Days its receipt of such acceleration notice
or its notification thereof by the Enhancer or (ii) a draw shall be made on
the accelerated Letter of Credit by the Indenture Trustee, and the Indenture
Trustee shall deposit the amount of such draw into the Capitalized Interest
Account as directed by the Enhancer.
Section 3.20. Periodic Advances. If, on the Business Day prior to any
-----------------
Determination Date, the Master Servicer determines that any Monthly Payments
due on any Thirty-year Maturity Mortgage Loan or Home Equity Mortgage Loan
during the related Collection Period have not been received as of the close of
business on the second Business Day preceding such Determination Date, the
Master Servicer shall determine the amount of any Periodic Advance required to
be made with respect to such unpaid Monthly Payments on the related
Determination Date. The Master Servicer may, but shall not be required to,
make a periodic advance with respect to any High LTV Mortgage Loan for which a
Monthly Payment due during the related collection period has not been received
as of the close of business on the second Business Day preceding the related
Determination Date. The Master Servicer shall cause to be deposited in the
Trustee Collection Account on the Master Servicer Remittance Date an amount
equal to the Periodic Advance for the related Determination Date, which
deposit may be made in whole or in part from funds in the Collection Account
being held for future distribution or withdrawal on or in connection with
Payment Dates in subsequent months. Any funds being held for future
distribution to Securityholders and so used shall be replaced by the Master
Servicer from its own funds by deposit into the Collection Account on or
before the Determination Date corresponding to any such future Determination
Date to the extent that funds in the Collection Account for such future
Determination Date shall otherwise be less than the amount required to be
transferred to the Trustee Collection Account in respect of payments to
Securityholders required to be made on the Payment Date related to such future
Determination Date.
The Master Servicer shall be entitled to be reimbursed for any such
Periodic Advance on a priority basis out of late collections, Liquidation
Proceeds or, to the extent the Master Servicer has in good faith determined
any such Periodic Advance to be nonrecoverable, out of funds on deposit in the
Collection Account or the Trustee Collection Account. The Master Servicer
shall designate on its records the specific Mortgage Loans and related
installments (or portions thereof) as to which such Periodic Advance shall be
deemed to have been made, such designation, except in cases of manifest error,
being conclusive for purposes of withdrawals from the Collection Account or
Trustee Collection Account pursuant to Section 3.04.
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01. Servicing Certificate. With respect to each Payment Date,
---------------------
on the Business Day following the related Determination Date, the Master
Servicer shall forward to the Depositor, the Indenture Trustee and the
Enhancer, and the Indenture Trustee, pursuant to Section 3.25 of the
Indenture, shall forward or cause to be forwarded by mail to each
Securityholder, the Owner Trustee, each Paying Agent (if other than the
Indenture Trustee), the Enhancer and each Rating Agency, a Servicing
Certificate setting forth the following information, to the extent applicable:
(a) the aggregate amount of Collections received on the Mortgage Loans
(stated separately for each Group, for the High LTV Mortgage Loans, for the
Home Equity Mortgage Loans, for the Thirty-year Maturity Mortgage Loans and
also in the aggregate) during the related Collection Period;
(b) the aggregate amount of (i) Interest Collections and (ii) Principal
Collections (in each case stated separately for each Group, for the High LTV
Mortgage Loans, for the Home Equity Mortgage Loans, for the Thirty-year
Maturity Mortgage Loans and also in the aggregate) for such Collection Period;
(c) the Principal Distribution Amount for such Collection Period stating
separately the Base Principal Distribution Amount and the Additional Principal
Distribution Amount (in each case stated separately for each Group and also in
the aggregate);
(d) the amount distributable to each Class of Notes in respect of
interest;
(e) the amount of any Interest Carry-Forward Amounts;
(f) the amount, if any, to be distributed to the Certificateholders;
(g) any accrued and unpaid Servicing Fees for previous Collection Periods
and the Servicing Fee for such Collection Period;
(h) the Excess Spread (stated separately for each Group and also in the
aggregate), if any, for such Collection Period;
(i) the Liquidation Loss Amount (stated separately for each Group, for
the High LTV Mortgage Loans, for the Home Equity Mortgage Loans, for the
Thirty-year Maturity Mortgage Loans and also in the aggregate) and any
Subordination Deficit (stated separately for each Group and also in the
aggregate) for such Collection Period;
(j) the Pool Balance (stated separately for each Group and also in the
aggregate) as of the end of the preceding Collection Period and as of the end
of the second preceding Collection Period;
(k) the Note Balance for each Class of Notes after giving effect to any
distribution on such Payment Date and to any reduction on account of
Liquidation Loss Amounts;
(l) the Overcollateralization Amount and the Overcollateralization Target
Amount (stated separately for each Group);
(m) the Certificate Balance after giving effect to any distribution on
such Payment Date;
(n) the number and aggregate Principal Balances of Mortgage Loans (in
each case stated separately for each Group, for the High LTV Mortgage Loans,
for the Home Equity Mortgage Loans, for the Thirty-year Maturity Mortgage
Loans and also in the aggregate) (i) as to which the related Monthly Payment
is delinquent for 30-59 days, 60-89 days and 90 or more days, respectively,
and (ii) that have become related to REO Property, in each case as of the end
of the preceding Collection Period;
(o) whether a Servicing Default has occurred since the prior
Determination Date, specifying such Servicing Default;
(p) each amount to be distributed to the Enhancer pursuant to the Basic
Documents, stated separately for each Group and amount;
(q) the Policy Draw Amount, if any, for such Payment Date;
(r) the weighted average Mortgage Interest Rate for the related
Collection Period;
(s) during the Pre-Funding Period, the amount on deposit in the
Pre-Funding Account (including the allocation thereof as between Group I and
Group II) as of such Payment Date and any transfers of funds in connection
therewith;
(t) during the Pre-Funding Period, whether the Payment Date following the
next Determination Date is expected to be a Subsequent Transfer Date, and a
reasonable estimate of the aggregate Principal Balances and Group assignment
of the intended Subsequent Mortgage Loans; and
(u) the amount of any Periodic Advances.
The Indenture Trustee shall conclusively rely upon the information
contained in a Servicing Certificate for purposes of making distributions
pursuant to Section 3.05 of the Indenture, shall have no duty to inquire into
such information and shall have no liability in so relying. The format and
content of the Servicing Certificate may be modified by the mutual agreement
of the Master Servicer and the Indenture Trustee. The Master Servicer shall
give notice of any such change to each Rating Agency and the Enhancer.
The amounts furnished pursuant to clauses (e) and (g) above shall be
expressed as an aggregate dollar amount per each Class of Notes or
Certificates, as the case may be, with a $1,000 denomination.
The Master Servicer shall forward to the Indenture Trustee any other
information reasonably requested by the Indenture Trustee to make
distributions pursuant to Section 3.05 of the Indenture. Prior to the close of
business on the Business Day next succeeding each Determination Date, the
Master Servicer shall furnish a written statement to the Paying Agent and the
Indenture Trustee setting forth the aggregate amounts required to be withdrawn
from the Pre-Funding Account (including the allocation of such withdrawal
between amounts reserved for Group I Mortgage Loans and Group II Mortgage
Loans) and the Collection Account. The determination by the Master Servicer of
such amounts shall, in the absence of obvious error, be presumptively deemed
to be correct for all purposes hereunder, and the Owner Trustee and the
Indenture Trustee shall be protected in relying upon the same without any
independent verification thereof. In addition, upon the Issuer's written
request, the Master Servicer shall promptly furnish information reasonably
requested by the Issuer that is reasonably available to the Master Servicer to
enable the Issuer to perform its federal and state income tax reporting
obligations.
ARTICLE V
THE ACCOUNTS
Section 5.01. Accounts. Prior to the Closing Date, the Master Servicer
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shall establish or cause to be established the following accounts, each of
which shall be an Eligible Account:
(a) an account (the "Collection Account") bearing a designation clearly
indicating that the funds on deposit therein are held for the benefit of the
Issuer, the Indenture Trustee, the Enhancer and the Securityholders;
(b) an account in the name of the Indenture Trustee (the "Capitalized
Interest Account"), bearing a designation clearly indicating that the funds on
deposit therein are held for the benefit of the Enhancer and the
Securityholders;
(c) an account in the name of the Indenture Trustee (the "Note Payment
Account"), bearing a designation clearly indicating that the funds on deposit
therein are held for the benefit of the Enhancer and the Noteholders;
(d) an account in the name of the Indenture Trustee (the "Pre-Funding
Account"), bearing a designation clearly indicating that funds on deposit
therein are held for the benefit of the Issuer, the Indenture Trustee, the
Enhancer and the Securityholders;
(e) an account in the name of the Indenture Trustee (the "Certificate
Distribution Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Enhancer and the
Certificateholders; and
(f) an account in the name of the Indenture Trustee (the "Trustee
Collection Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Enhancer and the
Securityholders.
Section 5.02. Collection Account. The Master Servicer shall deposit or
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cause to be deposited any amounts representing payments and collections in
respect of the Mortgage Loans received by it subsequent to the related Cut-Off
Date, other than in respect of the payments referred to in the following
paragraph, into the Collection Account within one Business Day following
receipt thereof or otherwise on or prior to the Closing Date, including the
following payments and collections received or made by it:
(a) all payments of principal, interest and prepayment penalties in
respect of the Mortgage Loans received by the Master Servicer from the
Mortgagors or the related Subservicer, net of any portion of the interest
thereof retained by such Subservicer as subservicing fees and any Periodic
Advances for the related Collection Period;
(b) the aggregate Purchase Price or Repurchase Price of any Mortgage
Loans purchased by the Transferor pursuant to Section 2.09 or 3.12;
(c) any Liquidation Proceeds and Insurance Proceeds; and
(d) any Substitution Adjustment Amounts;
provided, that with respect to each Collection Period, the Master Servicer
shall be permitted to retain from payments in respect of interest on the
Mortgage Loans, the Servicing Fee for such
Collection Period.
The foregoing requirements respecting deposits into the Collection
Account are exclusive; provided, that without limiting the generality of the
foregoing, the Master Servicer need not deposit into the Collection Account
any amounts representing fees or late charges payable by Mortgagors. In the
event that any amount not required to be deposited into the Collection Account
is so deposited, the Master Servicer may at any time withdraw such amount from
the Collection Account, any provision herein to the contrary notwithstanding.
The Collection Account may contain funds respecting payments on other mortgage
loans belonging to the Master Servicer or serviced by it on behalf of others.
Notwithstanding such commingling of funds, the Master Servicer shall keep
records that accurately reflect the funds on deposit in the Collection Account
that have been identified by it as being attributable to the Mortgage Loans
and shall hold all collections in the Collection Account to the extent they
represent collections on the Mortgage Loans for the benefit of the Issuer, the
Indenture Trustee, the Enhancer and the Securityholders.
The Master Servicer shall direct in writing the institution maintaining
the Collection Account to invest funds therein only in Permitted Investments.
No Permitted Investment may be sold or disposed of at a gain prior to
maturity, unless the Master Servicer shall have obtained an Opinion of Counsel
at the Master Servicer's expense that such sale or disposition will not cause
the Trust to be to be treated as an association (or a publicly-traded
partnership) taxable as a corporation for federal income tax purposes. All net
income, other than any gain from a sale or disposition of the type referred to
in the preceding sentence, received from any such Permitted Investment shall
be paid to the Master Servicer as additional servicing compensation. The
amount of any losses incurred in respect therewith shall be deposited into the
Collection Account by the Master Servicer out of its own funds immediately as
incurred.
The Master Servicer shall require each Subservicer to hold all funds
constituting collections on the Mortgage Loans, pending remittance thereof to
the Master Servicer, in one or more accounts meeting the requirements of an
Eligible Account (and amounts on deposit therein shall be invested in
Permitted Investments), unless all such collections are remitted on a daily
basis to the Master Servicer for deposit into the Collection Account.
The Collection Account may, upon written notice to the Issuer, the
Indenture Trustee and the Enhancer, be transferred to a different institution,
provided that such transfer is to an Eligible Account.
Section 5.03. Trustee Collection Account. On each Master Servicer
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Remittance Date, the Master Servicer shall transfer from the Collection
Account to the Trustee Collection Account the amount necessary for the
Indenture Trustee to make the required distributions pursuant to Section
3.05(a) of the Indenture. Such requirement respecting deposits into the
Trustee Collection Account is exclusive. On each Master Servicer Remittance
Date the Master Servicer shall deposit into the Trustee Collection Account
from its own funds an amount equal to the lesser of (i) the Prepayment
Interest Shortfalls for the related collection period and (ii) its Servicing
Fee for the related Collection Period prior to any reduction thereof on
account of any Prepayment Interest Shortfall. In the event that any amount not
required to be deposited into the Trustee Collection Account is so deposited,
the Master Servicer may at any time direct the Indenture Trustee to withdraw
such amount from the Trustee Collection Account and deliver it to or at the
direction of Master Servicer, any provision herein to the contrary
notwithstanding.
The Trustee may, but need not, invest funds in the Trustee Collection
Account, and if such funds are invested, they shall be invested only in
Permitted Investments. No Permitted Investment may be sold or disposed of at a
gain prior to maturity, unless the Indenture Trustee shall have obtained an
Opinion of Counsel at the Indenture Trustee's expense that such sale or
disposition will not cause the Trust to be to be treated as an association (or
a publicly-traded partnership) taxable as a corporation for federal income tax
purposes. All net income shall be for the account of the Indenture Trustee.
The amount of any losses incurred in respect therewith shall be deposited into
the Trustee Collection Account by the Indenture Trustee out of its own funds
immediately as incurred.
Section 5.04. Pre-Funding Account.
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(a) On the Closing Date, the Transferor shall deposit into the
Pre-Funding Account an amount equal to the Pre-Funded Amount from the proceeds
of the sale of the Securities. The Transferor shall designate the
$58,463,384.59 of such amount as allocated to Group I and $16,276,708.56 of
such amount is allocated to Group II. On each related Subsequent Transfer
Date, the Master Servicer shall instruct the Indenture Trustee in writing to
(i) withdraw from the Pre-Funding Account an amount equal to the aggregate
Principal Balance as of the related Subsequent Cut-Off Date of the Subsequent
Mortgage Loans to be sold to the Trust on such Subsequent Transfer Date, (ii)
allocate such withdrawal between amounts reserved for Group I and Group II as
indicated by the Master Servicer and (iii) pay such amount to or upon the
order of the Transferor upon satisfaction of the conditions set forth in this
Agreement and in the related Subsequent Transfer Agreement with respect
thereto.
(b) If the Pre-Funded Amount has not been reduced to zero at the close of
business on the last Payment Date of the Pre-Funding Period, after giving
effect to any withdrawal therefrom on such Payment Date, such remaining
Pre-Funded Amount shall be deposited into the Trustee Collection Account.
(c) The Master Servicer may cause the institution maintaining the
Pre-Funding Account to invest any funds therein in Permitted Investments
having a maturity of up to 180 days or maturing or otherwise available not
later than the Business Day preceding the related Payment Date on which funds
are scheduled to be withdrawn to purchase Subsequent Mortgage Loans; provided,
that any investment in an obligation of the institution with which the
Pre-Funding Account is maintained may mature on or before 10:30 a.m., New York
time, on such Payment Date; and provided further, that no such investment may
be sold or disposed of prior to maturity. Notwithstanding the foregoing, in
the event investment earnings have not matured on any Payment Date, the amount
of such earnings accrued as of such Payment Date may be advanced by the Master
Servicer for deposit into the Pre-Funding Account (which advance shall be
reimbursed to the Master Servicer from such investment earnings at maturity).
At any time when the Indenture Trustee is maintaining the Pre-Funding Account,
any request by the Master Servicer to invest funds on deposit therein shall be
in writing, delivered to the Indenture Trustee at or before 10:30 a.m., New
York time, if such investment is to be made on such day. The Master Servicer
shall certify that the requested investment is a Permitted Investment maturing
at or prior to the time required hereby. Any such investment shall be
registered in the name of the Indenture Trustee or its nominee, and to the
extent that any such investment is certificated, such investment shall be
maintained with the Indenture Trustee at its Corporate Trust Office. All net
income or other gain received from any such investment shall be deposited into
or credited to the Capitalized Interest Account, and may be withdrawn
therefrom in accordance with Section 5.05 hereof. The amount of any net losses
incurred in respect of the principal amount of any such investment shall be
deposited into the Pre-Funding Account by the Master Servicer out of its own
funds immediately as realized.
Section 5.05. Capitalized Interest Account. The Master Servicer shall
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direct the Indenture Trustee to invest funds on deposit in the Capitalized
Interest Account in Permitted Investments or such other investment as may be
acceptable to the Enhancer. No such investment in the Capitalized Interest
Account shall mature later than the Business Day immediately preceding the
next succeeding Payment Date (except if such investment is an obligation of,
or is managed or advised by, the Indenture Trustee, in which case such
investment shall mature not later than such Payment Date, or such other date
as may be approved by the Enhancer). The Indenture Trustee shall identify by
book entry to its appropriate records the status of the Trust as secured party
with respect to the investments made with funds deposited into the Capitalized
Interest Account. Any net investment income on the Capitalized Interest
Account shall be deposited into or credited to the Capitalized Interest
Account as received. On the Closing Date, the Transferor shall make a cash
deposit from the proceeds of the sale of the Notes into the Capitalized
Interest Account (which amount may be evidenced by a Letter of Credit
delivered pursuant to Section 3.19).
On each Payment Date, the Capitalized Interest Requirement as specified
by the Master Servicer in a notice to the Indenture Trustee for such purpose,
shall, to the extent funds are available therefor, be withdrawn by the
Indenture Trustee from the Capitalized Interest Account and deposited into the
Trustee Collection Account to be distributed in accordance with Section
3.05(a) of the Indenture. At the end of the Pre-Funding Period, following any
required transfer pursuant to the immediately preceding sentence, the amount
on deposit in the Capitalized Interest Account shall be paid to the
Transferor.
ARTICLE VI
THE MASTER SERVICER
Section 6.01. Liability of the Master Servicer. The Master Servicer shall
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be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by it hereunder.
Section 6.02. Merger or Consolidation or Assumption of the Obligations of
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the Master Servicer. Any Person into which the Master Servicer may be merged
-------------------
or converted or with which it may be consolidated, any Person resulting from
any merger, conversion or consolidation to which the Master Servicer shall be
a party or any Person succeeding to the business of the Master Servicer, shall
be the successor of the Master Servicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
The Master Servicer may assign its rights and delegate its duties and
obligations under this Agreement; provided, that the Person accepting such
assignment or delegation shall be a Person qualified to service the Mortgage
Loans, shall be reasonably satisfactory to the Issuer and the Enhancer; and
the Indenture Trustee, as pledgee of the Mortgage Loans, shall be willing to
service the Mortgage Loans and shall execute and deliver to the Indenture
Trustee and the Issuer an agreement, in form and substance reasonably
satisfactory to the Indenture Trustee and the Issuer, containing an assumption
by such Person of the due and punctual performance and observance of each
covenant and condition to be performed or observed by the Master Servicer
under this Agreement; and provided further, that no Rating Agency, after
notice thereto, shall have notified the Indenture Trustee in writing that such
assignment and delegation would result in a Rating Event, determined without
regard to the Policy; and provided further, that the Owner Trustee shall have
received an Opinion of Counsel to the effect that such assignment or
delegation would not cause the Trust to be treated as an association (or a
publicly-traded partnership) taxable as a corporation for federal income tax
purposes.
Section 6.03. Limitation on Liability of the Master Servicer and Others.
---------------------------------------------------------
Neither the Master Servicer nor any of its directors, officers, employees or
agents shall be under any liability to the Issuer, the Owner Trustee, the
Indenture Trustee or the Securityholders for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement; provided, that this provision shall not protect the Master Servicer
or any such Person against any liability that would otherwise be imposed on it
by reason of its willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder or by reason of its reckless disregard
thereof. The Master Servicer and any director, officer, employee or agent
thereof may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Master Servicer and any director, officer, employee or agent
thereof shall be indemnified by the Issuer and held harmless against any loss,
liability or expense incurred in connection with any Proceeding relating to
this Agreement or the Securities, including any amount paid to the Indenture
Trustee pursuant to Section 6.06(b), other than any loss, liability or expense
incurred by reason of its willful misfeasance, bad faith or gross negligence
in the performance of its duties hereunder or by reason of its reckless
disregard thereof. The Master Servicer shall be under no obligation to appear
in, prosecute or defend any legal action not incidental to its duties to
service the Mortgage Loans in accordance with this Agreement, and that in its
opinion may involve it in any expense or liability; provided, that the Master
Servicer may in its sole discretion undertake any action that it may deem
necessary or desirable in respect of this Agreement, the rights and duties of
the parties hereto and the interests of the Securityholders. In such event,
the reasonable legal expenses and costs of such action and any liability
resulting therefrom shall be expenses, costs and liabilities of the Issuer,
and the Master Servicer shall be entitled to reimbursement therefor. The
Master Servicer's right to indemnity or reimbursement pursuant to this Section
shall survive any resignation or termination of the Master Servicer pursuant
to Section 6.04 or Article VII in respect to any losses, expenses, costs or
liabilities arising prior to such resignation or termination or from events
that occurred prior to such resignation or termination.
Section 6.04. Master Servicer Not to Resign. Subject to the provisions of
-----------------------------
Section 6.02, the Master Servicer shall not assign this Agreement or resign
from the obligations and duties hereby imposed upon it except (a) upon a
determination that the performance of its obligations or duties hereunder are
no longer permissible under applicable law or are in material conflict by
reason of applicable law with other activities carried on by it or any
Affiliate thereof, the other activities of the Master Servicer so causing such
a conflict being of a type and nature carried on by the Master Servicer or
such Affiliate at the date of this Agreement or (b) upon the satisfaction of
the following conditions: (i) the Master Servicer shall have proposed a
successor master servicer to the Issuer and the Indenture Trustee in writing,
and such proposed successor master servicer shall be reasonably acceptable to
the Issuer and the Indenture Trustee; (ii) the Enhancer shall have consented
to such resignation and (iii) no Rating Agency, after prior notice thereto,
shall have delivered a letter to the Issuer and the Indenture Trustee prior to
the appointment of such proposed successor master servicer stating that such
proposed appointment would result in a Rating Event, determined without regard
to the Policy; provided, that no such resignation by the Master Servicer shall
become effective until such successor master servicer shall have assumed the
Master Servicer's responsibilities and obligations hereunder or the Indenture
Trustee shall have designated a successor master servicer in accordance with
Section 7.02. Any such determination permitting the resignation of the Master
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered
to the Issuer, the Indenture Trustee and the Enhancer.
Section 6.05. Delegation of Duties. In the ordinary course of its
--------------------
business, the Master Servicer may at any time delegate any of its duties
hereunder to any Person (including any Affiliate of the Master Servicer), that
agrees to conduct such duties in accordance with standards comparable to those
applicable to the Master Servicer hereunder. Such delegation shall not relieve
the Master Servicer of liability or responsibility with respect to such
duties, and shall not constitute a resignation of the Master Servicer pursuant
to Section 6.04.
Section 6.06. Indenture Trustee Fees and Expenses; Indemnification.
----------------------------------------------------
(a) After the Closing Date, the Master Servicer covenants and agrees to
pay, in accordance with Section 6.07 of the Indenture, from amounts on deposit
in the Collection Account, to the Indenture Trustee and any co-trustee from
time to time, and the Indenture Trustee and any such co-trustee shall be
entitled to, reasonable compensation, which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust, for all services rendered by each of them in the execution of the
trusts created under the Indenture and in the exercise and performance of any
of the powers and duties under the Indenture of the Indenture Trustee and any
such co-trustee. The Indenture Trustee and any such co-trustee shall be
entitled to payment or reimbursement in accordance with the Indenture from
amounts on deposit in the Collection Account, upon request therefrom for all
reasonable expenses, disbursements and advances incurred or made by the
Indenture Trustee or any such co-trustee, respectively, in accordance with any
of the provisions of this Agreement or the other Basic Documents, except any
such expenses, disbursements or advances as may arise from the negligence,
willful misfeasance or bad faith of the Indenture Trustee or such co-trustee,
as the case may be. The Indenture Trustee shall be entitled to be reimbursed
by the Master Servicer (or, if the Master Servicer is unable to fulfill such
obligation, in accordance with Section 3.05 of the Indenture) for all costs
associated with the transfer of servicing from the Master Servicer to the
Indenture Trustee, 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 Indenture Trustee to correct any errors or insufficiencies in
the servicing data or otherwise to enable the Indenture Trustee to service the
Mortgage Loans properly and effectively.
(b) The Indenture Trustee shall be indemnified and held harmless by the
Master Servicer for any loss, liability or expense incurred without
negligence, bad faith or willful misconduct on the part of the Indenture
Trustee, arising out of or in connection with the performance of its duties
under the Basic Documents (but not with respect to the performance of any of
its duties under the Administration Agreement), including the costs and
expenses (including reasonable attorneys' fees and expenses) of defending the
Indenture Trustee against any claim in connection with the exercise or
performance of any of its powers or duties under any Basic Document; provided,
that:
(i) with respect to any such claim, the Indenture Trustee shall have
given the Master Servicer and the Enhancer written notice thereof
promptly after the Indenture Trustee shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the Indenture
Trustee shall cooperate and consult fully with the Master Servicer in
preparing such defense; and
(iii) notwithstanding anything herein to the contrary, the Master
Servicer shall not be liable for the settlement of any claim by the
Indenture Trustee entered into without the prior written consent of the
Master Servicer.
No termination of this Agreement shall affect the obligations created by
this Section of the Master Servicer to indemnify the Indenture Trustee under
the conditions and to the extent set forth herein.
Notwithstanding the foregoing, the indemnification provided pursuant to
this paragraph shall not pertain to any loss, liability or expense of the
Indenture Trustee, including the costs and expenses of defending itself
against any claim, incurred in connection with (i) any actions taken by the
Indenture Trustee at the direction of the Securityholders pursuant to the
terms of the Basic Documents unless consented to by the Master Servicer or
(ii) any actions taken by the Indenture Trustee in its capacity as
administrator under the Administration Agreement.
Section 6.07. The Owner Trustee and its successors, assigns, agents and
servants (collectively the "Indemnified Parties") shall be indemnified,
defended and held harmless by the Master Servicer for any liabilities,
obligations, losses, damages, taxes, claims, actions and suits, and any and
all reasonable costs, expenses and disbursements (including reasonable
attorney's fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") that may at any time be imposed on, incurred by, or asserted
against the Owner Trustee or any Indemnified Party in any way relating to or
arising out of the Basic Documents, the Trust Estate or the administration of
the Trust Estate or the action or inaction of the Owner Trustee, provided
that:
(a) The Master Servicer shall not be liable for or required to indemnify
an Indemnified Party from and against Expenses arising or resulting from the
Owner Trustee's negligence with respect to the handling of funds, or with
respect to any other acts, willful misconduct, gross negligence or bad faith,
or as a result of any inaccuracy of an express representation or warranty
contained in Section 6.03 of the Trust Agreement;
(b) With respect to any such claim, the Indemnified Party shall have
given the Master Servicer and the Enhancer written note thereof promptly after
the Indemnified Party shall have actual knowledge thereof;
(c) While maintaining control over its own defense, the Indemnified Party
shall cooperate and consult fully with the Master Servicer in preparing such
defense;
(d) Notwithstanding anything to the contrary, the Master Servicer shall
not be liable for the settlement of any claim by an Indemnified Party entered
into without the prior written consent of the Master Servicer.
No termination of this Agreement shall affect the obligation created by
this Section of the Master Servicer to indemnify the Owner Trustee and the
Indemnified Parties under the conditions and to the extent set forth herein.
ARTICLE VII
DEFAULT
Section 7.01. Default. If any one of the following events (each, a
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"Servicing Default") shall occur and be continuing:
(a) any failure by the Master Servicer to deposit into any Collection
Account or Trustee Collection Account any deposit required to be made under
the terms of this Agreement that continues unremedied for a period of five
Business Days after the date upon which written notice of such failure shall
have been given to the Master Servicer and the Enhancer by the Issuer or the
Indenture Trustee;
(b) any failure on the part of the Master Servicer to duly observe or
perform in any material respect any other covenants or agreements of the
Master Servicer set forth in this Agreement, which failure materially and
adversely affects the interests of any Securityholder, and which failure
continues unremedied for a period of 45 days after the date on which written
notice of such failure, requiting the same to be remedied, and stating that
such notice is a "Notice of Default" hereunder, shall have been given to the
Master Servicer and the Enhancer by the Issuer or the Indenture Trustee;
(c) the entry against the Master Servicer of a decree or order by a
court, agency or supervisory authority having jurisdiction in the premises for
the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, conservatorship, receivership, readjustment of debt, marshalling
of assets and liabilities or similar Proceeding, or for the winding up or
liquidation of its affairs; and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days;
(d) the Master Servicer shall voluntarily go into liquidation or consent
to the appointment of a conservator, receiver, liquidator or similar person in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar Proceeding of or relating to the Master Servicer or all or
substantially all of its property, or a decree or order of a court, agency or
supervisory authority having jurisdiction in the premises for the appointment
of a conservator, receiver, liquidator or similar person in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
Proceeding, or for the winding-up or liquidation of the Master Servicer's
affairs, shall have been entered against the Master Servicer, and such decree
or order shall have remained in force undischarged, unbonded and unstayed for
a period of 60 days, or the Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a petition to
take advantage of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors or voluntarily suspend payment of
its obligations; or
(e) the continuation of a Master Servicer Termination Delinquency Rate
Trigger or a Master Servicer Termination Loss Trigger (each as defined in the
Insurance Agreement);
then, in each case, the Master Servicer shall immediately notify the Enhancer,
the Indenture Trustee and the Owner Trustee in writing thereof and, for so
long as such Servicing Default shall not have been remedied by the Master
Servicer, then the Enhancer, the Issuer or the Indenture Trustee, by notice
then given in writing to the Master Servicer, may terminate all rights and
obligations of the Master Servicer hereunder, other than the Master Servicer's
right to receive servicing compensation and reimbursement of expenses
hereunder during any period prior to the date of such termination; and the
Enhancer, the Indenture Trustee or the Owner Trustee may exercise any and all
other remedies available at law or in equity. Any such notice to the Master
Servicer shall also be given to the Enhancer, each Rating Agency and the
Issuer. On or after receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer under this Agreement shall pass to
and be vested in the Indenture Trustee as pledgee of the Mortgage Loans
pursuant to this Section. Without limitation, the Indenture Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney in-fact or otherwise, any and all documents or other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan or the related
Mortgage Documents or Related Documents, or otherwise. The Master Servicer
agrees to cooperate fully with the Enhancer, the Owner Trustee and the
Indenture Trustee in effecting the termination of the rights and
responsibilities of the Master Servicer hereunder, including the transfer to
the Indenture Trustee for the administration by it of all cash relating to the
Mortgage Loans that shall at the time be held by the Master Servicer for
deposit into the Collection Account, or that have been thereafter received by
the Master Servicer with respect to the Mortgage Loans. All reasonable costs
and expenses (including attorneys' fees) incurred in connection with amending
this Agreement to reflect such succession as Master Servicer pursuant to this
Section shall be paid by the predecessor Master Servicer (or if the
predecessor Master Servicer is the Indenture Trustee, the initial Master
Servicer and, in any event, if the initial Master Servicer cannot pay any such
amount, in accordance with Section 3.05 of the Indenture) upon presentation of
reasonable documentation of such costs and expenses.
Notwithstanding any termination of the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to receive, out of any late
collection of a payment on a Mortgage Loan that was due prior to the notice
terminating the Master Servicer's rights and obligations hereunder and
received after such notice, that portion thereof to which the Master Servicer
would have been entitled hereunder, its Servicing Fee in respect thereof and
any other amounts payable to the Master Servicer hereunder the entitlement to
which arose prior to such termination.
Notwithstanding the foregoing, a delay in or failure of performance under
paragraph (a) or (b) above, after the expiration of the applicable grace
periods, shall not constitute a Servicing Default if such delay or failure
could not have been prevented by the exercise of reasonable diligence by the
Master Servicer and such delay or failure was caused by an Act of God, any act
of the public enemy, declared or undeclared war, public disorder, rebellion or
sabotage, or epidemic, landslide, lightning, fire, hurricane, earthquake or
flood. The preceding sentence shall not relieve the Master Servicer from using
reasonable efforts to perform its obligations hereunder in a timely manner in
accordance with the terms hereof, and the Master Servicer shall provide the
Enhancer, the Owner Trustee and the Indenture Trustee with notice of such
failure or delay by it, together with a description of its efforts to so
perform its obligations.
Section 7.02. Indenture Trustee to Act; Appointment of Successor.
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(a) Within 90 days after the date the Master Servicer and the Indenture
Trustee receive a notice of termination pursuant to Section 7.01 or sends a
resignation notice pursuant to Section 6.04, the Indenture Trustee, as pledgee
of the Mortgage Loans, shall be the successor in all respects to the Master
Servicer in its capacity as Master Servicer hereunder and with respect to the
transactions set forth herein, and shall be subject to all responsibilities,
duties and liabilities relating thereto placed on the Master Servicer by the
terms hereof. Nothing in any Basic Document shall be construed to permit or
require the Indenture Trustee to (i) be responsible or accountable for any act
or omission of any prior Master Servicer prior to the issuance of the related
notice of termination hereunder, (ii) in its capacity as successor Master
Servicer, purchase, repurchase or substitute any Mortgage Loan or fund any
Additional Balances with respect thereto, (iii) fund any losses on any
Permitted Investment directed by any prior Master Servicer hereunder or (iv)
be responsible for the representations or warranties of any such prior Master
Servicer. As compensation therefor, the Indenture Trustee shall be entitled to
such compensation as the Master Servicer would have been entitled to hereunder
if no such notice of termination had been given. If the Enhancer desires to
have a Person other that the Indenture Trustee serve as successor Master
Servicer or if the Indenture Trustee is (i) unwilling to act as successor
Master Servicer or (ii) legally unable so to act, then the Enhancer shall
appoint or the Indenture Trustee may appoint, with the consent of the
Enhancer, or may petition a court of competent jurisdiction to appoint any
established mortgage loan servicing institution having a net worth of not less
than $10,000,000 as the successor to the Master Servicer hereunder with
respect to all or any part of the Master Servicer's responsibilities, duties
or liabilities hereunder; provided, that no Rating Agency, after prior notice
thereto, shall have notified the Indenture Trustee in writing that such the
appointment of such successor Master Servicer would result in a Rating Event,
determined without regard to the Policy. Notwithstanding the foregoing,
pending the appointment of a successor Master Servicer hereunder, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act in such capacity as provided above. In connection with such
appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation that the Master Servicer would otherwise have received pursuant
to Section 3.10 (or such lesser compensation as the Indenture Trustee and such
successor shall agree). The appointment of a successor Master Servicer shall
not affect any liability of the predecessor Master Servicer that may have
arisen under this Agreement prior to its termination as Master Servicer, nor
shall any successor Master Servicer be liable for any acts or omissions of any
predecessor Master Servicer or for any breach by such Master Servicer of any
of its representations or warranties contained herein or in any other Basic
Document. The Indenture Trustee and such successor Master Servicer shall take
such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
(b) Any successor Master Servicer, including the Indenture Trustee, (i)
shall be bound by the terms of the Insurance Agreement and (ii) shall not be
deemed to be in default or to have breached its duties hereunder if the
predecessor Master Servicer shall fail to make any required deposit into the
Collection Account or otherwise cooperate with any required servicing transfer
or succession hereunder.
Section 7.03. Notification to Securityholders. Upon any termination of or
-------------------------------
appointment of a successor Master Servicer hereunder, the Indenture Trustee
shall give prompt written notice thereof to the Issuer, the Indenture Trustee,
the Enhancer and each Rating Agency.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment. This Agreement may be amended from time to time
---------
by the parties hereto with the consent of the Enhancer; provided, that any
such amendment shall be accompanied by a letter from each Rating Agency to the
effect that the amendment will not result in a Rating Event, determined
without regard to the Policy.
Section 8.02. 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.
Section 8.03. Notices. All demands, notices and communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if personally
delivered or mailed by certified mail, return receipt requested, (a) if to the
Depositor, to ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (b) if to the Master Servicer, to ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq. and ▇▇▇▇▇▇ ▇▇▇▇▇ (with
a copy to the Transferor and to ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇); (c) if to the Transferor, to
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
and ▇▇▇▇▇▇ ▇▇▇▇▇ (with a copy to the Master Servicer and to ▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇); (d) if to the Enhancer, to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇; (e) if to ▇▇▇▇▇'▇, to ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Home Mortgage Loan Monitoring Group; (f)
if to Standard & Poor's, to ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Residential Mortgage Surveillance Group; (g) if to the Owner
Trustee, to ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ Home Equity Loan Trust 1999-2 (with a
copy to each Rating Agency and the Enhancer); (h) if to the Issuer, to c/o
Wilmington Trust Company, as Owner Trustee, ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ Home Equity
Loan Trust 1999-2; (i) if to the Indenture Trustee, to Norwest Center, Sixth
and Marquette, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust
(with a copy to the Indenture Trustee at 11000 Broken Land Parkway, Columbia,
Maryland 21044); and (j) as to each of the foregoing Persons, at such other
address as shall be designated by such Person in a written notice to the other
foregoing Persons.
Section 8.04. Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement, and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Securities or the rights of the Securityholders.
Section 8.05. Third-Party Beneficiaries. This Agreement shall inure to
-------------------------
the benefit of and be binding upon the parties hereto, the Securityholders,
the Owner Trustee, the Enhancer and their respective successors and permitted
assigns. Except as otherwise provided herein, no other Person shall have any
right or obligation hereunder.
Section 8.06. Counterparts.
------------
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all of which shall
together constitute but one and the same instrument.
Section 8.07. Effect of Headings and Table of Contents. The Article and
----------------------------------------
Section headings herein and in the Table of Contents are for convenience of
reference only and shall not affect the construction hereof.
Section 8.08. Termination; Clean-Up Call.
--------------------------
(a) The respective obligations and responsibilities of the parties hereto
shall terminate upon the last action required to be taken by the Issuer
pursuant to the Trust Agreement and by the Indenture Trustee pursuant to the
Indenture, following the earlier of (i) the date on or before which the
Indenture or the Trust Agreement is terminated; or (ii) the purchase by the
Transferor of all Mortgage Loans pursuant to paragraph (b) below.
(b) Subject to the provisions of Paragraph (c) below, the Transferor
shall have the right to purchase the Mortgage Loans assigned to Group I and
any related portion of the Trust Estate on any date on which the aggregate of
the Principal Balances of the Mortgage Loans in Group I is less than 10% of
the aggregate of the Principal Balances of the Mortgage Loans as of the
initial Cut-Off Date plus the initial amount deposited to the Pre-Funding
Account and allocated to Group I (provided that a draw on the Policy would not
occur as a result of such purchase), at a price equal to 100% of the aggregate
unpaid Principal Balance of all such remaining Mortgage Loans, plus accrued
and unpaid interest thereon at the weighted average of the Mortgage Interest
Rates thereon up to the date preceding the Payment Date on which such amounts
are to be distributed to the Securityholders, plus any amounts due and owing
to the Enhancer under the Insurance Agreement and any amounts owed to the
Trustee hereunder or under the Indenture (and any unpaid Servicing Fee shall
be deemed to have been paid at such time) plus any Interest Carry-Forward
Amount and interest owed thereon to the Noteholders. Subject to the provisions
of Paragraph (c) below, the Transferor shall have the right to purchase the
Mortgage Loans assigned to Group II and any related portion of the Trust
Estate on any date on which the aggregate of the Principal Balances of the
Mortgage Loans in Group II is less than 10% of the aggregate of the Principal
Balances of the Mortgage Loans as of the initial Cut-Off Date plus the initial
amount deposited to the Pre-Funding Account and allocated to Group II
(provided that a draw on the Policy would not occur as a result of such
purchase), at a price equal to 100% of the aggregate unpaid Principal Balance
of all such remaining Mortgage Loans, plus accrued and unpaid interest thereon
at the weighted average of the Mortgage Interest Rates thereon up to the date
preceding the Payment Date on which such amounts are to be distributed to the
Securityholders, plus any amounts due and owing to the Enhancer under the
Insurance Agreement and any amounts owed to the Trustee hereunder or under the
Indenture (and any unpaid Servicing Fee shall be deemed to have been paid at
such time) plus any Interest Carry-Forward Amount and interest owed thereon to
the Noteholders. If either such right is exercised by the Transferor, the
Transferor shall deposit the amount calculated above with the Indenture
Trustee for distribution to the Securityholders and, upon the receipt of such
deposit, the Indenture Trustee or the Custodian shall release to the Master
Servicer the related Mortgage Files.
(c) The Master Servicer, at its expense, shall prepare and deliver to the
Indenture Trustee for execution at the time the Mortgage Loans are to be
released to the Transferor, appropriate documents assigning each such Mortgage
Loan from the Indenture Trustee or the Issuer to the Transferor.
Section 8.09. Certain Matters Affecting the Indenture Trustee. For all
-----------------------------------------------
purposes of this Agreement, in the performance of any of its duties or in the
exercise of any of its powers hereunder, the Indenture Trustee shall be
subject to and entitled to the benefits of Article VI of the Indenture.
Section 8.10. Owner Trustee Not Liable for Mortgage Documents or Related
----------------------------------------------------------
Documents. The Owner Trustee makes no representations as to the validity or
---------
sufficiency of this Agreement, any Basic Document, the Securities (other than
the signature of the Owner Trustee on the Certificates), or any Mortgage
Document or Related Document. The Owner Trustee shall at no time have any
responsibility or liability with respect to the sufficiency of the Trust
Estate or its ability to generate the payments to be distributed to the
Securityholders, including the compliance by the Transferor with any
representation or warranty made in any Basic Document or the accuracy of any
such representation or warranty, or any action of the Paying Agent, the
Certificate Paying Agent, the Certificate Registrar or the Indenture Trustee
taken in the name of the Owner Trustee.
Section 8.11. Policy. On or prior to the Closing Date, the Master
------
Servicer shall cause the Enhancer to deliver the Policy to the Indenture
Trustee for the benefit of the Noteholders.
IN WITNESS WHEREOF, the Depositor, the Transferor, the Master Servicer,
the Issuer and the Indenture Trustee have caused this Agreement to be duly
executed by their respective officers or representatives as of the date and
year first above written.
BEAR ▇▇▇▇▇▇▇ ASSET BACKED
SECURITIES, INC.,
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Managing Director
▇▇▇▇▇ FUNDING CORP., as Transferor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇ UNION BANK AND TRUST
COMPANY, as Master Servicer
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
Home Equity Lender
▇▇▇▇▇ HOME EQUITY LOAN TRUST
1999-2, as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:
NORWEST BANK MINNESOTA
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Indenture Trustee
By: /s/ ▇▇▇ ▇▇▇▇
--------------------------------------
Name: ▇▇▇ ▇▇▇▇
Title: Assistant Vice President
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[TO BE PROVIDED UPON REQUEST]
EXHIBIT B
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PREMISES:
That Norwest Bank Minnesota, National Association, as indenture trustee
(the "Indenture Trustee") under the indenture dated as of April 30, 1999 (the
"Indenture"), between ▇▇▇▇▇ Home Equity Loan Trust 1999-2 and the Indenture
Trustee, a national banking association existing under the laws of the United
States of America and having its principal office located at Norwest Center,
Sixth and Marquette, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, hath made, constituted
and appointed, and does by these presents make, constitute and appoint ▇▇▇▇▇
Union Bank and Trust Company ("▇▇▇▇▇"), a bank organized and existing under
the laws of the State of Indiana, as Master Servicer under the Sale and
Servicing Agreement (defined below) and ▇▇▇▇▇ Home Equity Corporation, an
Indiana corporation, as initial subservicer thereunder, its true and lawful
attorney-in-fact, with full power and authority to sign, execute, acknowledge,
deliver, file for recordation and record any instrument on its behalf and to
perform such other act or acts as may be customarily and reasonably necessary
and appropriate to effectuate the following enumerated transactions in respect
of any of the Mortgage Loans or the related Mortgaged Properties, Mortgage
Documents or Related Documents, for which the undersigned is acting as
Indenture Trustee (whether the undersigned is named therein as mortgagee or
beneficiary or has become mortgagee by virtue of endorsement of related
Mortgage Documents) and for which ▇▇▇▇▇ is acting as Master Servicer pursuant
to the sale and servicing agreement dated as of April 30, 1999 (the "Sale and
Servicing Agreement"). Capitalized terms used herein that are not otherwise
defined shall have the meanings ascribed thereto in Appendix A to the
Indenture.
This appointment shall apply to the following enumerated transactions
only:
1. The modification or re-recording of a Mortgage Loan, where such
modification or re-recording is for the purpose of correcting the
Mortgage Loan to conform same to the original intent of the parties
thereto or to correct title errors discovered after such title insurance
was issued and such modification or re-recording, in either instance,
does not adversely affect the Lien of the Mortgage Loan as insured.
2. The subordination of the Lien of a Mortgage Loan to an easement in favor
of a public utility company or a government agency or unit with powers of
eminent domain; this paragraph shall include the execution of partial
satisfactions/releases, partial reconveyances or the execution of
requests to trustees to accomplish the same.
3. With respect to a Mortgage Loan, the foreclosure, the taking of a deed in
lieu of foreclosure, or the completion of judicial or non-judicial
foreclosure or termination, cancellation or rescission of any such
foreclosure, including any and all of the following acts:
a. the substitution of trustee(s) serving under a deed of trust, in
accordance with state law and such deed of trust;
b. statements of breach or non-performance;
c. notices of default;
d. cancellations/rescissions of notices of default and/or notices of
sale;
e. the taking of a deed in lieu of foreclosure; and
f. such other documents and actions as may be necessary under the terms
of the Mortgage Loan or state law to expeditiously complete such
transactions.
4. The conveyance of mortgaged properties to a mortgage insurer, or the
closing of the title to the property to be acquired as real estate owned,
or conveyance of title to real estate owned.
5. The completion of loan assumption agreements.
6. The full satisfaction and/or release of a Mortgage Loan or full
reconveyance upon payment and discharge of all sums secured thereby,
including cancellation of any related Mortgage Documents.
7. The assignment of any Mortgage Loan and the related Mortgage Documents in
connection with the repurchase of such Mortgage Loan.
8. The full assignment of a Mortgage Loan upon payment and discharge of all
sums secured thereby in conjunction with the refinancing thereof
including, without limitation, the endorsement of the related Mortgage
Documents.
9. The subordination of the Lien of a Mortgage Loan, where such
subordination is in connection with any modification pursuant to Section
3.01(b) of the Sale and Servicing Agreement, and the execution of partial
satisfactions or releases in connection with such Section.
10. Any other modification of the terms of a Mortgage Loan (including the
Mortgage Interest Rate thereon) made in accordance with the Sale and
Servicing Agreement.
The undersigned gives such attorneys-in-fact full power and authority to
execute such instruments and to do and perform all and every act and thing
necessary and proper to carry into effect the power or powers granted by or
under this Limited Power of Attorney as fully as the undersigned might or
could do, and does hereby ratify and confirm to all that such attorneys-infact
shall lawfully do or cause to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the
power granted under this Limited Power of Attorney, and may be satisfied that
this Limited Power of Attorney shall continue in full force and effect has not
been revoked unless an instrument of revocation shall have been made in
writing by the undersigned.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Indenture Trustee
By:______________________________
Name:
Title:
STATE OF )
) SS.
COUNTY' OF )
On this __ day of May, 1999, before me personally appeared _________,
personally known to me to be duly authorized officers of Norwest Bank
Minnesota, National Association ("Norwest Bank"), that executed the within
instrument and personally known to me to be the persons who executed the
within instrument on behalf of Norwest Bank therein named, and acknowledged to
me that Norwest Bank executed the within instrument pursuant to its bylaws.
WITNESS my hand and official seal.
-------------------------------------
Notary Public in and for the State of________
After recording, please mail to:
--------------------------------------
--------------------------------------
Attention:______________________________
EXHIBIT C
REQUEST FOR RELEASE OF DOCUMENTS
To: Norwest Bank Minnesota, N.A.
▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Inventory Control
Re: Custodial Agreement dated as of ____________, among __________
and Norwest Bank Minnesota, N.A., as Custodian
In connection with the administration of the Mortgage Loans held by you
as Custodian for the Owner pursuant to the above-captioned Custody Agreement,
we request the release, and hereby acknowledge receipt, of the Custodian's
Mortgage File for the Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number:
--------------------
Mortgagor Name, Address & Zip Code:
----------------------------------
Reason for Requesting Documents (check one):
-------------------------------
_____ 1. Mortgage Paid in Full
_____ 2. Foreclosure
_____ 3. Substitution
_____ 4. Other Liquidation (Repurchased, etc.)
_____ 5. Nonliquidation Reason:____________________________
Address to which Custodian should
Deliver the Custodian's Mortgage File: --------------------------
--------------------------
--------------------------
By:__________________________
(authorized signer)
Issuer: _______________________
Address: _____________________
Date: ________________________
Custodian
---------
Norwest Bank Minnesota, N.A.
Please acknowledge the execution of the above request by your signature and
date below:
------------------------------ ------------------
Signature Date
Documents returned to Custodian:
------------------------------ ------------------
Custodian Date
EXHIBIT D
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Transfer No. __ of Subsequent Mortgage Loans, dated as of ____________,
199__, among ▇▇▇▇▇ Union Bank and Trust Company, a bank organized under the
laws of the State of Indiana ("▇▇▇▇▇ Union Bank"), as Seller (in such
capacity, the "Seller"), ▇▇▇▇▇ Funding Corp., a Delaware corporation, as
Transferor (the "Transferor"), ▇▇▇▇▇ Home Equity Loan Trust 1999-2, as issuer
(the "Issuer"), and Norwest Bank Minnesota, National Association, as indenture
trustee (in such capacity, the "Indenture Trustee").
WITNESSETH:
WHEREAS, the Seller and the Transferor are parties to the Mortgage Loan
Sale Agreement dated as of April 30, 1999 (the "Mortgage Loan Sale
Agreement"), between the Seller and the Transferor;
WHEREAS, the Transferor and Bear ▇▇▇▇▇▇▇ Asset Backed Securities, Inc.
("Bear Steams") are parties to the Purchase and Sale Agreement dated as of
April 30, 1999 (the "Purchase and Sale Agreement"), between Transferor and
Bear ▇▇▇▇▇▇▇;
WHEREAS, the Transferor, ▇▇▇▇▇ Union Bank, the Issuer and the Indenture
Trustee are parties to the sale and servicing agreement dated as of April 30,
1999 (the "Sale and Servicing Agreement"), among the Transferor, ▇▇▇▇▇ Union
Bank, as master servicer (in such capacity, the "Master Servicer"), Bear
▇▇▇▇▇▇▇, as depositor (in such capacity, the "Depositor"), the Issuer and the
Indenture Trustee;
WHEREAS, pursuant to the Sale and Servicing Agreement and the Mortgage
Loan Sale Agreement, the Seller desires to convey certain Subsequent Mortgage
Loans (as hereinafter defined) to the Transferor and the Transferor desires to
convey such Subsequent Mortgage Loans to the Issuer; and
WHEREAS, the Issuer wishes to pledge such Subsequent Mortgage Loans to
the Indenture Trustee pursuant to the Indenture.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Defined Terms. Capitalized terms used herein that are not
-------------
otherwise defined shall have the meanings ascribed thereto in Appendix A to
the indenture dated as of April 30, 1999 (the "Indenture"), between the
Depositor and the Indenture Trustee.
"Agreement" means this Subsequent Transfer Agreement and all amendments
hereof and supplements hereto.
"Subsequent Cutoff Date" means, with respect to the Subsequent Mortgage
Loans conveyed hereby, ________, 199__.
"Subsequent Mortgage Loans" means the Mortgage Loans identified on the
Mortgage Loan Schedule specified in Section 1.02 hereof.
"Subsequent Transfer Date" means, with respect to the Subsequent Mortgage
Loans conveyed hereby, ________, 199__.
Section 2. Mortgage Loan Schedule. Annexed hereto is a supplement to
----------------------
Schedule A to the Sale and Servicing Agreement listing the Subsequent Mortgage
Loans to be conveyed by the Seller to the Transferor, and by the Transferor to
the Trust pursuant to this Agreement on the Subsequent Transfer Date.
Section 3. Conveyance of Subsequent Mortgage Loans by the Seller. Subject
-----------------------------------------------------
to the conditions set forth in Section 7, [in consideration of the
Transferor's delivery to or upon the order of the Seller of an amount equal to
$ ] [as a capital contribution to the Transferor in the amount of $ ] (i.e.,
the aggregate Principal Balance of the Subsequent Mortgage Loans as of the
Subsequent Cutoff Date), the Seller does hereby sell, transfer, assign and
otherwise convey to the Transferor, without recourse (subject to the Seller's
obligations hereunder):
(a) all right, title and interest of the Seller in and to the Subsequent
Mortgage Loans listed on the Mortgage Loan Schedule attached hereto, and all
interest accrued after the Subsequent Cut-Off Date and principal received
relating to the Principal Balances of the Subsequent Mortgage Loans as of the
Subsequent Cut-Off Date, and any Additional Balances relating thereto;
(b) all right, title and interest of the Seller in the Lien on the
Mortgaged Properties created by the related Mortgage Documents;
(c) all right, title and interest of the Seller in any Liquidation
Proceeds and Insurance Proceeds covering the Subsequent Mortgage Loans or the
related Mortgaged Properties or Mortgagors; and
(d) any proceeds of the foregoing and all other assets included or to be
included in the Trust for the benefit of the Securityholders.
Section 4. Conveyance of Subsequent Mortgage Loans by the Transferor.
---------------------------------------------------------
Subject to the conditions set forth in Section 7, in consideration of the
Indenture Trustee's delivery on behalf of the Trust to or upon the order of
the Transferor of an amount equal to $ ____________ (i.e., the aggregate
Principal Balance of the Subsequent Mortgage Loans as of the Subsequent
Cut-Off Date), the Transferor does hereby sell, transfer, assign and otherwise
convey to the Trust, without recourse (subject to the Transferor's obligations
hereunder);
(a) all right, title and interest of the Transferor in and to the
Subsequent Mortgage Loans listed on the Mortgage Loan Schedule attached
hereto, and all interest accrued after the Subsequent Cut-Off Date and
principal received relating to the Principal Balances of the Subsequent
Mortgage Loans as of the Subsequent Cut-Off Date, and any Additional Balances
relating thereto;
(b) all right, title and interest of the Transferor in the Lien on the
Mortgaged Properties created by the related Mortgage Documents; Servicing
Agreement
(c) all right, title and interest of the Transferor in any Liquidation
Proceeds and Insurance Proceeds covering the Subsequent Mortgage Loans or the
related Mortgaged Properties or Mortgagors; and
(d) any proceeds of the foregoing and all other assets included or to be
included in the Trust for the benefit of the Securityholders
Section 5. Representations and Warranties of Seller. The Seller does
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hereby reaffirm the representations and warranties set forth in Section 3.1 of
the Mortgage Loan Sale Agreement for the benefit of the other parties hereto,
and further represents and warrants that the statements set forth in Section
3.2 (excluding subsections (n), (v), (w) and (x) thereof) with respect to the
Initial Mortgage Loans are true with respect to the Subsequent Mortgage Loans;
provided, that references therein to "Closing Date" and "Initial Cut-Off Date"
shall be deemed herein to be "Subsequent Transfer Date" and "Subsequent
Cut-Off Date". Such representations and warranties shall survive the sale,
transfer and assignment of the Subsequent Mortgage Loans to the Trust and the
pledge thereof to the Indenture Trustee.
Section 6. Representations and Warranties of Transferor. The Transferor
--------------------------------------------
does hereby reaffirm the representations and warranties set forth in Section
3.1 of the Purchase and Sale Agreement for the benefit of the Trust and the
Indenture Trustee, and further represents and warrants that the statements set
forth in Section 3.2 (excluding subsections (n), (v), (w) and (x) thereof)
with respect to the Initial Mortgage Loans are true with respect to the
Subsequent Mortgage Loans; provided, that references therein to "Closing Date"
and "Initial Cut-Off Date" shall be deemed herein to be "Subsequent Transfer
Date" and "Subsequent Cut-Off Date". Such representations and warranties shall
survive the sale, transfer and assignment of the Subsequent Mortgage Loans to
the Trust and the pledge thereof to the Indenture Trustee.
Section 7. Conditions Precedent. The obligation of the Trust to acquire
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the Subsequent Mortgage Loans hereunder is subject to the satisfaction, on or
prior to the Subsequent Transfer Date, of the following conditions precedent:
(i) each of the representations and warranties made by the Seller in Section 5
and (ii) each of the representations and warranties made by the Transferor in
Section 6, shall be true and correct as of the date of this Agreement and as
of the Subsequent Transfer Date.
The Indenture Trustee shall not be required to investigate or otherwise
verify satisfaction of the conditions listed above, but shall be entitled to
conclusively rely upon Opinions of Counsel and Officer's Certificates
confirming such fulfillment.
Section 8. Reaffirmation of Agreements. All terms, conditions and
---------------------------
provisions of the Mortgage Loan Sale Agreement are hereby reaffirmed and
incorporated by reference by the Seller and the Transferor as to the
Subsequent Mortgage Loans, and all terms, conditions and provisions of the
Sale and Servicing Agreement are hereby reaffirmed and incorporated by
reference by the Transferor as to the Subsequent Mortgage Loans.
Section 9. Governing Law. This Agreement shall be construed in accordance
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with the laws of the State of New York and the obligations, rights and
remedies of the parties under this Agreement shall be determined in accordance
with such laws; provided, however, the immunities, authority and standard of
care of the Indenture Trustee shall be governed by the jurisdiction in which
its Corporate Trust Office is located.
IN WITNESS WHEREOF, the Seller, the Transferor, the Issuer and the
Indenture Trustee have caused this Agreement to be duly executed and delivered
by their respective duly authorized officers as of the day and the year first
above written.
▇▇▇▇▇ UNION BANK AND TRUST
COMPANY, as Seller
By:_____________________________
Name:
Title:
▇▇▇▇▇ FUNDING CORP., as Transferor
By:______________________________
Name:
Title:
▇▇▇▇▇ HOME EQUITY LOAN TRUST
1999-2, as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By:_______________________________
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Indenture Trustee
By:_______________________________
Name:
Title:
EXHIBIT F
FORM OF INITIAL/INTERIM CERTIFICATION OF
TRUSTEE
▇▇▇▇▇ HOME EQUITY CORPORATION TRUST 1999-2
------------------------------------------
The undersigned, a duly authorized representative of Norwest Bank
Minnesota, National Association, as Indenture Trustee (the "Indenture
Trustee") and pursuant to the Sale and Servicing Agreement dated April 30,
1999, between Bear ▇▇▇▇▇▇▇ Asset Backed Securities, Inc. as Depositor of the
Trust, ▇▇▇▇▇ Union Bank and Trust Company as Master Servicer, ▇▇▇▇▇ Funding
Corp. as Transferor, the ▇▇▇▇▇ Home Equity Loan Trust 1999-2 and Indenture
Trustee, (hereinafter as such agreement may have been, or may from time to
time be, amended, supplemented or otherwise modified, the "Sale and Servicing
Agreement"), does hereby certify as follows:
A. Capitalized terms used in this Certificate have their
respective meanings set forth in the Sale and Servicing Agreement. References
herein to certain subsections are references to the respective subsections of
the Sale and Servicing Agreement.
B. This Certificate is being delivered pursuant to Section
2.04.
C. The Undersigned is a Responsible Officer.
D. This Certificate is being delivered by the date specified in
Section 2.04
E. Pursuant to and in accordance with the limitations set forth
in Section 2.04,the Indenture Trustee hereby certifies and declares that, with
noted exceptions on attached schedule, (I) all documents required to be
delivered pursuant to Section 2.04 are in its possession, (ii) each such
document has been reviewed by it and has not been mutilated, damaged, torn, or
otherwise physically altered (handwritten additions, changes or corrections
shall not constitute physical alteration if initialed by the Mortgagor),
appears regular on its face and relates to such Mortgage Loan.
IN WITNESS WHEREOF, the Indenture Trustee has caused this Certificate to
be duly executed this _____ day of ___________, 19__.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Indenture Trustee
By: --------------------------
Authorized Officer