RESIDENTIAL FUNDING COMPANY, LLC,
as Master Servicer
HOME EQUITY LOAN TRUST 2007-HSA3,
as Issuer
and
LASALLE BANK NATIONAL ASSOCIATION
as Indenture Trustee
SERVICING AGREEMENT
Dated as of May 30, 2007
Home Equity Loans
This Servicing Agreement, dated as of May 30, 2007, among Residential Funding
Company, LLC (the "Master Servicer"), the Home Equity Loan Trust 2007-HSA3 (the "Issuer"),
and LaSalle Bank National Association (the "Indenture Trustee").
W I T N E S S E T H T H A T:
WHEREAS, pursuant to the terms of the Purchase Agreement, Residential Funding
Company, LLC (in its capacity as Seller) will sell to the Depositor the Group I Loans and
Group II Loans together with the Related Documents on the Closing Date and thereafter all
Additional Balances on the Group II Loans created on or after the Cut-off Date (except as
set forth herein);
WHEREAS, the Depositor will sell the Group I Loans and Group II Loans and all
of its rights under the Purchase Agreement to the Issuer, together with the Related
Documents on the Closing Date, and thereafter all Additional Balances on the Group II Loans
created on or after the Cut-off Date (except as set forth herein);
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer will issue
and transfer to or at the direction of the Depositor, the Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer will issue and
transfer to or at the direction of the Depositor, the Notes; and
WHEREAS, pursuant to the terms of this Servicing Agreement, the Master
Servicer will service the Home Equity Loans directly or through one or more Subservicers;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS. For all purposes of this Servicing Agreement, except as
otherwise expressly provided herein or unless the context otherwise requires, capitalized
terms not otherwise defined herein shall have the meanings assigned to such terms in the
Definitions contained in Appendix A to the Indenture dated the date hereof (the
"Indenture"), between the Issuer and LaSalle Bank National Association, as indenture trustee,
which is incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.
Section 1.02 OTHER DEFINITIONAL PROVISIONS. All terms defined in this Servicing Agreement
shall have the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
As used in this Servicing Agreement and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in this Servicing
Agreement or in any such certificate or other document, and accounting terms partly defined
in this Servicing Agreement or in any such certificate or other document, to the extent not
defined, shall have the respective meanings given to them under generally accepted
accounting principles. To the extent that the definitions of accounting terms in this
Servicing Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the definitions
contained in this Servicing Agreement or in any such certificate or other document shall
control.
The words "hereof," "herein," "hereunder" and words of similar import when used in
this Servicing Agreement shall refer to this Servicing Agreement as a whole and not to any
particular provision of this Servicing Agreement; Section and Exhibit references contained
in this Servicing Agreement are references to Sections and Exhibits in or to this Servicing
Agreement unless otherwise specified; the term "including" shall mean "including without
limitation"; and the term "proceeds" shall have the meaning ascribed thereto in the UCC.
The definitions contained in this Servicing Agreement are applicable to the singular
as well as the plural forms of such terms and to the masculine as well as the feminine and
neuter genders of such terms.
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; SERVICING FEE. All calculations of interest hereunder
that are made in respect of the Loan Balance of a Home Equity Loan shall be made in
accordance with the method of calculation set forth in the related Mortgage Note. All
calculations of interest on the Class I Notes (other than the Class A-I-1 Notes) shall be
made on the basis of a 360 day year consisting of twelve 30 day months. All calculations of
interest on the Class A-I-1 Notes and the Class A-II Notes shall be made on the basis of the
actual number of days in an Interest Period and a year assumed to consist of 360 days. The
calculation of the Servicing Fee shall be made on the basis of a 360-day year consisting of
twelve 30-day months. All dollar amounts calculated hereunder shall be rounded to the
nearest ▇▇▇▇▇ with one-half of one ▇▇▇▇▇ being rounded up.
Section 1.04 DETERMINATION OF NOTE RATES. On the second LIBOR Business Day immediately
preceding (i) the Closing Date, in the case of the first Interest Period and (ii) the first
day of each succeeding Interest Period, the Master Servicer shall determine the Note Rates
for such Interest Period and shall inform the Issuer, the Indenture Trustee and the
Depositor at their respective facsimile numbers given to the Master Servicer in writing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01 REPRESENTATIONS AND WARRANTIES REGARDING THE MASTER SERVICER. The Master
Servicer represents and warrants to the Issuer and for the benefit of the Indenture Trustee,
as pledgee of the Home Equity Loans and the Credit Enhancer, as of the Closing Date:
The Master Servicer is a limited liability company duly organized, validly existing
and in good standing under the laws governing its creation and existence, and has the power
to own its assets and to transact the business in which it is currently engaged. The Master
Servicer is duly qualified to do business as a foreign limited liability company and is in
good standing in each jurisdiction in which the character of the business transacted by it
or properties owned or leased by it requires such qualification and in which the failure to
so qualify would have a material adverse effect on the business, properties, assets, or
condition (financial or other) of the Master Servicer;
The Master Servicer has the power and authority to make, execute, deliver and perform
this Servicing Agreement and all of the transactions contemplated under this Servicing
Agreement, and has taken all necessary action to authorize the execution, delivery and
performance of this Servicing Agreement. When executed and delivered, this Servicing
Agreement will constitute the legal, valid and binding obligation of the Master Servicer
enforceable in accordance with its terms, except as enforcement of such terms may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies;
The Master Servicer is not required to obtain the consent of any other Person or any
consent, license, approval or authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Servicing Agreement, except for such
consent, license, approval or authorization, or registration or declaration, as shall have
been obtained or filed, as the case may be;
The execution and delivery of this Servicing Agreement and the performance of the
transactions contemplated hereby by the Master Servicer will not violate any provision of
any existing law or regulation or any order or decree of any court applicable to the Master
Servicer or any provision of the certificate of formation or limited liability company
agreement of the Master Servicer, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Master Servicer is a party or by which
the Master Servicer may be bound;
No litigation or administrative proceeding of or before any court, tribunal or
governmental body is currently pending, or to the knowledge of the Master Servicer
threatened, against the Master Servicer or any of its properties or with respect to this
Servicing Agreement or the Securities which in the opinion of the Master Servicer has a
reasonable likelihood of resulting in a material adverse effect on the transactions
contemplated by this Servicing Agreement; and
The Master Servicer is a member of MERS in good standing, and will comply in all
material respects with the rules and procedures of MERS in connection with the servicing of
the Home Equity Loans that are registered with MERS.
The foregoing representations and warranties shall survive any termination of the
Master Servicer hereunder.
Section 2.02 REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer hereby represents
and warrants to the Master Servicer and for the benefit of the Indenture Trustee, as pledgee
of the Home Equity Loans, and the Credit Enhancer, as of the Closing Date:
The Issuer is a statutory trust duly formed and in good standing under the laws of
the State of Delaware and has full power, authority and legal right to execute and deliver
this Servicing Agreement and to perform its obligations under this Servicing Agreement, and
has taken all necessary action to authorize the execution, delivery and performance by it of
this Servicing Agreement; and
The execution and delivery by the Issuer of this Servicing Agreement and the
performance by the Issuer of its obligations under this Servicing Agreement will not violate
any provision of any law or regulation governing the Issuer or any order, writ, judgment or
decree of any court, arbitrator or governmental authority or agency applicable to the Issuer
or any of its assets. Such execution, delivery and performance will not require the consent
or approval of, the giving of notice to, the filing or registration with, or the taking of
any action, other than such actions that have already been taken, with respect to, any
governmental authority or agency regulating the activities of limited liability companies.
Such execution, delivery, authentication and performance will not conflict with, or result
in a breach or violation of, any mortgage, deed of trust, lease or other agreement or
instrument to which the Issuer is bound.
Section 2.03 ENFORCEMENT OF REPRESENTATIONS AND WARRANTIES. The Master Servicer, on behalf
of the Indenture Trustee, as pledgee of the Home Equity Loans, or the Issuer or the Credit
Enhancer, shall enforce the representations and warranties of the Seller pursuant to the
Purchase Agreement. Upon the discovery by the Seller, the Depositor, the Master Servicer,
the Indenture Trustee, the Credit Enhancer, the Issuer, or the Custodian of a breach of any
of the representations and warranties made in the Purchase Agreement, in respect of any Home
Equity Loan, which materially and adversely affects the interests of the Securityholders or
the Credit Enhancer in that Home Equity Loan, the party discovering such breach shall give
prompt written notice to the other parties (the Custodian being so obligated under a
Custodial Agreement); provided, that in the event of a breach of representation set forth in
Section 3.1(b)(xxv) of the Purchase Agreement, notice shall be given within five days of
discovery and provided further, that failure to provide notice within such five days shall
not affect the Seller's obligation to cure such breach or purchase the related Home Equity
Loan pursuant to the terms of the Purchase Agreement. The Master Servicer shall promptly
notify the Seller of such breach and request that, pursuant to the terms of the Purchase
Agreement, the Seller either (i) cure such breach in all material respects within 45 days
(with respect to a breach of the representations and warranties contained in Section 3.1(a)
of the Purchase Agreement) or 90 days (with respect to a breach of the representations and
warranties contained in Section 3.1(b) and 3.1(c) of the Purchase Agreement) from the date
the Seller was notified of such breach or, in the case of a breach of the representation set
forth in Section 3.1(b)(xxv) of the Purchase Agreement, within 90 days after the discovery
thereof by the Seller, the Depositor, the Master Servicer, the Indenture Trustee, the Credit
Enhancer, the Issuer or the Purchaser or (ii) purchase such Home Equity Loan from the Issuer
at the price, during the time, and in the manner set forth in Section 3.1(d) of the Purchase
Agreement; provided that the Seller shall, subject to compliance with all the conditions set
forth in the Purchase Agreement, have the option to substitute an Eligible Substitute Loan
or Loans for such Home Equity Loan, provided that in the case of the substitution of a Group
I Loan, such substitution occurs within two years following the Closing Date. If the breach
of representation and warranty that gave rise to the obligation to repurchase or substitute
a Home Equity Loan pursuant to Section 3.1 of the Purchase Agreement was the representation
and warranty set forth in clause (b)(viii) or (c)(x) of Section 3.1 of the Purchase
Agreement, then the Master Servicer shall request that the Seller pay to the Trust,
concurrently with and in addition to the remedies provided in the preceding sentence, an
amount equal to any liability, penalty or expense (including reasonable legal fees and
expenses) that was actually incurred and paid out of or on behalf of the Trust, and that
directly resulted from such breach, or if incurred and paid by the Trust thereafter,
concurrently with such payment. In the event that the Seller elects to substitute one or
more Eligible Substitute Loans pursuant to Section 3.1(b) or 3.1(c) of the Purchase
Agreement, the Seller shall deliver to the Custodian on behalf of the Issuer with respect to
such Eligible Substitute Loans, the original Loan Agreement, the Mortgage, and such other
documents and agreements as are required by the Purchase Agreement. Payments due with
respect to Eligible Substitute Loans in the month of substitution shall not be transferred
to the Issuer and will be retained by the Master Servicer and remitted by the Master
Servicer to the Seller on the next succeeding Payment Date provided a payment at least equal
to the applicable Minimum Monthly Payment has been received by the Issuer for such month in
respect of the Home Equity Loan to be removed. The Master Servicer shall amend or cause to
be amended the Group I Loan Schedule or Group II Loan Schedule, as applicable, to reflect
the removal of such Home Equity Loan and the substitution of the Eligible Substitute Loans
and the Master Servicer shall promptly deliver the amended Group I Loan Schedule or Group II
Loan Schedule, as applicable, to the Owner Trustee and the Indenture Trustee.
It is understood and agreed that the obligation of the Seller to cure such breach or
purchase or substitute for such Home Equity Loan as to which such a breach has occurred and
is continuing and to make any additional payments required under the Purchase Agreement in
connection with a breach of the representations and warranties contained in Sections
3.1(b)(viii), or 3.1(c)(x) thereof shall constitute the sole remedy respecting such breach
available to the Issuer and the Indenture Trustee, as pledgee of the Home Equity Loans,
against the Seller. In connection with the purchase of or substitution for any such Home
Equity Loan by the Seller, the Issuer shall assign to the Seller all of its right, title and
interest in respect of the Purchase Agreement applicable to such Home Equity Loan. Upon
receipt of the Repurchase Price, or upon completion of such substitution, the Master
Servicer shall notify the Custodian and the Indenture Trustee and then the Custodian shall
deliver the Mortgage Files to the Master Servicer, together with all relevant endorsements
and assignments prepared by the Master Servicer which the Indenture Trustee shall execute.
If the Master Servicer is Residential Funding Company, LLC, then the Indenture Trustee may,
with the consent of the Credit Enhancer, and at the direction of the Credit Enhancer, shall,
give the notification and require the purchase or substitution provided for in the first
preceding paragraph in the event of such a breach of a representation or warranty made by
Residential Funding Company, LLC in the Purchase Agreement.
ARTICLE III
ADMINISTRATION AND SERVICING OF HOME EQUITY LOANS
Section 3.01 THE MASTER SERVICER.
(a) The Master Servicer shall service and administer the Home Equity Loans in a manner
generally consistent with the terms of the Program Guide and in a manner consistent with the
terms of this Servicing Agreement, following such procedures as it would employ in its good
faith business judgment and which are normal and usual in its general mortgage servicing
activities, and shall have full power and authority, acting alone or through a Subservicer,
to do any and all things which it may deem necessary or desirable in connection with such
servicing and administration, it being understood, however, that the Master Servicer shall
at all times remain responsible to the Issuer and the Indenture Trustee, as pledgee of the
Home Equity Loans, and the Credit Enhancer for the performance of its duties and obligations
hereunder in accordance with the terms hereof and the Program Guide. In addition, the
Master Servicer shall perform the obligations of the Master Servicer and REMIC Administrator
(for so long as the Master Servicer is the REMIC Administrator) set forth in the Indenture
and the Trust Agreement.
Without limiting the generality of the foregoing, the Master Servicer shall continue,
and is hereby authorized and empowered by the Issuer and the Indenture Trustee, as pledgee
of the Home Equity Loans, to execute and deliver, on behalf of itself, the Issuer, the
Indenture Trustee or any of them, any and all instruments of satisfaction or cancellation,
or of partial or full release, or discharge, or of consent to assumption or modification in
connection with a proposed conveyance, or of assignment of any Mortgage and Mortgage Note in
connection with the repurchase of a Home Equity Loan and all other comparable instruments,
or with respect to the modification or re-recording of a Mortgage for the purpose of
correcting the Mortgage, the subordination of the lien, as permitted pursuant to this
Agreement, of the Mortgage in favor of a public utility company or government agency or unit
with powers of eminent domain, the taking of a deed in lieu of foreclosure, the
commencement, prosecution or completion of judicial or non-judicial foreclosure, the
conveyance of a Mortgaged Property to the related insurer, the acquisition of any property
acquired by foreclosure or deed in lieu of foreclosure on behalf of the Trust, the Credit
Enhancer and the Noteholders, or the management, marketing and conveyance of any property
acquired by foreclosure or deed in lieu of foreclosure with respect to the Home Equity Loans
and with respect to the Mortgaged Properties.
The Issuer, the Indenture Trustee and the Custodian, as applicable, shall furnish the
Master Servicer with any powers of attorney and other documents necessary or appropriate to
enable the Master Servicer to carry out its servicing and administrative duties hereunder.
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 connection with
servicing and administering the Home Equity Loans, the Master Servicer and any Affiliate of
the Master Servicer may perform services such as appraisals and brokerage services that are
not customarily provided by servicers of mortgage loans, and shall be entitled to reasonable
compensation therefor in accordance with Section 3.03. In addition, the Master Servicer
may, at its own discretion and on behalf of the Indenture Trustee, obtain credit information
in the form of a Credit Score from a Credit Repository. The Program Guide and any other
Subservicing Agreement entered into between the Master Servicer and any Subservicer shall
require the Subservicer to accurately and fully report its borrower credit files to each of
the Credit Repositories in a timely manner. The Master Servicer is further authorized and
empowered by the Issuer and the Indenture Trustee, on behalf of the Noteholders and the
Indenture Trustee, in its own name or in the name of the Subservicer, when the Master
Servicer or the Subservicer, as the case may be, believes it appropriate in its best
judgment to register any Home Equity Loan on the MERS(R)System, or cause the removal from the
registration of any Home Equity Loan on the MERS(R)System, to execute and deliver, on behalf
of the Indenture Trustee and the Noteholders or any of them, any and all instruments of
assignment and other comparable instruments with respect to such assignment or re-recording
of a Mortgage in the name of MERS, solely as nominee for the Indenture Trustee and its
successors and assigns. Any expenses incurred in connection with the actions described in
the preceding sentence shall be borne by the Master Servicer, with no right of
reimbursement.
Notwithstanding anything in this Servicing Agreement to the contrary, subject to
Section 3.02(a), the Master Servicer shall not permit any modification with respect to any
Group I Loan that would both constitute a sale or exchange of such Group I Loan within the
meaning of Section 1001 of the Internal Revenue Code (the "Code") and any proposed,
temporary or final regulations promulgated thereunder and cause any of REMIC I or REMIC II
to fail to qualify as a REMIC under the Code or, except as provided in Section 11.01(f) of
the Indenture, cause the imposition of a tax upon any of the REMICs (including but not
limited to the tax on prohibited transactions as defined in Section 860F(a)(2) of the Code
and the tax on contributions to a REMIC set forth in Section 860G(d) of the Code).
(b) If the Mortgage relating to a Home Equity Loan did not have a lien senior to the Home
Equity Loan on the related Mortgaged Property as of the Cut-off Date, then the Master
Servicer, in such capacity, may not consent to the placing of a lien senior to that of the
Mortgage on the related Mortgaged Property. If the Mortgage relating to a Group II Loan had
a lien senior to the Group II Loan on the related Mortgaged Property as of the Cut-off Date,
then the Master Servicer, in such capacity, may consent to the refinancing of the prior
senior lien, provided that the following requirements are met:
(i) (A) the Mortgagor's debt-to-income ratio resulting from such refinancing is less than
the original debt-to-income ratio as set forth on the Group I Loan Schedule or Group II Loan
Schedule, as applicable; provided, however, that in no instance shall the resulting Combined
Loan-to-Value Ratio of such Home Equity Loan be higher than that permitted by the Program
Guide; or (B) the resulting Combined Loan-to-Value Ratio of such Group II Loan is no higher
than the Combined Loan-to-Value Ratio prior to such refinancing; provided, however, if such
refinanced mortgage loan is a "rate and term" mortgage loan (meaning, the Mortgagor does not
receive any cash from the refinancing), the Combined Loan-to-Value Ratio may increase to the
extent of either (a) the reasonable closing costs of such refinancing or (b) any decrease in
the value of the related Mortgaged Property, if the Mortgagor is in good standing as defined
by the Program Guide;
(ii) the interest rate, or, in the case of an adjustable rate existing senior lien, the
maximum interest rate, for the loan evidencing the refinanced senior lien is no more than
2.0% higher than the interest rate or the maximum interest rate, as the case may be, on the
loan evidencing the existing senior lien immediately prior to the date of such refinancing;
provided, however, (a) if the loan evidencing the existing senior lien prior to the date of
refinancing has an adjustable rate and the loan evidencing the refinanced senior lien has a
fixed rate, then the current interest rate on the loan evidencing the refinanced senior lien
may be up to 2.0% higher than the then-current loan rate of the loan evidencing the existing
senior lien and (b) if the loan evidencing the existing senior lien prior to the date of
refinancing has a fixed rate and the loan evidencing the refinanced senior lien has an
adjustable rate, then the maximum interest rate on the loan evidencing the refinanced senior
lien shall be less than or equal to (x) the interest rate on the loan evidencing the
existing senior lien prior to the date of refinancing plus (y) 2.0%; and
(iii) the loan evidencing the refinanced senior lien is not subject to negative
amortization.
The Master Servicer may also, without prior approval of the Rating Agencies or the
Credit Enhancer, increase the Credit Limits on the Group II Loans (a "Credit Limit
Increase"), provided that (i) a new appraisal is obtained, (ii) the new Combined
Loan-to-Value Ratio of any such Group II Loan after giving effect to such increase is less
than or equal to the Combined Loan-to-Value Ratio of the Group II Loan as of the Cut-off
Date, (iii) the Master Servicer receives verbal verification of employment of the related
Mortgagor and (iv) the payment history of the related Mortgagor is within the underwriting
parameters of the Program Guide. In addition, the Master Servicer may increase the Credit
Limits on Group II Loans without obtaining new appraisals provided that clauses (iii) and
(iv) of the preceding sentence are satisfied, the Combined Loan-to-Value Ratio of the Group
II Loan following the Credit Limit Increase will be limited to 100% and at no time shall the
aggregate Loan Balance of such Group II Loans exceed 5% of the current Pool Balance;
provided, further, however, that for Group II Loans with original Combined Loan-to-Value
Ratios in excess of 80%, the Combined Loan-to-Value Ratio resulting from such Credit Limit
Increase must be less than or equal to the original Combined Loan-to-Value Ratio and at no
time shall the aggregate Loan Balance of such Group II Loans exceed 5% of the current Pool
Balance for the Group II Loans.
In connection with servicing the Group II Loans, the Master Servicer may take
reasonable actions to encourage or effect the termination of Loan Agreements that have
become dormant.
The relationship of the Master Servicer (and of any successor to the Master Servicer
as servicer under this Servicing Agreement) to the Issuer under this Servicing Agreement is
intended by the parties to be that of an independent contractor and not that of a joint
venturer, partner or agent. The relationship of the Master Servicer (and of any successor
to the Master Servicer as servicer under this Servicing Agreement) to the Indenture Trustee
under this Servicing Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent.
All costs incurred by the Master Servicer or by Subservicers in effecting the timely
payment of taxes and assessments on the properties subject to the Home Equity Loans shall
not, for the purpose of calculating monthly distributions to Certificateholders, be added to
the amount owing under the related Home Equity Loans, notwithstanding that the terms of such
Home Equity Loan so permit, and such costs shall be recoverable to the extent permitted by
Section 3.03.
(c) The Master Servicer may enter into Subservicing Agreements with Subservicers for the
servicing and administration of certain of the Home Equity Loans. Any Subservicing Agreement
that may be entered into and any other transactions or services relating to the Home Equity
Loans involving a Subservicer in its capacity as such and not as an originator shall be
deemed to be between the Subservicer and the Master Servicer alone and the Indenture Trustee
and Securityholders shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer in its capacity as such
except as set forth in Section 7.02. Each Subservicer of a Home Equity Loan shall be
entitled to receive and retain, as provided in the related Subservicing Agreement and in
Section 3.02, the related Subservicing Fee from payments of interest received on such Home
Equity Loan after payment of all amounts required to be remitted to the Master Servicer in
respect of such Home Equity Loan. For any Home Equity Loan that is a nonsubserviced Home
Equity Loan, the Master Servicer shall be entitled to receive and retain an amount equal to
the Subservicing Fee from payments of interest. References in this Servicing Agreement to
actions taken or to be taken by the Master Servicer in servicing the Home Equity 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 Home Equity Loan shall be
deemed to have been received by the Master Servicer whether or not actually received by the
Master Servicer. Each Subservicing Agreement will be upon such terms and conditions as are
not inconsistent with this Servicing Agreement and as the Master Servicer and the
Subservicer have agreed. With the approval of the Master Servicer, a Subservicer may
delegate its servicing obligations to third-party servicers, but such Subservicers will
remain obligated under the related Subservicing Agreements. The Master Servicer and the
Subservicer may enter into amendments to the related Subservicing Agreements; provided,
however, that any such amendments shall not cause the Home Equity Loans to be serviced in a
manner that would be materially inconsistent with the standards set forth in this Servicing
Agreement. The Master Servicer shall be entitled to terminate any Subservicing Agreement in
accordance with the terms and conditions thereof and without any limitation by virtue of
this Servicing Agreement; provided, however, that in the event of termination of any
Subservicing Agreement by the Master Servicer or the Subservicer, the Master Servicer shall
either act as servicer of the related Home Equity Loan or enter into a Subservicing
Agreement with a successor Subservicer which will be bound by the terms of the related
Subservicing Agreement. If the Master Servicer or any Affiliate of Residential Funding acts
as servicer, it will not assume liability for the representations and warranties of the
Subservicer which it replaces. If the Master Servicer enters into a Subservicing Agreement
with a successor Subservicer, the Master Servicer shall use reasonable efforts to have the
successor Subservicer assume liability for the representations and warranties made by the
terminated Subservicer in respect of the related Home Equity Loans and, in the event of any
such assumption by the successor Subservicer, the Master Servicer may, in the exercise of
its business judgment, release the terminated Subservicer from liability for such
representations and warranties.
As part of its servicing activities hereunder, the Master Servicer, for the benefit
of the Securityholders and the Credit Enhancer, shall use reasonable efforts to enforce the
obligations of each Subservicer under the related Subservicing Agreement, to the extent that
the non-performance of any such obligation would have a material adverse effect on a Home
Equity Loan. Such enforcement, including, without limitation, the legal prosecution of
claims, termination of Subservicing Agreements and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such time as the
Master Servicer, in its good faith business judgment, would require were it the owner of the
related Home Equity Loans. The Master Servicer shall pay the costs of such enforcement at
its own expense, and shall be reimbursed therefor only (i) from a general recovery resulting
from such enforcement to the extent, if any, that such recovery exceeds all amounts due in
respect of the related Home Equity Loan or (ii) from a specific recovery of costs, expenses
or attorneys fees against the party against whom such enforcement is directed.
Notwithstanding any Subservicing Agreement, any of the provisions of this Agreement
relating to agreements or arrangements between the Master Servicer or a Subservicer or
reference to actions taken through a Subservicer or otherwise, the Master Servicer shall
remain obligated and liable to the Indenture Trustee, the Credit Enhancer, the Noteholders
and the Certificateholders for the servicing and administering of the Home Equity Loans in
accordance with the provisions of this Section 3.01 without diminution of such obligation or
liability by virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same terms and
conditions as if the Master Servicer alone were servicing and administering the Home Equity
Loans. The Master Servicer shall be entitled to enter into any agreement with a Subservicer
or Program Seller for indemnification of the Master Servicer and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.
In the event the Master Servicer shall for any reason no longer be the master
servicer (including by reason of a Servicing Default), the Indenture Trustee, its designee
or the successor servicer for the Indenture Trustee shall be deemed to have assumed all of
the Master Servicer's interest therein and to have replaced the Master Servicer as a party
to the Subservicing Agreement to the same extent as if the Subservicing Agreement had been
assigned to the assuming party, except that the Master Servicer shall not thereby be
relieved of any liability or obligations under the Subservicing Agreement, nor shall the
Indenture Trustee be responsible for any obligations or liabilities prior to such
replacement. The Indenture Trustee shall not be responsible for any representations and
warranties made by the Master Servicer pursuant to such Subservicing Agreement.
The Master Servicer shall, upon request of the Indenture Trustee but at the expense
of the Master Servicer, deliver to the assuming party all documents and records relating to
each Subservicing Agreement and the Home Equity Loans then being serviced and an accounting
of amounts collected and held by it and otherwise use its best efforts to effect the orderly
and efficient transfer of each Subservicing Agreement to the assuming party.
(d) All other documents contained in the Mortgage File and any original
documents relating to the Home Equity Loans not contained in the Mortgage File or delivered
to the Custodian, if any, or the Indenture Trustee are and shall be held by the Master
Servicer (or an Affiliate of the Master Servicer) in trust as agent for the Indenture
Trustee on behalf of the Noteholders.
Section 3.02 COLLECTION OF CERTAIN HOME EQUITY LOAN PAYMENTS.
(a) The Master Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Home Equity Loans, and shall, to the extent such
procedures shall be consistent with this Servicing Agreement and generally consistent with
the Program Guide, follow such collection procedures as it would employ in its good faith
business judgment and which are normal and usual in its general mortgage servicing
activities. Consistent with the foregoing, and without limiting the generality of the
foregoing, the Master Servicer may in its discretion waive any late payment charge, penalty
interest or other fees which may be collected in the ordinary course of servicing such Home
Equity Loan. The Master Servicer may also extend the Due Date for payment due on a Home
Equity Loan in accordance with the Program Guide, provided, however, that the Master
Servicer shall first determine that any such waiver or extension will not impair the
coverage of any related insurance policy or materially adversely affect the lien of the
related Mortgage (except as described below) or the interests of the Securityholders and the
Credit Enhancer. Notwithstanding anything in this Section to the contrary, the Master
Servicer or any Subservicer shall not enforce any prepayment charge to the extent that such
enforcement would violate any applicable law. Consistent with the terms of this Servicing
Agreement and subject to Section 3.01(a) herein, the Master Servicer may also:
(i) waive, modify or vary any term of any Home Equity Loan (including reduce the Credit
Limit or extend the period during which a Draw may be made by the Mortgagor pursuant to the
Loan Agreement with respect to any Group II Loan);
(ii) consent to the postponement of strict compliance with any such term or in any manner
grant indulgence to any Mortgagor;
(iii) arrange with a Mortgagor a schedule for the payment of principal and interest due and
unpaid;
(iv) forgive any portion of the amounts contractually owed under the Home Equity Loan;
(v) capitalize any past due amounts owed under the Home Equity Loan by adding amounts in
arrearage to the existing Loan Balance of the Home Equity Loan (a "Capitalization Workout"),
provided, however, that the Master Servicer shall not enter into a Capitalization Workout
unless the Combined Loan-to-Value Ratio of the Home Equity Loan prior to the Capitalization
Workout equals or exceeds 80%; and
(vi) reset the due date for the Home Equity Loan, or any combination of the foregoing,
if in the Master Servicer's determination such waiver, modification, postponement or
indulgence, arrangement or other action referred to above is not materially adverse to the
interests of the Securityholders or the Credit Enhancer and is generally consistent with the
Master Servicer's policies with respect to home equity loans similar to Home Equity Loans;
provided, however, that the Master Servicer may not, except in the case of an extension of
the period during which a Draw may be made by the Mortgagor with respect to a Group II Loan,
pursuant to this Section 3.02, modify or permit any Subservicer to modify any Home Equity
Loan, (including without limitation any modification that would change the Loan Rate,
forgive the payment of any principal or interest (unless in connection with the liquidation
of the related Home Equity Loan), capitalize any arrearage for the related Home Equity Loan
or extend the due date of any payment) unless such Home Equity Loan is in default or, in the
judgment of the Master Servicer, such default is reasonably foreseeable. Notwithstanding
the foregoing, the final maturity date of any Home Equity Loan will not be extended beyond
the Final Scheduled Payment Date. The general terms of any waiver, modification,
postponement or indulgence with respect to any of the Home Equity Loans will be included in
the Servicing Certificate, and such Home Equity Loans will not be considered "delinquent"
for the purposes of the Basic Documents so long as the Mortgagor complies with the terms of
such waiver, modification, postponement or indulgence. In addition, if a Group II Loan is in
default or, in the judgment of the Master Servicer, such default is reasonably foreseeable,
the Master Servicer may, through modification, convert such Group II Loan to a fully
amortizing closed-end loan. Notwithstanding the foregoing, with respect to the Group II
Loans, the Master Servicer in its sole discretion (i) may permit the Mortgagor (or may enter
into a modification agreement which will allow the Mortgagor) to make monthly payments, with
respect to any Billing Cycle during the related Draw Period, in a minimum amount that will
be equal to the related finance charge for such Billing Cycle and (ii) may reduce the amount
of the Credit Limit (to an amount no less than the then current Loan Balance of such Group
II Loan) in connection with any refinancing of a senior lien pursuant to Section 3.01(b) of
this Agreement. In connection with any Curtailment of a Home Equity Loan, the Master
Servicer, to the extent not inconsistent with the terms of the Mortgage Note and local law
and practice, may permit the Home Equity Loan to be reamortized such that the Minimum
Monthly Payment is recalculated as an amount that will fully amortize the remaining Loan
Balance thereof by the Final Scheduled Payment Date based on the original Loan Rate;
provided, that such re-amortization of any Group I Loan shall not be permitted if it would
constitute a reissuance of such Group I Loan for federal income tax purposes.
(b) The Master Servicer shall establish a Custodial Account, which shall be an Eligible
Account in which the Master Servicer shall deposit or cause to be deposited any amounts
representing payments and collections in respect of the Home Equity Loans received by it on
or after the Cut-off Date, within one Business Day following receipt thereof, except as
otherwise specifically provided herein, including the following payments and collections
received or made by it (without duplication):
(i) all payments on account of principal, (including Principal
Prepayments made by Mortgagors on the Home Equity Loans or from any REO Proceeds received in
connection with an REO Property for which an REO Disposition has occurred);
(ii) all payments on account of interest at the Adjusted Mortgage
Rate on the Home Equity Loans, or from any REO Proceeds received in connection with an REO
Property for which an REO Disposition has occurred;
(iii) the aggregate Repurchase Price of the Home Equity Loans
purchased by the Master Servicer pursuant to Section 3.15 and amounts received from the
Seller pursuant to Article 3 of the Purchase Agreement in respect of any liability, penalty
or expense that resulted from a breach of the representation and warranty set forth in
Sections 3.01(b)(viii) or 3.01(c)(x) of the Purchase Agreement;
(iv) Net Liquidation Proceeds net of any related Foreclosure Profit;
(v) all proceeds of any Home Equity Loans repurchased by the Seller
pursuant to the Purchase Agreement, and all Substitution Adjustment Amounts required to be
deposited in connection with the substitution of an Eligible Substitute Loan pursuant to the
Purchase Agreement;
(vi) Insurance Proceeds, other than Net Liquidation Proceeds,
resulting from any insurance policy maintained on a Mortgaged Property; and
(vii) amounts required to be paid by the Master Servicer pursuant to
Sections 3.04 and 8.08 and any payments or collections received in the nature of prepayment
charges.
The foregoing requirements respecting deposits to the Custodial Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the Master Servicer
need not deposit in the Custodial Account amounts representing Foreclosure Profits, fees
(including annual fees), assumption charges or late charge penalties payable by Mortgagors
(such amounts to be retained as additional servicing compensation in accordance with Section
3.09 hereof), or amounts received by the Master Servicer for the accounts of Mortgagors for
application towards the payment of taxes, insurance premiums, assessments and similar items.
In the event any amount not required to be deposited in the Custodial Account is so
deposited, the Master Servicer may at any time withdraw such amount from the Custodial
Account, any provision herein to the contrary notwithstanding. The Custodial Account may
contain funds that belong to one or more trusts created for the notes or certificates of
other series and may contain other funds respecting payments on home equity loans or other
mortgage loans belonging to the Master Servicer or serviced or master serviced by it on
behalf of others. Notwithstanding such commingling of funds, the Master Servicer shall keep
records that accurately reflect the funds on deposit in the Custodial Account that have been
identified by it as being attributable to the Home Equity Loans and shall hold all
collections in the Custodial Account to the extent they represent collections on the Home
Equity Loans for the benefit of the Trust, the Securityholders, the Credit Enhancer and the
Indenture Trustee, as their interests may appear. The Master Servicer shall retain all
Foreclosure Profits as additional servicing compensation.
With respect to Insurance Proceeds, Net Liquidation Proceeds, REO Proceeds and the
proceeds of the purchase of any Home Equity Loan received in any calendar month, the Master
Servicer may elect to treat such amounts to be deposited in the Custodial Account for
distribution in accordance with Section 3.05 of the Indenture for distribution on the
Payment Date in the month of receipt, but is not obligated to do so. If the Master Servicer
so elects, such amounts will be deemed to have been received (and any related Liquidation
Loss Amount shall be deemed to have occurred) on the last day of the month prior to the
receipt thereof.
The Master Servicer may cause the institution maintaining the Custodial Account to
invest any funds in the Custodial Account in Permitted Investments (including obligations of
the Master Servicer or any of its Affiliates, if such obligations otherwise qualify as
Permitted Investments), which shall mature not later than the Business Day preceding the
next Payment Date and shall not be sold or disposed of prior to its maturity. Except as
provided above, all income and gain realized from any such investment shall inure to the
benefit of the Master Servicer and shall be subject to its withdrawal or order from time to
time. The amount of any losses incurred in respect of the principal amount of any such
investments shall be deposited in the Custodial Account by the Master Servicer out of its
own funds immediately as realized.
(c) The Master Servicer will require each Subservicer to hold all funds constituting
collections on the Home Equity Loans, pending remittance thereof to the Master Servicer, in
one or more accounts meeting the requirements of an Eligible Account, and invested in
Permitted Investments.
Section 3.03 PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT. The Master Servicer shall,
from time to time as provided herein, make withdrawals from the Custodial Account of amounts
on deposit therein pursuant to Section 3.02 that are attributable to the Home Equity Loans
for the following purposes:
(a) to deposit in the Payment Account, on the Business Day prior to each Payment Date, an
amount equal to the Interest Collections and Principal Collections required to be
distributed on such Payment Date, any payments or collections in the nature of prepayment
charges received during the related Collection Period and any RAHI Premiums received during
the related Collection Period;
(b) prior to either an Amortization Event or the Collection Period during which the
Revolving Period ends, to pay to the Seller, the amount of any Additional Balances as and
when created during the related Collection Period, provided, that the aggregate amount so
paid to the Seller in respect of Additional Balances at any time during any Collection
Period shall not exceed the amount of Principal Collections theretofore received for such
Collection Period;
(c) to the extent deposited to the Custodial Account, to reimburse itself
or the related Subservicer for previously unreimbursed expenses incurred in maintaining
individual insurance policies pursuant to Section 3.04, or Liquidation Expenses paid
pursuant to Section 3.07 or otherwise reimbursable pursuant to the terms of this Servicing
Agreement (to the extent not payable pursuant to Section 3.09), such withdrawal right being
limited to amounts received on particular Home Equity Loans (other than any Repurchase Price
in respect thereof) which represent late recoveries of the payments for which such advances
were made, or from related Liquidation Proceeds or the proceeds of the purchase of such Home
Equity Loan;
(d) to pay to any Subservicer any Subservicing Fees not previously withheld
by the Subservicer;
(e) to the extent deposited in the Custodial Account to pay to itself as
additional servicing compensation any interest or investment income earned on funds
deposited in the Custodial Account and Payment Account that it is entitled to withdraw
pursuant to Sections 3.02(b) and 5.01;
(f) to the extent deposited in the Custodial Account, to pay to itself as additional
servicing compensation any Foreclosure Profits (to the extent permitted by law);
(g) to pay to itself, a Subservicer or the Seller, or any other appropriate
person, as the case may be, with respect to any Home Equity Loan or property acquired in
respect thereof that has been purchased or otherwise transferred to the Seller, the Master
Servicer or other entity, all amounts received thereon and not required to be distributed to
Securityholders as of the date on which the related Purchase Price or Repurchase Price is
determined;
(h) to withdraw any other amount deposited in the Custodial Account that
was not required to be deposited therein pursuant to Section 3.02;
(i) after the occurrence of an Amortization Event, to pay to the Seller,
the Excluded Amount for each Group II Loan; and
(j) to reimburse itself for amounts expended by it (a) pursuant to Section
3.06 in good faith in connection with the restoration of property damaged by an Uninsured
Cause, and (b) in connection with the liquidation of a Home Equity Loan or disposition of an
REO Property to the extent not otherwise reimbursed pursuant to clause (c) above; and
(k) to reimburse itself or the REMIC Administrator for expenses incurred by
and reimbursable to it or the REMIC Administrator pursuant to Sections 3.07, 6.03 or any
other applicable sections of this Agreement or Section 11.01 of the Indenture.
Since, in connection with withdrawals pursuant to clauses (c), (d), (f) and (g), the Master
Servicer's entitlement thereto is limited to collections or other recoveries on the related
Home Equity Loan, the Master Servicer shall keep and maintain separate accounting, on a Home
Equity Loan by Home Equity Loan basis, for the purpose of justifying any withdrawal from the
Custodial Account pursuant to such clauses. Notwithstanding any other provision of this
Servicing Agreement, the Master Servicer shall be entitled to reimburse itself for any
previously unreimbursed expenses incurred pursuant to Section 3.07 or otherwise reimbursable
pursuant to the terms of this Servicing Agreement that the Master Servicer determines to be
otherwise nonrecoverable (except with respect to any Home Equity Loan as to which the
Repurchase Price has been paid), by withdrawal from the Custodial Account of amounts on
deposit therein attributable to the Home Equity Loans on any Business Day prior to the
Payment Date succeeding the date of such determination.
Section 3.04 MAINTENANCE OF HAZARD INSURANCE; PROPERTY PROTECTION EXPENSES.
(a) The Master Servicer shall cause to be maintained for each Home Equity
Loan hazard insurance naming the Master Servicer or related Subservicer as loss payee
thereunder providing extended coverage in an amount which is at least equal to the lesser of
(i) the maximum insurable value of the improvements securing such Home Equity Loan from time
to time or (ii) the combined Loan Balance owing on such Home Equity Loan and any mortgage
loan senior to such Home Equity Loan from time to time; provided, however, that such
coverage may not be less than the minimum amount required to fully compensate for any loss
or damage on a replacement cost basis. The Master Servicer shall also cause to be
maintained on property acquired upon foreclosure, or deed in lieu of foreclosure, of any
Home Equity Loan, fire insurance with extended coverage in an amount which is 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 the related
Mortgaged Property or property thus acquired or amounts released to the Mortgagor in
accordance with the Master Servicer's normal servicing procedures) shall be deposited in the
Custodial Account to the extent called for by Section 3.02. In cases in which any Mortgaged
Property is located at any time during the life of a Home Equity Loan in a federally
designated flood area, the hazard insurance to be maintained for the related Home Equity
Loan shall include flood insurance (to the extent available). All such flood insurance
shall be in amounts equal to the lesser of (i) the amount required to compensate for any
loss or damage to the Mortgaged Property on a replacement cost basis and (ii) the maximum
amount of such insurance available for the related Mortgaged Property under the national
flood insurance program (assuming that the area in which such Mortgaged Property is located
is participating in such program). The Master Servicer shall be under no obligation to
require that any Mortgagor maintain earthquake or other additional insurance and shall be
under no obligation itself to maintain any such additional insurance on property acquired in
respect of a Home Equity Loan, other than pursuant to such applicable laws and regulations
as shall at any time be in force and as shall require such additional insurance.
If the Master Servicer shall obtain and maintain a blanket policy consistent with its
general mortgage servicing activities insuring against hazard losses on all of the Home
Equity Loans, it shall conclusively be deemed to have satisfied its obligations as set forth
in the first sentence of this Section 3.04, it being understood and agreed that such policy
may contain a deductible clause, in which case the Master Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy complying
with the first sentence of this Section 3.04 and there shall have been a loss which would
have been covered by such policy, deposit in the Custodial Account the amount not otherwise
payable under the blanket policy because of such deductible clause. Any such deposit by the
Master Servicer shall be made on the last Business Day of the Collection Period in the month
in which payments under any such policy would have been deposited in the Custodial Account.
In connection with its activities as servicer of the Home Equity Loans, the Master Servicer
agrees to present, on behalf of itself, the Issuer and the Indenture Trustee, claims under
any such blanket policy.
Section 3.05 ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AND MODIFICATION AGREEMENTS;
RELEASE OR SUBSTITUTION OF LIEN. (a)When any Mortgaged Property is conveyed by the
Mortgagor, the Master Servicer or Subservicer, to the extent it has knowledge of such
conveyance, shall enforce any due-on-sale clause contained in any Mortgage Note or Mortgage,
to the extent permitted under applicable law and governmental regulations, but only to the
extent that such enforcement will not adversely affect or jeopardize coverage under any
Required Insurance Policy or otherwise adversely affect the interests of the
Certificateholders or the Credit Enhancer. Notwithstanding the foregoing:
(i) the Master Servicer shall not be deemed to be in default under this
Section 3.05(a) by reason of any transfer or assumption which the Master Servicer is
restricted by law from preventing; and
(ii) if the Master Servicer determines that it is reasonably likely that any
Mortgagor will bring, or if any Mortgagor does bring, legal action to declare invalid
or otherwise avoid enforcement of a due-on-sale clause contained in any Mortgage Note
or Mortgage, the Master Servicer shall not be required to enforce the due-on-sale
clause or to contest such action.
(b) Subject to the Master Servicer's duty to enforce any due-on-sale clause
to the extent set forth in Section 3.05(a), the Master Servicer or the related Subservicer,
as the case may be, shall be entitled to (A) execute assumption agreements, substitution
agreements, and instruments of satisfaction or cancellation or of partial or full release or
discharge, or any other document contemplated by this Servicing Agreement and other
comparable instruments with respect to the Home Equity Loans and with respect to the
Mortgaged Properties subject to the Mortgages (and the Issuer and the Indenture Trustee each
shall promptly execute any such documents on request of the Master Servicer) and (B) approve
the granting of an easement thereon in favor of another Person, any alteration or demolition
of the related Mortgaged Property or other similar matters, if it has determined, exercising
its good faith business judgment in the same manner as it would if it were the owner of the
related Home Equity Loan, that the security for, and the timely and full collectability of,
such Home Equity Loan would not be adversely affected thereby, and that each of REMIC I and
REMIC II would continue to qualify as a REMIC under the Code as a result thereof and that no
tax on "prohibited transactions" or "contributions" after the startup day would be imposed
on any of REMIC I or REMIC II as a result thereof. A partial release pursuant to this
Section 3.05 shall be permitted only if the Combined Loan-to-Value Ratio for such Home
Equity Loan after such partial release does not exceed the Combined Loan-to-Value Ratio for
such Home Equity Loan as of the Cut-off Date, and provided further that, in the case of a
Group I Loan, the Master Servicer, the Indenture Trustee and the Credit Enhancer have
received an Opinion of Counsel to the effect that such partial release will not result in an
Adverse REMIC Event. Any fee collected by the Master Servicer or the related Subservicer
for processing such request will be retained by the Master Servicer or such Subservicer as
additional servicing compensation.
(c) The Master Servicer may enter into an agreement with a Mortgagor to
release the lien on the Mortgaged Property relating to a Group II Loan (the "Existing
Lien"), if at the time of such agreement the Group II Loan is current in payment of principal
and interest, under any of the following circumstances:
(i) in any case in which, simultaneously with the release of the Existing Lien, the
Mortgagor executes and delivers to the Master Servicer a Mortgage on a substitute Mortgaged
Property, provided that the Combined Loan-to-Value Ratio of the Group II Loan (calculated
based on the Appraised Value of the substitute Mortgaged Property) is not greater than the
Combined Loan-to-Value Ratio prior to releasing the Existing Lien;
(ii) in any case in which, simultaneously with the release of the Existing Lien, the
Mortgagor executes and delivers to the Master Servicer a Mortgage on a substitute Mortgaged
Property, provided that: (A) the Combined Loan-to-Value Ratio of the Group II Loan
(calculated based on the Appraised Value of the substitute Mortgaged Property) is not
greater than the lesser of (1) 100% and (2) 105% of the Combined Loan-to-Value Ratio prior
to releasing the Existing Lien; and (B) the Master Servicer determines that at least two
appropriate compensating factors are present (compensating factors may include, without
limitation, an increase in the Mortgagor's monthly cash flow after debt service, the
Mortgagor's debt-to-income ratio has not increased since origination, or an increase in the
Mortgagor's credit score); or
(iii) in any case in which, at the time of release of the Existing Lien, the Mortgagor does
not provide the Master Servicer with a Mortgage on a substitute Mortgaged Property (any
Group II Loan that becomes and remains unsecured in accordance with this subsection, an
"Unsecured Loan"), provided that: (A) the current Combined Loan-to-Value Ratio is greater
than or equal to 85%; (B) the Master Servicer shall not permit the release of an Existing
Lien under this clause (iii) as to more than 100 Group II Loans in any calendar year; (C) at
no time shall the aggregate Loan Balance of Unsecured Loans exceed 2.5% of the then Pool
Balance; (D) the Mortgagor agrees to an automatic debit payment plan; and (E) the Master
Servicer shall provide notice to each Rating Agency that has requested notice of such
releases.
In connection with any Unsecured Loan, the Master Servicer may require the Mortgagor
to enter into an agreement under which: (i) the Loan Rate may be increased effective until a
substitute Mortgage meeting the criteria under (i) or (ii) above is provided; or (ii) any
other provision may be made which the Master Servicer considers to be appropriate.
Thereafter, the Master Servicer shall determine in its discretion whether to accept any
proposed Mortgage on any substitute Mortgaged Property as security for the Group II Loan,
and the Master Servicer may require the Mortgagor to agree to any further conditions which
the Master Servicer considers appropriate in connection with such substitution, which may
include a reduction of the Loan Rate (but not below the Loan Rate in effect at the Closing
Date). Any Group II Loan as to which a Mortgage on a substitute Mortgaged Property is
provided in accordance with the preceding sentence shall no longer be deemed to be an
Unsecured Loan.
(d) Subject to any other applicable terms and conditions of this Agreement,
the Master Servicer shall be entitled to approve an assignment in lieu of satisfaction with
respect to any Home Equity Loan, provided the obligee with respect to such Home Equity Loan
following such proposed assignment provides the Master Servicer with a "Lender Certification
for Assignment of Home Equity Loan" in the form attached hereto as Exhibit D, in form and
substance satisfactory to the Indenture Trustee and Master Servicer, providing the
following: (i) that the Home Equity Loan is secured by Mortgaged Property located in a
jurisdiction in which an assignment in lieu of satisfaction is required to preserve lien
priority, minimize or avoid mortgage recording taxes or otherwise comply with, or facilitate
a refinancing under, the laws of such jurisdiction; (ii) that the substance of the
assignment is, and is intended to be, a refinancing of such Home Equity Loan and that the
form of the transaction is solely to comply with, or facilitate the transaction under, such
local laws; (iii) that the Home Equity Loan following the proposed assignment will have a
rate of interest at least 0.25 percent below or above the rate of interest on such Home
Equity Loan prior to such proposed assignment; and (iv) that such assignment is at the
request of the borrower under the related Home Equity Loan. Upon approval of an assignment
in lieu of satisfaction with respect to any Home Equity Loan, the Master Servicer shall
receive cash in an amount equal to the unpaid Loan Balance of and accrued interest on such
Home Equity Loan and the Master Servicer shall treat such amount as a Principal Prepayment
in Full with respect to such Home Equity Loan for all purposes hereof.
Section 3.06 TRUST ESTATE; RELATED DOCUMENTS (a) When required by the provisions of
this Servicing Agreement, the Issuer or the Indenture Trustee shall execute instruments to
release property from the terms of the Trust Agreement, Indenture or Custodial Agreement, as
applicable, or convey the Issuer's or the Indenture Trustee's interest in the same, in a
manner and under circumstances which are not inconsistent with the provisions of this
Servicing Agreement. No party relying upon an instrument executed by the Issuer or the
Indenture Trustee as provided in this Section 3.06 shall be bound to ascertain the Issuer's
or the Indenture Trustee's authority, inquire into the satisfaction of any conditions
precedent or see to the application of any moneys.
(b) If from time to time the Master Servicer shall deliver to the Custodian
copies of any written assurance, assumption agreement or substitution agreement or other
similar agreement pursuant to Section 3.05, the Custodian shall check that each of such
documents purports to be an original executed copy (or a copy of the original executed
document if the original executed copy has been submitted for recording and has not yet been
returned) and, if so, shall file such documents, and upon receipt of the original executed
copy from the applicable recording office or receipt of a copy thereof certified by the
applicable recording office shall file such originals or certified copies with the Related
Documents. If any such documents submitted by the Master Servicer do not meet the above
qualifications, such documents shall promptly be returned by the Custodian to the Master
Servicer, with a direction to the Master Servicer to forward the correct documentation.
(c) Upon receipt of a Request for Release from the Master Servicer,
substantially in the form of Exhibit C to the effect that a Home Equity Loan has been the
subject of a final payment or a prepayment in full and the related Home Equity Loan has been
terminated or that substantially all Liquidation Proceeds which have been determined by the
Master Servicer in its reasonable judgment to be finally recoverable have been recovered,
and upon deposit to the Custodial Account of such final monthly payment, prepayment in full
together with accrued and unpaid interest to the date of such payment with respect to such
Home Equity Loan or, if applicable, Liquidation Proceeds, the Custodian shall promptly
release the Related Documents to the Master Servicer, which the Indenture Trustee shall
execute, along with such documents as the Master Servicer or the Mortgagor may request to
evidence satisfaction and discharge of such Home Equity Loan, upon request of the Master
Servicer. If from time to time and as appropriate for the servicing or foreclosure of any
Home Equity Loan, the Master Servicer requests the Custodian to release the Related
Documents and delivers to the Custodian a trust receipt reasonably satisfactory to the
Custodian and signed by a Responsible Officer of the Master Servicer, the Custodian shall
release the Related Documents to the Master Servicer. If such Home Equity Loans shall be
liquidated and the Custodian receives a certificate from the Master Servicer as provided
above, then, upon request of the Master Servicer, the Custodian shall release the trust
receipt to the Master Servicer.
Section 3.07 REALIZATION UPON DEFAULTED HOME EQUITY LOANS; LOSS MITIGATION. With respect
to such of the Home Equity Loans as come into and continue in default, the Master Servicer
will decide whether to (i) foreclose upon the Mortgaged Properties securing such Home Equity
Loans, (ii) write off the unpaid Loan Balance of the Home Equity Loans as bad debt, (iii)
take a deed in lieu of foreclosure, (iv) accept a short sale (a payoff of the Home Equity
Loan for an amount less than the total amount contractually owed in order to facilitate a
sale of the Mortgaged Property by the Mortgagor) or permit a short refinancing (a payoff of
the Home Equity Loan for an amount less than the total amount contractually owed in order to
facilitate refinancing transactions by the Mortgagor not involving a sale of the Mortgaged
Property), (v) arrange for a repayment plan, (vi) agree to a modification in accordance with
this Servicing Agreement, or (vii) in the case of a Group II Loan, take an unsecured note,
in connection with a negotiated release of the lien of the Mortgage in order to facilitate a
settlement with the Mortgagor; in each case subject to the rights of any related first lien
holder; provided that in connection with the foregoing if the Master Servicer has actual
knowledge that any Mortgaged Property is affected by hazardous or toxic wastes or substances
and that the acquisition of such Mortgaged Property would not be commercially reasonable,
then the Master Servicer will not cause the Issuer or the Indenture Trustee to acquire title
to such Mortgaged Property in a foreclosure or similar proceeding. In connection with such
decision, the Master Servicer shall follow such practices (including, in the case of any
default on a related senior mortgage loan, the advancing of funds to correct such default if
deemed to be appropriate by the Master Servicer) and procedures as it shall deem necessary
or advisable and as shall be normal and usual in its general mortgage servicing activities
and as shall be required or permitted by the Program Guide; provided that the Master
Servicer shall not be liable in any respect hereunder if the Master Servicer is acting in
connection with any such foreclosure or attempted foreclosure which is not completed or
other conversion in a manner that is consistent with the provisions of this Servicing
Agreement. The foregoing is subject to the proviso that the Master Servicer shall not be
required to expend its own funds in connection with any foreclosure or attempted foreclosure
which is not completed or towards the correction of any default on a related senior mortgage
loan or restoration of any property unless it shall determine that such expenditure will
increase Net Liquidation Proceeds. In the event of a determination by the Master Servicer
that any such expenditure previously made pursuant to this Section 3.07 will not be
reimbursable from Net Liquidation Proceeds, the Master Servicer shall be entitled to
reimbursement of its funds so expended pursuant to Section 3.03.
In addition, the Master Servicer may pursue any remedies that may be available
in connection with a breach of a representation and warranty with respect to any such Home
Equity Loan in accordance with Section 2.03. However, the Master Servicer is not required
to continue to pursue both foreclosure (or similar remedies) with respect to the Home Equity
Loans and remedies in connection with a breach of a representation and warranty if the
Master Servicer determines in its reasonable discretion that one such remedy is more likely
to result in a greater recovery as to the Home Equity Loan. Upon the occurrence of a Cash
Liquidation or REO Disposition, following the deposit in the Custodial Account of all
Insurance Proceeds, Liquidation Proceeds and other payments and recoveries referred to in
the definition of "Cash Liquidation" or "REO Disposition," as applicable, upon receipt by
the Indenture Trustee of written notification of such deposit signed by a Servicing Officer,
the Indenture Trustee or the Custodian, as the case may be, shall release to the Master
Servicer the related Mortgage File and the Indenture Trustee shall execute and deliver such
instruments of transfer or assignment prepared by the Master Servicer, in each case without
recourse, representation or warranty as shall be necessary to vest in the Master Servicer or
its designee, as the case may be, the related Home Equity Loan, and thereafter such Home
Equity Loan shall not be part of the Trust. Notwithstanding the foregoing or any other
provision of this Agreement, in the Master Servicer's sole discretion with respect to any
defaulted Home Equity Loan or REO Property as to either of the following provisions, (i) a
Cash Liquidation or REO Disposition may be deemed to have occurred if substantially all
amounts expected by the Master Servicer to be received in connection with the related
defaulted Home Equity Loan or REO Property have been received; provided, however, a Cash
Liquidation or REO Disposition shall be deemed to have occurred with respect to any Group I
Loan or Group II Loan that is 180 days or more delinquent as of the end of the related
Collection Period; provided further, however, any subsequent collections with respect to any
such Group I Loan or Group II Loan shall be deposited to the Custodial Account, and (ii) for
purposes of determining the amount of any Liquidation Proceeds, Insurance Proceeds, REO
Proceeds or any other unscheduled collections or the amount of any Liquidation Loss Amount,
the Master Servicer may take into account minimal amounts of additional receipts expected to
be received or any estimated additional liquidation expenses expected to be incurred in
connection with the related defaulted Group I Loan or Group II Loan or REO Property.
In the event that title to any Mortgaged Property is acquired in foreclosure by the
Trust or by deed in lieu of foreclosure, the deed or certificate of sale shall be issued in
the name of the Indenture Trustee or a nominee thereof, who shall hold the same on behalf of
the Issuer in accordance with Section 3.13 of the Indenture. Notwithstanding any such
acquisition of title and cancellation of the related Home Equity Loan, such Mortgaged
Property shall (except as otherwise expressly provided herein) be considered to be an
outstanding Home Equity Loan held as an asset of the Issuer until such time as such 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 Home Equity Loan it
shall be assumed that, notwithstanding that the indebtedness evidenced by the related Loan
Agreement shall have been discharged, such Loan Agreement 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.
In the event that the Trust acquires any REO Property as aforesaid or otherwise in
connection with a default or imminent default on a Group I Loan, the Master Servicer on
behalf the Trust shall dispose of such REO Property as soon as practicable, giving due
consideration to the interests of the Noteholders and the Certificateholders, but in all
cases within three full years after the taxable year of its acquisition by the Trust for
purposes of Section 860G(a)(8) of the Code (or such shorter period as may be necessary under
applicable state (including any state in which such property is located) law to maintain the
status of any of REMIC I or REMIC II as a REMIC under applicable state law and avoid taxes
resulting from such property failing to be foreclosure property under applicable state law)
or, at the expense of the Trust, request, more than 60 days before the day on which such
grace period would otherwise expire, an extension of such grace period unless the Master
Servicer obtains for the Indenture Trustee and the Credit Enhancer an Opinion of Counsel,
addressed to the Indenture Trustee, the Credit Enhancer and the Master Servicer, to the
effect that the holding by the Trust of such REO Property subsequent to such period will not
result in the imposition of taxes on "prohibited transactions" as defined in Section 860F of
the Code or cause REMIC I or REMIC II to fail to qualify as a REMIC (for federal (or any
applicable State or local) income tax purposes) at any time that any Certificates are
outstanding, in which case the Trust may continue to hold such REO Property (subject to any
conditions contained in such Opinion of Counsel). The Master Servicer shall be entitled to
be reimbursed from the Custodial Account for any costs incurred in obtaining such Opinion of
Counsel, as provided in Section 3.03. Notwithstanding any other provision of this
Agreement, no REO Property acquired by the Trust shall be rented (or allowed to continue to
be rented) or otherwise used by or on behalf of the Trust in such a manner or pursuant to
any terms that would (i) cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or (ii) subject REMIC I or
REMIC II to the imposition of any federal income taxes on the income earned from such REO
Property, including any taxes imposed by reason of Section 860G(c) of the Code, unless the
Master Servicer has agreed to indemnify and hold harmless the Trust with respect to the
imposition of any such taxes.
Any proceeds from the purchase or repurchase of any Home Equity Loan, that occur
before such Home Equity Loan is deemed liquidated, pursuant to the terms of this Servicing
Agreement (including without limitation Sections 2.03, 3.15 and 3.16) will be applied in the
following order of priority: first, to the Master Servicer or the related Subservicer, all
Servicing Fees payable therefrom to the Payment Date on which such amounts are to be
deposited in the Payment Account; second, as Interest Collections, accrued and unpaid
interest on the related Home Equity Loan, at the Net Loan Rate to the Payment Date on which
such amounts are to be deposited in the Payment Account; and third, as Principal
Collections, as a recovery of principal on the Home Equity Loan.
Liquidation Proceeds with respect to a Liquidated Home Equity Loan will be applied in
the following order of priority: first, to reimburse the Master Servicer or the related
Subservicer in accordance with this Section 3.07 for any Liquidation Expenses; second, to
the Master Servicer or the related Subservicer, all unpaid Servicing Fees through the date
of receipt of the final Liquidation Proceeds; third, as Principal Collections, as a recovery
of principal on the Home Equity Loan, up to an amount equal to the Loan Balance of the
related Home Equity Loan immediately prior to the date it became a Liquidated Home Equity
Loan; fourth, as Interest Collections, accrued and unpaid interest on the related Home
Equity Loan at the Net Loan Rate through the date of receipt of the final Liquidation
Proceeds; and fifth, to Foreclosure Profits.
Proceeds and other recoveries from a Home Equity Loan after it becomes a Liquidated
Home Equity Loan will be applied in the following order of priority: first, to reimburse the
Master Servicer or the related Subservicer in accordance with this Section 3.07 for any
expenses previously unreimbursed from Liquidation Proceeds or otherwise; second, to the
Master Servicer or the related Subservicer, all unpaid Servicing Fees payable thereto
through the date of receipt of the proceeds previously unreimbursed from Liquidation
Proceeds or otherwise; third, as Interest Collections, up to an amount equal to the sum of
(a) the Loan Balance of the related Home Equity Loan immediately prior to the date it became
a Liquidated Home Equity Loan, less any Net Liquidation Proceeds previously received with
respect to such Home Equity Loan and applied as a recovery of principal, and (b) accrued and
unpaid interest on the related Home Equity Loan at the Net Loan Rate through the date of
deemed liquidation; and fourth, to Foreclosure Profits.
In the event of a default on a Home Equity Loan one or more of whose obligors is a
Non-United States Person, in connection with any foreclosure or acquisition of a deed in
lieu of foreclosure (together, "foreclosure") in respect of such Home Equity Loan, the
Master Servicer will cause compliance with the provisions of Treasury Regulation Section
1.1445-2(d)(3) (or any successor thereto) necessary to assure that no withholding tax
obligation arises with respect to the proceeds of such foreclosure except to the extent, if
any, that proceeds of such foreclosure are required to be remitted to the obligors on such
Home Equity Loan.
Section 3.08 ISSUER AND INDENTURE TRUSTEE TO COOPERATE. On or before each Payment Date,
the Master Servicer will notify the Indenture Trustee or the Custodian, with a copy to the
Issuer, of the termination of or the payment in full and the termination of any Home Equity
Loan during the preceding Collection Period. Upon receipt of payment in full, the Master
Servicer is authorized to execute, pursuant to the authorization contained in Section 3.01,
if the assignments of Mortgage have been recorded to the extent required under the Purchase
Agreement, an instrument of satisfaction regarding the related Mortgage, which instrument of
satisfaction shall be recorded by the Master Servicer if required by applicable law and be
delivered to the Person entitled thereto and cause the removal from the registration of the
MERS(R)System of such Mortgage. It is understood and agreed that any expenses incurred in
connection with such instrument of satisfaction or transfer shall be reimbursed from amounts
deposited in the Custodial Account. From time to time and as appropriate for the servicing
or foreclosure of any Home Equity Loan, the Indenture Trustee or the Custodian shall, upon
request of the Master Servicer and delivery to the Indenture Trustee or Custodian, with a
copy to the Issuer, of a Request for Release, in the form annexed hereto as Exhibit C,
signed by a Servicing Officer, release or cause to be released the related Mortgage File to
the Master Servicer and the Issuer or Indenture Trustee shall promptly execute such
documents, in the forms provided by the Master Servicer, as shall be necessary for the
prosecution of any such proceedings or the taking of other servicing actions. Such trust
receipt shall obligate the Master Servicer to return the Mortgage File to the Indenture
Trustee or the Custodian (as specified in such receipt) when the need therefor by the Master
Servicer no longer exists unless the Home Equity Loan shall be liquidated, in which case,
upon receipt of a certificate of a Servicing Officer similar to that hereinabove specified,
the trust receipt shall be released to the Master Servicer.
In order to facilitate the foreclosure of the Mortgage securing any Home Equity Loan
that is in default following recordation of the assignments of Mortgage in accordance with
the provisions of the Purchase Agreement, the Indenture Trustee or the Issuer shall, if so
requested in writing by the Master Servicer, promptly execute an appropriate assignment in
the form provided by the Master Servicer to assign such Home Equity Loan for the purpose of
collection to the Master Servicer (any such assignment shall unambiguously indicate that the
assignment is for the purpose of collection only), and, upon such assignment, such assignee
for collection will thereupon bring all required actions in its own name and otherwise
enforce the terms of the Home Equity Loan and deposit or credit the Net Liquidation
Proceeds, exclusive of Foreclosure Profits, received with respect thereto in the Custodial
Account. In the event that all delinquent payments due under any such Home Equity Loan are
paid by the Mortgagor and any other defaults are cured, then the assignee for collection
shall promptly reassign such Home Equity Loan to the Indenture Trustee and return all
Related Documents to the place where the related Mortgage File was being maintained.
In connection with the Issuer's obligation to cooperate as provided in this Section
3.08 and all other provisions of this Servicing Agreement requiring the Issuer to authorize
or permit any actions to be taken with respect to the Home Equity Loans, the Indenture
Trustee, as pledgee of the Home Equity Loans and as assignee of record of the Home Equity
Loans on behalf of the Issuer pursuant to Section 3.13 of the Indenture, expressly agrees,
on behalf of the Issuer, to take all such actions on behalf of the Issuer and to promptly
execute and return all instruments reasonably required by the Master Servicer in connection
therewith; provided, that if the Master Servicer shall request a signature of the Indenture
Trustee, on behalf of the Issuer, the Master Servicer will deliver to the Indenture Trustee
an Officer's Certificate stating that such signature is necessary or appropriate to enable
the Master Servicer to carry out its servicing and administrative duties under this
Servicing Agreement.
Section 3.09 SERVICING COMPENSATION; PAYMENT OF CERTAIN EXPENSES BY MASTER SERVICER.
Subject to Section 3.07, in the event that Liquidation Proceeds, Insurance Proceeds and REO
Proceeds in respect of a Cash Liquidation or REO Disposition exceed the unpaid Loan Balance
of such Home Equity Loan plus unpaid interest accrued thereon (including REO Imputed
Interest) at the related Net Loan Rate, the Master Servicer shall be entitled to retain
therefrom and to pay to itself and/or the related Subservicer, any Foreclosure Profits.
Additional servicing compensation in the form of assumption fees, investment income on
amounts in the Custodial Account or the Certificate Distribution Account or otherwise shall
be retained by the Master Servicer or the Subservicer to the extent provided herein.
Moreover, additional servicing compensation in the form of late payment charges, investment
income on amounts in the Payment Account and other receipts not required to be deposited in
the Custodial Account as specified in Section 3.02(b) shall be retained by the Master
Servicer. The Master Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including payment of all other fees and expenses
not expressly stated hereunder to be for the account of the Securityholders, including,
without limitation, the fees and expenses of the Owner Trustee, Indenture Trustee and the
Custodian) and shall not be entitled to reimbursement therefor.
Section 3.10 ANNUAL STATEMENT AS TO COMPLIANCE. (a) The Master Servicer will deliver to
the Depositor, the Issuer, the Credit Enhancer and the Indenture Trustee on or before the
earlier of (a) March 31 of each year or (b) with respect to any calendar year during which
the Depositor's annual report on Form 10-K is required to be filed in accordance with the
Exchange Act and the rules and regulations of the Commission, the date on which the annual
report on Form 10-K is required to be filed in accordance with the Exchange Act and the
rules and regulations of the Commission, a servicer compliance certificate, signed by an
authorized officer of the Master Servicer, as described in Item 1123 of Regulation AB, to
the effect that:
(i) A review of the Master Servicer's activities during the reporting
period and of its performance under this Servicing Agreement has been made under such
officer's supervision.
(ii) To the best of such officer's knowledge, based on such review, the
Master Servicer has fulfilled all of its obligations under this Servicing Agreement in all
material respects throughout the reporting period or, if there has been a failure to fulfill
any such obligation in any material respect, specifying each such failure known to such
officer and the nature and status thereof.
The Master Servicer shall use commercially reasonable efforts to obtain from
all other parties participating in the servicing function any additional certifications
required under Item 1123 of Regulation AB to the extent required to be included in a Report
on Form 10-K; provided, however, that a failure to obtain such certifications shall not be a
breach of the Master Servicer's duties hereunder if any such party fails to deliver such a
certification.
(b) The Master Servicer shall deliver to the Issuer and the Indenture
Trustee, with a copy to the Credit Enhancer, promptly after having obtained knowledge
thereof, but in no event later than five Business Days thereafter, written notice by means
of an Officer's Certificate of any event which with the giving of notice or the lapse of
time or both, would become a Servicing Default.
Section 3.11 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT. On or before the
earlier of (a) March 31 of each year or (b) with respect to any calendar year during which
the Depositor's annual report on Form 10-K is required to be filed in accordance with the
Exchange Act and the rules and regulations of the Commission, the date on which the annual
report is required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission, the Master Servicer at its expense shall cause a firm of
independent public accountants, which shall be members of the American Institute of
Certified Public Accountants, to furnish a report to the Depositor and the Indenture Trustee
the attestation required under Item 1122(b) of Regulation AB. In rendering such statement,
such firm may rely, as to matters relating to the direct servicing of home equity loans by
Subservicers, upon comparable statements for examinations conducted by independent public
accountants substantially in accordance with standards established by the American Institute
of Certified Public Accountants (rendered within one year of such statement) with respect to
such Subservicers.
Section 3.12 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE HOME EQUITY
Loans. The Master Servicer shall provide to the Credit Enhancer, any Securityholder upon
reasonable request (or a regulator for a Securityholder) or the Indenture Trustee,
reasonable access to the documentation regarding the Home Equity Loans such access being
afforded without charge but only upon reasonable request and during normal business hours at
the offices of the Master Servicer. Nothing in this Section 3.12 shall derogate from the
obligation of the Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors and the failure of the Master Servicer to provide
access as provided in this Section 3.12 as a result of such obligation shall not constitute
a breach of this Section 3.12.
Section 3.13 MAINTENANCE OF CERTAIN SERVICING INSURANCE POLICIES. The Master Servicer
shall during the term of its service as servicer maintain in force (i) a policy or policies
of insurance covering errors and omissions in the performance of its obligations as master
servicer hereunder and (ii) a fidelity bond in respect of its officers, employees or
agents. Each such policy or policies and bond shall be at least equal to the coverage that
would be required by ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, whichever is greater, for Persons performing
servicing for Home Equity Loans purchased by such entity. Coverage of the Master Servicer
under a policy or bond obtained by an Affiliate of the Master Servicer and providing the
coverage required by this Section 3.13 shall satisfy the requirements of this Section 3.13.
Section 3.14 INFORMATION REQUIRED BY THE INTERNAL REVENUE SERVICE AND REPORTS OF
FORECLOSURES AND ABANDONMENTS OF MORTGAGED PROPERTY. The Master Servicer shall prepare and
deliver all federal and state information reports with respect to the Home Equity Loans when
and as required by all applicable state and federal income tax laws. In particular, with
respect to the requirement under Section 6050J of the Code to the effect that the Master
Servicer or Subservicer shall make reports of foreclosures and abandonments of any mortgaged
property for each year beginning in 2007, the Master Servicer or Subservicer shall file
reports relating to each instance occurring during the previous calendar year commencing
with the fiscal year 2007 in which the Master Servicer (i) on behalf of the Issuer, acquires
an interest in any Mortgaged Property through foreclosure or other comparable conversion in
full or partial satisfaction of a Home Equity Loan, or (ii) knows or has reason to know that
any Mortgaged Property has been abandoned. The reports from the Master Servicer or
Subservicer shall be in form and substance sufficient to meet the reporting requirements
imposed by Section 6050J and Section 6050H (reports relating to mortgage interest received)
of the Code.
Section 3.15 OPTIONAL REPURCHASE OR TRANSFER OF HOME EQUITY LOANS.
(a) Notwithstanding any provision in Section 3.07 to the contrary, the
Master Servicer, at its option and in its sole discretion, may repurchase any Home Equity
Loan that is delinquent in payment for a period of 90 days or longer for a price equal to
the Repurchase Price; provided that such Home Equity Loan is 90 days or more delinquent at
the time of repurchase. If at any time the Master Servicer makes a payment to the Payment
Account covering the amount of the Repurchase Price for such a Home Equity Loan, and the
Master Servicer provides to the Indenture Trustee a certification signed by a Servicing
Officer stating that the amount of such payment has been deposited in the Payment Account,
then the Indenture Trustee shall execute the assignment of such Home Equity Loan at the
request of the Master Servicer without recourse, representation or warranty to the Master
Servicer which shall succeed to all the Indenture Trustee's right, title and interest in and
to such Loan, and all security and documents relative thereto. Such assignment shall be an
assignment outright and not for security. The Master Servicer will thereupon own such Home
Equity Loan, and all such security and documents, free of any further obligation to the
Indenture Trustee or the Securityholders with respect thereto.
(b) Subject to the conditions set forth below, the Master Servicer, upon
receipt of written notice and direction from the Issuer, shall cause the retransfer of Group
II Loans from the Indenture Trustee to the Issuer as of the close of business on a Payment
Date (the "Transfer Date"). On the fifth Business Day (the "Transfer Notice Date") prior to
the Transfer Date designated in such notice, the Master Servicer shall give the Indenture
Trustee, the Rating Agencies and the Credit Enhancer a notice of the proposed retransfer
that contains a list of the Home Equity Loans to be retransferred. Such retransfers of Group
II Loans shall be permitted upon satisfaction of the following conditions:
(i) No Amortization Event has occurred or will result from such retransfer;
(ii) On the Transfer Date, the Group II Overcollateralization Amount (after giving effect
to the removal from the Trust of the Group II Loans proposed to be transferred) will equal
or exceed Group II Required Overcollateralization Amount;
(iii) On or before the Transfer Date, the Master Servicer shall have delivered to the
Indenture Trustee and the Custodian a revised Group II Loan Schedule showing that the
applicable Group II Loans are no longer owned by the Trust;
(iv) The Master Servicer shall represent and warrant that the Group II Loans to be removed
from the Trust were selected at random and the Master Servicer shall have received the
consent of the Credit Enhancer as to the selection of the particular Group II Loans to be
removed; and
(v) The Master Servicer shall have delivered to the Indenture Trustee and the Credit
Enhancer an officer's certificate certifying that the items set forth in subparagraphs (i)
through (iv), inclusive, have been performed or are true and correct, as the case may be.
The Indenture Trustee may conclusively rely on such officer's certificate, shall have no
duty to make inquiries with regard to the matters set forth therein and shall incur no
liability in so relying.
The Master Servicer shall not be permitted to effect the retransfer of any Group II
Loan except under the conditions specified above. Upon receiving the requisite notice and
direction from the Issuer, the Master Servicer shall perform in a timely manner those acts
required of it, as specified above. Upon satisfaction of the above conditions, on the
Transfer Date the Indenture Trustee shall deliver, or cause to be delivered, to the Issuer a
written itemization of each Group II Loan being transferred, together with the Mortgage File
for each such Home Equity Loan, and the Indenture Trustee shall execute and deliver to the
Issuer or its designee such other documents prepared by the Master Servicer as shall be
reasonably necessary to transfer such Group II Loans to the Group II Certificateholders.
Any such transfer of the Trust's right, title and interest in and to the Group II Loans
shall be without recourse, representation or warranty by or of the Indenture Trustee or the
Trust to the Issuer or its designee.
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01 STATEMENTS TO SECURITYHOLDERS. (a) With respect to each Payment Date, on the
Business Day following the related Determination Date (or with respect to any Payment Date
for which a draw on either the Group I Policy or the Group II Policy will occur, no later
than 12:00 p.m. New York City time, on the second Business Day prior to the applicable
Payment Date; provided, however, that the Master Servicer shall provide the Indenture
Trustee with written notice of any required draw on either the Group I Policy or the Group
II Policy prior to 9:00 a.m. New York City time, on the second Business Day prior to the
applicable Payment Date), the Master Servicer shall forward to the Indenture Trustee and the
Indenture Trustee pursuant to Section 3.26 of the Indenture shall make available
electronically at ▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇ to each Certificateholder, Noteholder, the Credit
Enhancer, the Depositor, the Owner Trustee, the Certificate Paying Agent and each Rating
Agency, a statement setting forth the following information (the "Servicing Certificate") as
to the Notes and Certificates, to the extent applicable:
(i) the applicable Record Date, Determination Date and Payment Date;
(ii) the aggregate amount of payments received with respect to the Home Equity Loans,
including prepayment amounts;
(iii) the Servicing Fee and Subservicing Fee payable to the Subservicer;
(iv) [Reserved];
(v) for each of Loan Group I and Loan Group II, the aggregate amount of (a) Interest
Collections, (b) Principal Collections and (c) Substitution Adjustment Amounts for such
Collection Period;
(vi) the amount paid as principal to the Noteholders of each Class of Notes;
(vii) for each of Loan Group I and Loan Group II, the amount paid as interest to the
Noteholders of each Class of Notes, separately stating the portion thereof in respect of
Prepayment Interest Shortfalls, Relief Act Shortfalls, Group I Net WAC Cap Shortfalls or
Group II Net WAC Cap Shortfalls, if any;
(viii) for each of Loan Group I and Loan Group II, the aggregate Interest Distribution
Amount remaining unpaid, if any, for each Class of Class I Notes and Class II Notes, after
giving effect to the payments made on such Payment Date;
(ix) [Reserved];
(x) the amount of any draw on the Group I Policy or the Group II Policy for such Payment
Date, the amount paid to the Credit Enhancer in reimbursement for prior draws and the
aggregate amount of prior draws under the Policies not yet reimbursed;
(xi) for each of Loan Group I and Loan Group II, the amount of such distribution as
principal and interest to the Certificateholders of the Certificates, separately stating the
portion thereof which resulted in a reduction of the Certificate Loan Balance thereof;
(xii) the aggregate Loan Balance of the Home Equity Loans in each Loan Group as of the end
of the preceding Collection Period;
(xiii) the aggregate amount of Additional Balances on the Home Equity Loans created during
the previous Collection Period conveyed to the Issuer;
(xiv) for each of Loan Group I and Loan Group II, the number and aggregate Loan Balances of
Home Equity Loans (a) as to which the Minimum Monthly Payment is Delinquent for 30 to 59
days, 60 to 89 days and 90 or more days, respectively, (b) that are foreclosed and (c) that
have become REO, in each case as of the end of the related Collection Period; provided,
however, that such information will not be provided on the statements relating to the first
Payment Date;
(xv) the Note Rate for each Class of Class I Notes and Class II Notes, the Group I Net WAC
Rate and the Group II Net WAC Rate for the related Collection Period;
(xvi) for each of Loan Group I and Loan Group II, the aggregate Liquidation Loss Amounts
with respect to the related Collection Period, the amount of any Liquidation Loss
Distribution Amounts with respect to the Notes, and the aggregate of the Liquidation Loss
Amounts from all Collection Periods to date expressed as dollars and as a percentage of the
aggregate Cut-off Date Loan Balance for such Loan Group;
(xvii) for each Loan Group, the aggregate Bankruptcy Losses and losses caused by or
resulting from an Extraordinary Event with respect to the related Collection Period and the
aggregate of each of such losses from all Collection Periods to date;
(xviii) for each of Loan Group I and Loan Group II, the Security Balance of each Class of
Notes and the Certificate Principal Balance of the related Certificates after giving effect
to the distribution of principal on such Payment Date;
(xix) the aggregate Servicing Fees for the related Collection Period and the aggregate
amount of Draws for the related Collection Period;
(xx) the number and amount of any increases in the Credit Limits of the Group II Loans
during the related Collection Period;
(xxi) the Group I Overcollateralization Amount, the Group II Overcollateralization Amount,
the Group I Required Overcollateralization Amount immediately following such Payment Date
and the Group II Required Overcollateralization Amount immediately following such Payment
Date;
(xxii) any material modifications, extensions or waivers to the terms of the Home Equity
Loans during the Collection Period or that have cumulatively become material over time;
(xxiii) any material breaches of Home Equity Loan representations or warranties or covenants
in the Purchase Agreement;
(xxiv) the number and principal amount of release agreements pursuant to Section 3.05(c)
entered into during the calendar year and since the Closing Date, stated separately, for the
Group II Loans and, the aggregate outstanding principal amount of such release agreements
expressed as a percentage of the Pool Balance for Loan Group II with information provided
separately with respect to all Unsecured Loans and (2) the number and principal amount of
Capitalization Workouts pursuant to Section 3.02(a)(v) entered into during the calendar year
and since the Closing Date, stated separately for each of Loan Group I and Loan Group II and
the aggregate outstanding amount of the Capitalization Workouts expressed as a percentage of
the respective Pool Balance;
(xxv) the calculation of any Servicing Trigger or Trigger Event;
(xxvi) the amount of any RAHI Premium payable pursuant to Section 3.05(e) of the Indenture;
and
(xxvii) the amount of the premiums on the Policies pursuant to Section 3.05(a) of the
Indenture.
In the case of information furnished pursuant to clauses (ii) and (iii) above, the
amounts shall be expressed as an aggregate dollar amount per Variable Funding Note, Term
Note or Certificate, as applicable, with a $1,000 denomination.
If an Amortization Event or Servicing Default shall occur, on the Business Day
following the related Determination Date, the Master Servicer shall forward to the Indenture
Trustee, a statement of such effect, including the nature of such Amortization Event or
Servicing Default. The Indenture Trustee shall deliver or cause to be delivered by mail to
the Credit Enhancer notice of such Amortization Event or Servicing Default, including, the
nature thereof. Such statement may be included in, or separate from, the regular statement
to Securityholders.
In addition, the Master Servicer shall forward to the Indenture Trustee any other
information reasonably requested by the Indenture Trustee necessary to make distributions
pursuant to Section 3.05 of the Indenture. Prior to the close of business on the Business
Day next succeeding each Determination Date, the Master Servicer shall furnish a written
statement to the Certificate Paying Agent and the Indenture Trustee setting forth the
aggregate amounts required to be withdrawn from the Custodial Account and deposited into the
Payment Account on the Business Day preceding the related Payment Date pursuant to Section
3.03. The determination by the Master Servicer of such amounts shall be presumptively
deemed to be correct for all purposes hereunder and the Owner Trustee and Indenture Trustee
shall be protected in relying upon the same without any independent check or verification.
In addition, upon the Issuer's written request, the Master Servicer shall promptly furnish
information reasonably requested by the Issuer that is reasonably available to the Master
Servicer to enable the Issuer to perform its federal and state income tax reporting
obligations.
Section 4.02 TAX REPORTING. So long as Residential Funding Company, LLC or any Affiliate
thereof owns 100% of the Certificates, then no separate federal and state income tax returns
and information returns or reports will be filed with respect to the Issuer, and the Issuer
will be treated as an entity wholly owned by Residential Funding Company, LLC or such
Affiliate.
Section 4.03 EXCHANGE ACT REPORTING.
(a) The Master Servicer shall, on behalf of the Depositor and in respect of the
Trust Estate, sign and cause to be filed with the Commission any periodic reports required
to be filed under the provisions of the Exchange Act, and the rules and regulations of the
Commission thereunder including, without limitation, reports on Form 10-K, Form 10-D and
Form 8-K. In connection with the preparation and filing of such periodic reports, the
Indenture Trustee shall timely provide to the Master Servicer (I) a list of Securityholders
as shown on the Certificate Register and the Note Register as of the end of each calendar
year, (II) copies of all pleadings, other legal process and any other documents relating to
any claims, charges or complaints involving the Indenture Trustee, as trustee hereunder, or
the Trust Estate that are received by the Indenture Trustee, (III) notice of all matters
that, to the actual knowledge of a Responsible Officer of the Indenture Trustee, have been
submitted to a vote of the Securityholders, other than those matters that have been
submitted to a vote of the Securityholders at the request of the Depositor or the Master
Servicer, and (IV) notice of any failure of the Indenture Trustee to make any distribution
to the Securityholders as required pursuant to this Agreement. Neither the Master Servicer
nor the Indenture Trustee shall have any liability with respect to the Master Servicer's
failure to properly prepare or file such periodic reports resulting from or relating to the
Master Servicer's inability or failure to obtain any information not resulting from the
Master Servicer's own negligence or willful misconduct
(b) Any Form 10-K filed with the Commission in connection with this Section 4.03
shall include:
(i) A certification, signed by the senior officer in charge of the servicing functions of
the Master Servicer, in the form attached as Exhibit E hereto or such other form as may be
required or permitted by the Commission (the "Form 10-K Certification"), in compliance with
Rules 13a-14 and 15d-14 under the Exchange Act and any additional directives of the
Commission.
(ii) A report regarding its assessment of compliance during the preceding calendar year
with all applicable servicing criteria set forth in relevant Commission regulations with
respect to mortgage-backed securities transactions taken as a whole involving the Master
Servicer that are backed by the same types of assets as those backing the certificates, as
well as similar reports on assessment of compliance received from other parties
participating in the servicing function as required by relevant Commission regulations, as
described in Item 1122(a) of Regulation AB. The Master Servicer shall obtain from all other
parties participating in the servicing function any required certifications.
(iii) With respect to each assessment report described immediately above, a report by a
registered public accounting firm that attests to, and reports on, the assessment made by
the asserting party, as set forth in relevant Commission regulations, as described in
Regulation 1122(b) of Regulation AB and Section 3.11.
(iv) The servicer compliance certificate required to be delivered pursuant Section 3.10.
(c) In connection with the Form 10-K Certification, the Indenture Trustee shall
provide the Master Servicer with a back-up certification substantially in the form attached
hereto as Exhibit F.
(d) This Section 4.03 may be amended in accordance with this Servicing Agreement
without the consent of the Securityholders.
(e) The Indenture Trustee shall make available on the Indenture Trustee's internet
website each of the reports filed with the Commission by or on behalf of the Depositor under
the Exchange Act, as soon as reasonably practicable upon delivery of such reports to the
Indenture Trustee.
ARTICLE V
PAYMENT ACCOUNT
Section 5.01 PAYMENT ACCOUNT. The Indenture Trustee shall establish and maintain a Payment
Account titled "LaSalle Bank National Association, as Indenture Trustee, for the benefit of
the Securityholders, the Certificate Paying Agent and the Credit Enhancer pursuant to the
Indenture, dated as of May 30, 2007, between Home Equity Loan Trust 2007-HSA3 and LaSalle
Bank National Association". The Payment Account shall be an Eligible Account. On each
Payment Date, amounts on deposit in the Payment Account will be distributed by the Indenture
Trustee in accordance with Section 3.05 of the Indenture. The Indenture Trustee shall, upon
written request from the Master Servicer, invest or cause the institution maintaining the
Payment Account to invest the funds in the Payment Account in Permitted Investments
designated in the name of the Indenture Trustee, which shall mature not later than the
Business Day next preceding the Payment Date next following the date of such investment
(except that (i) any investment in the institution with which the Payment Account is
maintained or any investment in a fund for which the institution acts as a custodian, may
mature on such Payment Date and (ii) any other investment may mature on such Payment Date if
the Indenture Trustee advances funds on such Payment Date to the Payment Account in the
amount payable on such investment on such Payment Date, pending receipt thereof to the
extent necessary to make distributions on the Securities) and shall not be sold or disposed
of prior to maturity. All income and gain realized from any such investment shall be for
the benefit of the Master Servicer and shall be subject to its withdrawal or order from time
to time. The amount of any losses incurred in respect of any such investments shall be
deposited in the Payment Account by the Master Servicer out of its own funds immediately as
realized.
ARTICLE VI
THE MASTER SERVICER
Section 6.01 LIABILITY OF THE MASTER SERVICER. The Master Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Master Servicer herein.
Section 6.02 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, THE MASTER
SERVICER. Any Person into which the Master Servicer may be merged or converted or with
which it may be consolidated, or 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 Servicing Agreement; provided, that the Person accepting such assignment or
delegation shall be a Person which is qualified to service Home Equity Loans, is reasonably
satisfactory to the Indenture Trustee (as pledgee of the Home Equity Loans), the Issuer and
the Credit Enhancer, is willing to service the Home Equity Loans and executes and delivers
to the Indenture Trustee and the Issuer an agreement, in form and substance reasonably
satisfactory to the Credit Enhancer, the Indenture Trustee and the Issuer, which contains an
assumption by such Person of the due and punctual performance and observance of each
covenant and condition to be performed or observed by the Master Servicer under this
Servicing Agreement; provided, further, that each Rating Agency's rating of the Securities
in effect immediately prior to such assignment and delegation will not be qualified,
reduced, or withdrawn as a result of such assignment and delegation (as evidenced by a
letter to such effect from each Rating Agency), if determined without regard to the
Policies; and provided, further, that the Owner Trustee receives an Opinion of Counsel to the
effect that such assignment or delegation shall not cause the Trust to be treated as a
corporation for federal or state income tax purposes.
Section 6.03 LIMITATION ON LIABILITY OF THE MASTER SERVICER AND OTHERS. Neither the Master
Servicer nor any of the directors or officers or employees or agents of the Master Servicer
shall be under any liability to the Issuer, the Owner Trustee, the Indenture Trustee or the
Securityholders for any action taken or for refraining from the taking of any action in good
faith pursuant to this Servicing Agreement, provided, however, that this provision shall not
protect the Master Servicer or any such Person against any liability which would otherwise
be imposed by reason of its willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder or by reason of its reckless disregard of its
obligations and duties hereunder. The Master Servicer and any director or officer or
employee or agent of the Master Servicer may rely in good faith on any document of any kind
prima facie properly executed and submitted by any Person respecting any matters arising
hereunder. The Master Servicer and any director or officer or employee or agent of the
Master Servicer shall be indemnified by the Issuer and held harmless against any loss,
liability or expense incurred in connection with any legal action relating to this Servicing
Agreement or the Securities, including any amount paid to the Owner Trustee or the Indenture
Trustee pursuant to Section 6.06(b), other than any loss, liability or expense incurred by
reason of its willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder or by reason of its reckless disregard of its obligations and duties
hereunder. The Master Servicer shall not be under any obligation to appear in, prosecute or
defend any legal action which is not incidental to its duties to service the Home Equity
Loans in accordance with this Servicing Agreement, and which in its opinion may involve it
in any expense or liability; provided, however, that the Master Servicer may in its sole
discretion undertake any such action which it may deem necessary or desirable in respect of
this Servicing Agreement, and the rights and duties of the parties hereto and the interests
of the Securityholders. In such event, the reasonable legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs and liabilities of the
Issuer, and the Master Servicer shall be entitled to be reimbursed therefor. The Master
Servicer's right to indemnity or reimbursement pursuant to this Section 6.03 shall survive
any resignation or termination of the Master Servicer pursuant to Section 6.04 or 7.01 with
respect to any losses, expenses, costs or liabilities arising prior to such resignation or
termination (or arising from events that occurred prior to such resignation or termination).
Section 6.04 MASTER SERVICER NOT TO RESIGN. Subject to the provisions of Section 6.02, the
Master Servicer shall not resign from the obligations and duties hereby imposed on it except
(i) upon determination that the performance of its obligations or duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of applicable
law with any other activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Master Servicer so causing such a conflict being of a type and nature
carried on by the Master Servicer or its subsidiaries or Affiliates at the date of this
Servicing Agreement or (ii) upon satisfaction of the following conditions: (a) the Master
Servicer has proposed a successor servicer to the Issuer and the Indenture Trustee in
writing and such proposed successor servicer is reasonably acceptable to the Issuer, the
Indenture Trustee and the Credit Enhancer; (b) each Rating Agency shall have delivered a
letter to the Issuer, the Credit Enhancer and the Indenture Trustee prior to the appointment
of the successor servicer stating that the proposed appointment of such successor servicer
as Master Servicer hereunder will not result in the reduction or withdrawal of the then
current rating of the Securities, if determined without regard to the Policies; and (c) such
proposed successor servicer is reasonably acceptable to the Credit Enhancer, as evidenced by
a letter to the Issuer and the Indenture Trustee; provided, however, that no such
resignation by the Master Servicer shall become effective until such successor servicer or,
in the case of (i) above, the Indenture Trustee, as pledgee of the Home Equity Loans, shall
have assumed the Master Servicer's responsibilities and obligations hereunder or the
Indenture Trustee, as pledgee of the Home Equity Loans, shall have designated a successor
servicer in accordance with Section 7.02. Any such resignation shall not relieve the Master
Servicer of responsibility for any of the obligations specified in Sections 7.01 and 7.02 as
obligations that survive the resignation or termination of the Master Servicer. Any such
determination permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Indenture Trustee and the Credit Enhancer.
Section 6.05 DELEGATION OF DUTIES. In the ordinary course of business, the Master Servicer
at any time may delegate any of its duties hereunder to any Person, including any of its
Affiliates, who agrees to conduct such duties in accordance with standards comparable to
those with which the Master Servicer complies pursuant to Section 3.01. Such delegation
shall not relieve the Master Servicer of its liabilities and responsibilities with respect
to such duties and shall not constitute a resignation within the meaning of Section 6.04.
Section 6.06 MASTER SERVICER TO PAY INDENTURE TRUSTEE'S AND OWNER TRUSTEE'S FEES AND
EXPENSES; INDEMNIFICATION. (a) The Master Servicer covenants and agrees to pay to the
Owner Trustee, the Indenture Trustee and any co-trustee of the Indenture Trustee or the
Owner Trustee from time to time, and the Owner Trustee, the Indenture Trustee and any such
co-trustee shall be entitled to, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust) for all
services rendered by each of them in the execution of the trusts created under the Trust
Agreement and the Indenture and in the exercise and performance of any of the powers and
duties under the Trust Agreement or the Indenture, as the case may be, of the Owner Trustee,
the Indenture Trustee and any co-trustee, and the Master Servicer will pay or reimburse the
Indenture Trustee and any co-trustee upon request for all reasonable expenses, disbursements
and advances incurred or made by the Indenture Trustee or any co-trustee in accordance with
any of the provisions of this Servicing Agreement or the Indenture except any such expense,
disbursement or advance as may arise from its negligence, willful misfeasance or bad faith.
(b) The Master Servicer agrees to indemnify the Indenture Trustee and the
Owner Trustee for, and to hold the Indenture Trustee and the Owner Trustee, as the case may
be, harmless against, any loss, liability or expense incurred without negligence, bad faith
or willful misconduct on the part of the Indenture Trustee or the Owner Trustee, as the case
may be, arising out of, or in connection with, the acceptance and administration of the
Issuer and the assets thereof, including the costs and expenses (including reasonable legal
fees and expenses) of defending the Indenture Trustee or the Owner Trustee, as the case may
be, against any claim in connection with the exercise or performance of any of its powers or
duties under any Basic Document, provided that:
(i) with respect to any such claim, the Indenture Trustee or Owner Trustee, as the case
may be, shall have given the Master Servicer written notice thereof promptly after the
Indenture Trustee or Owner Trustee, as the case may be, shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the Issuer, the Indenture Trustee or
Owner Trustee, as the case may be, shall cooperate and consult fully with the Master
Servicer in preparing such defense; and
(iii) notwithstanding anything in this Servicing Agreement to the contrary, the Master
Servicer shall not be liable for settlement of any claim by the Indenture Trustee or the
Owner Trustee, as the case may be, entered into without the prior consent of the Master
Servicer.
No termination of this Servicing Agreement shall affect the obligations created by
this Section 6.06 of the Master Servicer to indemnify the Indenture Trustee and the Owner
Trustee under the conditions and to the extent set forth herein.
Notwithstanding the foregoing, the indemnification provided by the Master Servicer in
this Section 6.06(b) shall not be available (a) for any loss, liability or expense of the
Indenture Trustee or the Owner Trustee, including the costs and expenses of defending itself
against any claim, incurred in connection with any actions taken by the Indenture Trustee or
the Owner Trustee at the direction of the Noteholders or Certificateholders, as the case may
be, pursuant to the terms of this Servicing Agreement or (b) where indemnification by the
Indenture Trustee is required pursuant to Section 9.05(a).
ARTICLE VII
DEFAULT
Section 7.01 SERVICING DEFAULT. If any one of the following events ("Servicing Default")
shall occur and be continuing:
(a) Any failure by the Master Servicer to deposit in the Custodial Account
or Payment Account any deposit required to be made under the terms of this Servicing
Agreement which continues unremedied for a period of five Business Days after the date upon
which written notice of such failure shall have been given to the Master Servicer by the
Issuer or the Indenture Trustee, or to the Master Servicer, the Issuer and the Indenture
Trustee by the Credit Enhancer; or
(b) Failure on the part of the Master Servicer duly to observe or perform
in any material respect any other covenants or agreements of the Master Servicer set forth
in the Securities or in this Servicing Agreement, which failure, in each case, materially
and adversely affects the interests of Securityholders or the Credit Enhancer and which
continues unremedied for a period of 45 days after the date on which written notice of such
failure, requiring the same to be remedied, and stating that such notice is a "Notice of
Default" hereunder, shall have been given to the Master Servicer by the Issuer or the
Indenture Trustee, or to the Master Servicer, the Issuer and the Indenture Trustee by the
Credit Enhancer; or
(c) The entry against the Master Servicer of a decree or order by a court
or agency or supervisory authority having jurisdiction in the premises for the appointment
of a trustee, conservator, receiver or liquidator in any insolvency, conservatorship,
receivership, readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and the continuance of any
such decree or order unstayed and in effect for a period of 60 consecutive days; or
(d) The Master Servicer shall voluntarily go into liquidation, consent to
the appointment of a conservator, receiver, liquidator or similar person in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or of or relating to all or substantially all of its
property, or a decree or order of a court, agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator, receiver, liquidator or
similar person in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Master Servicer and such decree or order shall have
remained in force undischarged, unbonded or unstayed for a period of 60 days; or the Master
Servicer shall admit in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors or voluntarily suspend payment of its
obligations,
then, and in every such case, so long as a Servicing Default shall not have been remedied by
the Master Servicer, either the Issuer or the Indenture Trustee, with the consent of the
Credit Enhancer, or the Credit Enhancer, by notice then given in writing to the Master
Servicer (and to the Issuer and the Indenture Trustee if given by the Credit Enhancer) may
terminate all of the rights and obligations of the Master Servicer as servicer under this
Servicing Agreement other than its right to receive servicing compensation and expenses for
servicing the Home Equity Loans hereunder during any period prior to the date of such
termination and the Issuer or the Indenture Trustee, with the consent of the Credit
Enhancer, or the Credit Enhancer may exercise any and all other remedies available at law or
equity. Any such notice to the Master Servicer shall also be given to each Rating Agency,
the Credit Enhancer and the Issuer. On or after the receipt by the Master Servicer of such
written notice, all authority and power of the Master Servicer under this Servicing
Agreement, whether with respect to the Securities or the Home Equity Loans or otherwise,
shall pass to and be vested in the Indenture Trustee as pledgee of the Home Equity Loans, as
successor Master Servicer pursuant to and under this Section 7.01; and, without limitation,
the Indenture Trustee is hereby authorized and empowered to execute and deliver, on behalf
of the Master Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the transfer and
endorsement of each Home Equity Loan and related documents, or otherwise. The Master
Servicer agrees to cooperate with the Indenture Trustee in effecting the termination of the
responsibilities and rights of the Master Servicer hereunder, including, without limitation,
the transfer to the Indenture Trustee for the administration by it of all cash amounts
relating to the Home Equity Loans that shall at the time be held by the Master Servicer and
to be deposited by it in the Custodial Account, or that have been deposited by the Master
Servicer in the Custodial Account or thereafter received by the Master Servicer with respect
to the Home Equity Loans. All reasonable costs and expenses (including, but not limited to,
attorneys' fees) incurred in connection with amending this Servicing Agreement to reflect
such succession as Master Servicer pursuant to this Section 7.01 shall be paid by the
predecessor Master Servicer (or if the predecessor Master Servicer is the Indenture Trustee,
the initial Master Servicer) upon presentation of reasonable documentation of such costs and
expenses.
Notwithstanding any termination of the activities of the Master Servicer hereunder,
the Master Servicer shall be entitled to receive, out of any late collection of a payment on
a Home Equity Loan which was due prior to the notice terminating the Master Servicer's
rights and obligations hereunder and received after such notice, that portion to which the
Master Servicer would have been entitled pursuant to Sections 3.03 and 3.09, and any other
amounts payable to the Master Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder.
Notwithstanding the foregoing, a delay in or failure of performance under Section
7.01(a) or under Section 7.01(b) after the applicable grace periods specified in such
Sections, shall not constitute a Servicing Default if such delay or failure could not be
prevented by the exercise of reasonable diligence by the Master Servicer and such delay or
failure was caused by an act of God or the public enemy, acts of declared or undeclared war,
public disorder, rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes,
earthquakes, floods or similar causes. The preceding sentence shall not relieve the Master
Servicer from using reasonable efforts to perform its respective obligations in a timely
manner in accordance with the terms of this Servicing Agreement and the Master Servicer
shall provide the Indenture Trustee, the Credit Enhancer and the Securityholders with notice
of such failure or delay by it, together with a description of its efforts to so perform its
obligations. The Master Servicer shall immediately notify the Indenture Trustee, the Credit
Enhancer and the Owner Trustee in writing of any Servicing Default.
Section 7.02 INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Master Servicer receives a notice of termination pursuant to
Section 7.01 or sends a notice pursuant to Section 6.04, the Indenture Trustee as pledgee of
the Home Equity Loans shall be the successor in all respects to the Master Servicer in its
capacity as servicer under this Servicing Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Master Servicer by the terms and provisions hereof. Nothing
in this Servicing Agreement or in the Trust Agreement shall be construed to permit or
require the Indenture Trustee as successor Master Servicer to (i) succeed to the
responsibilities, duties and liabilities of the initial Master Servicer in its capacity as
Seller under the Purchase Agreement, (ii) be responsible or accountable for any act or
omission of the Master Servicer prior to the issuance of a notice of termination hereunder,
(iii) require or obligate the Indenture Trustee, in its capacity as successor Master
Servicer, to purchase, repurchase or substitute any Home Equity Loan, (iv) fund any
Additional Balances with respect to any Home Equity Loan, (v) fund any losses on any
Permitted Investment directed by any other Master Servicer, or (vi) be responsible for the
representations and warranties of the Master Servicer. As compensation therefor, the
Indenture Trustee as successor Master Servicer shall be entitled to such compensation as the
Master Servicer would have been entitled to hereunder if no such notice of termination had
been given. Notwithstanding the above, (i) if the Indenture Trustee is unwilling to act as
successor Master Servicer, or (ii) if the Indenture Trustee is legally unable so to act, the
Indenture Trustee as pledgee of the Home Equity Loans may (in the situation described in
clause (i)) or shall (in the situation described in clause (ii)) appoint or petition a court
of competent jurisdiction to appoint any established housing and home finance institution,
bank or other mortgage loan or home equity loan servicer having a net worth of not less than
$10,000,000 as the successor to the Master Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Master Servicer hereunder;
provided, that any such successor Master Servicer shall be acceptable to the Credit
Enhancer, as evidenced by the Credit Enhancer's prior written consent which consent shall
not be unreasonably withheld and provided further, that the appointment of any such
successor Master Servicer will not result in the qualification, reduction or withdrawal of
the ratings assigned to the Securities by the Rating Agencies, if determined without regard
to the Policies. Pending appointment of a successor to the Master Servicer here under,
unless the Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act in such capacity as hereinabove provided. In connection with such appointment and
assumption, the successor shall be entitled to receive compensation out of payments on Home
Equity Loans in an amount equal to the compensation which the Master Servicer would
otherwise have received pursuant to Section 3.09 (or such lesser compensation as the
Indenture Trustee and such successor shall agree). The appointment of a successor Master
Servicer shall not affect any liability of the predecessor Master Servicer which may have
arisen under this Servicing Agreement prior to its termination as Master Servicer
(including, without limitation, the obligation to purchase Home Equity Loans pursuant to
Section 3.01, to pay any deductible under an insurance policy pursuant to Section 3.04 or to
indemnify the Indenture Trustee pursuant to Section 6.06), nor shall any successor Master
Servicer be liable for any acts or omissions of the predecessor Master Servicer or for any
breach by such Master Servicer of any of its representations or warranties contained herein
or in any related document or agreement. The Indenture Trustee and such successor shall
take such action, consistent with this Servicing Agreement, as shall be necessary to
effectuate any such succession.
(b) Any successor, including the Indenture Trustee, to the Master Servicer
as servicer shall during the term of its service as servicer (i) continue to service and
administer the Home Equity Loans for the benefit of the Securityholders, (ii) maintain in
force a policy or policies of insurance covering errors and omissions in the performance of
its obligations as Master Servicer hereunder and a fidelity bond in respect of its officers,
employees and agents to the same extent as the Master Servicer is so required pursuant to
Section 3.13 and (iii) be bound by the terms of the Insurance Agreement.
(c) Any successor Master Servicer, including the Indenture Trustee, shall
not be deemed in default or to have breached its duties hereunder if the predecessor Master
Servicer shall fail to deliver any required deposit to the Custodial Account or otherwise
cooperate with any required servicing transfer or succession hereunder.
(d) In connection with the termination or resignation of the Master
Servicer hereunder, either (i) the successor Master Servicer, including the Indenture
Trustee if the Indenture Trustee is acting as successor Master Servicer, shall represent and
warrant that it is a member of MERS in good standing and shall agree to comply in all
material respects with the rules and procedures of MERS in connection with the servicing of
the Home Equity Loans that are registered with MERS, in which case the predecessor Master
Servicer shall cooperate with the successor Master Servicer in causing MERS to revise its
records to reflect the transfer of servicing to the successor Master Servicer as necessary
under MERS' rules and regulations, or (ii) the predecessor Master Servicer shall cooperate
with the successor Master Servicer in causing MERS to execute and deliver an assignment of
Mortgage in recordable form to transfer the Mortgage from MERS to the Indenture Trustee and
to execute and deliver such other notices, documents and other instruments as may be
necessary or desirable to effect a transfer of such Home Equity Loan or servicing of such
Home Equity Loan on the MERS(R)System to the successor Master Servicer. The predecessor
Master Servicer shall file or cause to be filed any such assignment in the appropriate
recording office. The predecessor Master Servicer shall bear any and all fees of MERS,
costs of preparing any assignments of Mortgage, and fees and costs of filing any assignments
of Mortgage that may be required under this subsection (d). The successor Master Servicer
shall cause such assignment to be delivered to the Indenture Trustee or the Custodian
promptly upon receipt of the original with evidence of recording thereon or a copy certified
by the public recording office in which such assignment was recorded.
Section 7.03 NOTIFICATION TO SECURITYHOLDERS. Upon any termination of or appointment of a
successor to the Master Servicer pursuant to this Article VII or Section 6.04, the Indenture
Trustee shall give prompt written notice thereof to the Securityholders, the Credit
Enhancer, the Issuer and each Rating Agency.
Section 7.04 SERVICING TRIGGER; REMOVAL OF MASTER SERVICER .
(a) Upon determination by the Credit Enhancer or the Master Servicer that a
Servicing Trigger has occurred, such party shall give written notice of such Servicing
Trigger to the Master Servicer or Credit Enhancer, as applicable, the Depositor, the
Indenture Trustee and to each Rating Agency.
(b) At any time after such determination and while a Servicing Trigger is
continuing, the Credit Enhancer may direct the Indenture Trustee in writing to remove the
Master Servicer if the Credit Enhancer makes a determination that the manner of master
servicing was a factor contributing to the size of the delinquencies or losses incurred in
the Trust Estate.
(c) Upon receipt of directions to remove the Master Servicer pursuant to the
preceding clause (b), the Indenture Trustee shall notify the Master Servicer that it has
been terminated and the Master Servicer shall be terminated in the same manner as specified
in Sections 7.01 and 7.02.
(d) After notice of occurrence of a Servicing Trigger has been given and while a
Servicing Trigger is continuing, until and unless the Master Servicer has been removed as
provided in clause (b), the Master Servicer covenants and agrees to act as the Master
Servicer for a term from the occurrence of the Servicing Trigger to the end of the calendar
quarter in which such Servicing Trigger occurs, which term may at the Credit Enhancer's
discretion be extended by written notice to the Indenture Trustee and the Master Servicer
for successive terms of three (3) calendar months each, until the termination of the Trust
Estate. The Master Servicer will, upon the receipt of each such notice of extension (a
"Master Servicer Extension Notice") become bound for the duration of the term covered by such
Master Servicer Extension Notice to continue as Master Servicer subject to and in accordance
with this Servicing Agreement. If, as of the fifteenth (15th) day prior to the last day of
any term as the Master Servicer, the Indenture Trustee shall not have received any Master
Servicer Extension Notice from the Credit Enhancer, the Indenture Trustee shall, within five
(5) days thereafter, give written notice of such nonreceipt to the Credit Enhancer and the
Master Servicer. If any such term expires without a Master Servicer Extension Notice then
the Indenture Trustee shall act as successor or appoint a successor Master Servicer as
provided in Section 7.02.
(e) No provision of this Section 7.04 shall have the effect of limiting the rights
of the Depositor, the Indenture Trustee, the Noteholders or the Credit Enhancer under
Section 7.01.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01 AMENDMENT. This Servicing Agreement may be amended from time to time by the
parties hereto, provided that any amendment be accompanied by a letter from the Rating
Agencies that the amendment will not result in the downgrading or withdrawal of the rating
then assigned to the Securities, if determined without regard to the Policies, and a tax
opinion to the effect that neither such amendment nor any action permitted by such amendment
and not otherwise permitted by this Agreement will cause any of REMIC I or REMIC II to fail
to qualify as a REMIC or, except as permitted pursuant to the provisions of Section 11.01(f)
of the Indenture, give rise to the imposition of a tax on "prohibited transactions" of a
REMIC, or prohibited contributions to a REMIC, on any REMIC I or REMIC II and provided
further, that the Credit Enhancer and the Indenture Trustee shall consent thereto.
Section 8.02 GOVERNING LAW. THIS SERVICING AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICTS OF LAW PROVISIONS
(OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
Section 8.03 NOTICES. All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at or mailed by
certified mail, return receipt requested, to (a) in the case of the Master Servicer, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Director - Bond
Administration, (b) in the case of the Depositor, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President, (c) in the case of the Credit Enhancer,
MBIA Insurance Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: IPM-SF, Re:
Home Equity Loan Trust 2007-HSA3, (d) in the case of Standard & Poor's, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Residential Mortgage Surveillance Group, (e) in the case of
Moody's, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ABS Monitoring Department,
(f) in the case of the Owner Trustee, Wilmington Trust Company, ▇▇▇▇▇▇ Square North, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust
Administration, (g) in the case of the Issuer, to Home Equity Loan Trust 2007-HSA3, c/o
Owner Trustee, Wilmington Trust Company, ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust Administration, (h) in the case
of the Indenture Trustee, LaSalle Bank National Association, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, Attention: Global Securities and Trust Services, RFMSII 2007-HSA3
and (i) in the case of the Underwriters, to Residential Funding Securities, LLC, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Director of
Compliance and to Credit Suisse Securities (USA) LLC, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: General Counsel; or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party. Any notice required or
permitted to be mailed to a Securityholder shall be given by first class mail, postage
prepaid, at the address of such Securityholder as shown in the Register. Any notice so
mailed within the time prescribed in this Servicing Agreement shall be conclusively presumed
to have been duly given, whether or not the Securityholder receives such notice. Any notice
or other document required to be delivered or mailed by the Indenture Trustee to any Rating
Agency shall be given on a reasonable efforts basis and only as a matter of courtesy and
accommodation and the Indenture Trustee shall have no liability for failure to delivery such
notice or document to any Rating Agency.
Section 8.04 SEVERABILITY OF PROVISIONS. If any one or more of the covenants, agreements,
provisions or terms of this Servicing Agreement shall be for any reason whatsoever held
invalid, then such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Servicing Agreement and
shall in no way affect the validity or enforceability of the other provisions of this
Servicing Agreement or of the Securities or the rights of the Securityholders thereof.
Section 8.05 THIRD-PARTY BENEFICIARIES. This Servicing Agreement will inure to the benefit
of and be binding upon the parties hereto, the Securityholders, the Credit Enhancer, the
Depositor, the Owner Trustee and their respective successors and permitted assigns. Except
as otherwise provided in this Servicing Agreement, no other Person will have any right or
obligation hereunder. The Credit Enhancer is a third-party beneficiary of this Servicing
Agreement.
Section 8.06 COUNTERPARTS. This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
Section 8.07 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect the
construction hereof.
Section 8.08 TERMINATION UPON PURCHASE BY THE MASTER SERVICER OR LIQUIDATION OF HOME EQUITY
LOANS. (a) The respective obligations and responsibilities of the Master Servicer,
the Issuer and the Indenture Trustee created hereby shall terminate upon the last action
required to be taken by the Issuer pursuant to the Trust Agreement and by the Indenture
Trustee pursuant to the Indenture following the earlier of:
(i) the date on or before which the Indenture or Trust Agreement is terminated; or
(ii) the purchase by the Master Servicer of all Home Equity Loans and all property
acquired in respect of any Home Equity Loan remaining in the Trust (other than the Policy).
(b) The right of the Master Servicer to purchase the Group I Loans is
conditioned upon the Pool Balance for Loan Group I as of such date (after application of
payments received during the related Collection Period) being equal to or less than ten
percent of the aggregate of the Cut-off Date Loan Balances of the Group I Loans; provided,
however, that no such purchase will be permitted if it would result in a draw under the
Group I Policy or will result in any amounts owing to the Credit Enhancer remaining
unreimbursed, unless, in either case, the Credit Enhancer consents in writing to the
purchase. The right of the Master Servicer to purchase the Group II Loans is conditioned
upon the Pool Balance for Loan Group II as of such date (after application of payments
received during the related Collection Period) being equal to or less than ten percent of
the aggregate of the Cut-off Date Loan Balances of the Group II Loans; provided, however,
that no such purchase will be permitted if it would result in a draw under the Group II
Policy or will result in any amounts owing to the Credit Enhancer remaining unreimbursed,
unless, in either case, the Credit Enhancer consents in writing to the purchase. The
purchase by the Master Servicer of either the Group I Loans or the Group II Loans and all
property acquired (including REO Property) in respect of such Home Equity Loans shall be at
a price equal to 100% of the unpaid Loan Balance of each Home Equity Loan in the related
Loan Group, plus accrued and unpaid interest on each such Home Equity Loan, at the
applicable Net Loan Rate, plus the related Policy premium rate, up to the first day of the
month in which such amounts are to be distributed to Securityholders, or in the case of REO
Property, the fair market value of the REO Property, plus any amounts due and owing to the
Credit Enhancer under the Insurance Agreement in respect of the related Policy or the
Notes. The purchase price paid by the Master Servicer for the Group I Loans and the Group
II Loans shall also include any amounts owed to the Trust by the Seller pursuant to the
penultimate sentence of the second paragraph of Section 3.1(d) of the Purchase Agreement,
that remain unpaid on the date of such purchase. If such right is exercised by the Master
Servicer, the Master Servicer shall deposit the amount calculated pursuant to this Section
8.08(b) with the Indenture Trustee for deposit in the Payment Account and, upon the receipt
of such deposit, the Indenture Trustee or Custodian shall release to the Master Servicer,
the files pertaining to the Home Equity Loans being purchased.
(c) In addition to the foregoing, on any Payment Date on which the Pool
Balance of a Loan Group (after application of payment received during the related Collection
Period) is equal to or less than ten percent of the aggregate of the Cut-off Date Loan
Balances of the Home Equity Loans in such Loan Group, the Master Servicer shall have the
right, at its option, to purchase the Notes in whole, but not in part, at a price equal to
the outstanding Security Balance of the Notes plus the sum of Interest Distribution Amount
thereon for the related Interest Period and any previously unpaid Interest Distribution
Amount, plus any amounts due to the Credit Enhancer under the Insurance Agreement in
respect of the related Policy or the related Notes. If the Master Servicer exercises this
right to purchase the outstanding Class I or Class II Notes, the Master Servicer will
promptly purchase the related Home Equity Loans pursuant to this Section 8.08.
(d) The Master Servicer, at its expense, shall prepare and deliver to the
Indenture Trustee for execution, at the time the Home Equity Loans are to be released to the
Master Servicer, appropriate documents assigning each such Home Equity Loan from the
Indenture Trustee or the Issuer to the Master Servicer or the appropriate party.
Section 8.09 CERTAIN MATTERS AFFECTING THE INDENTURE TRUSTEE. For all purposes of this
Servicing Agreement, in the performance of any of its duties or in the exercise of any of
its powers hereunder, the Indenture Trustee shall be subject to and entitled to the benefits
of Article VI of the Indenture.
Section 8.10 OWNER TRUSTEE NOT LIABLE FOR RELATED DOCUMENTS. The recitals contained herein
shall be taken as the statements of the Depositor, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no representations as
to the validity or sufficiency of this Servicing Agreement, of any Basic Document or of the
Certificates (other than the signatures of the Owner Trustee on the Certificates) or the
Notes, or of any Related Documents. The Owner Trustee shall at no time have any
responsibility or liability with respect to the sufficiency of the Owner Trust Estate or its
ability to generate the payments to be distributed to Certificateholders under the Trust
Agreement or the Noteholders under the Indenture, including, the compliance by the Depositor
or the Seller with any warranty or representation made under any Basic Document or in any
related document or the accuracy of any such warranty or representation, or any action of
the Certificate Paying Agent, the Certificate Registrar or the Indenture Trustee taken in
the name of the Owner Trustee.
ARTICLE IX
COMPLIANCE WITH REGULATION AB
Section 9.01 INTENT OF THE PARTIES; REASONABLENESS.
The Depositor, the Indenture Trustee and the Master Servicer acknowledge and agree
that the purpose of this Article IX is to facilitate compliance by the Depositor with the
provisions of Regulation AB and related rules and regulations of the Commission. The
Depositor shall not exercise its right to request delivery of information or other
performance under these provisions other than in good faith, or for purposes other than
compliance with the Securities Act, the Exchange Act and the rules and regulations of the
Commission under the Securities Act and the Exchange Act. Each of the Master Servicer and
the Indenture Trustee acknowledges that interpretations of the requirements of Regulation AB
may change over time, whether due to interpretive guidance provided by the Commission or its
staff, consensus among participants in the mortgage-backed securities markets, advice of
counsel, or otherwise, and agrees to comply with reasonable requests made by the Depositor
in good faith for delivery of information under these provisions on the basis of evolving
interpretations of Regulation AB. Each of the Master Servicer and the Indenture Trustee
shall cooperate reasonably with the Depositor to deliver to the Depositor (including any of
its assignees or designees), any and all disclosure, statements, reports, certifications,
records and any other information necessary in the reasonable, good faith determination of
the Depositor to permit the Depositor to comply with the provisions of Regulation AB.
Section 9.02 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE INDENTURE TRUSTEE.
(a) The Indenture Trustee shall be deemed to represent and warrant to the
Depositor as of the date hereof and on each date on which information is provided to the
Depositor under Sections 9.01, 9.02(b) or 9.03 that, except as disclosed in writing to the
Depositor prior to such date: (i) it is not aware and has not received notice that any
default, early amortization or other performance triggering event has occurred as to any
other Securitization Transaction due to any default of the Indenture Trustee; (ii) there are
no aspects of its financial condition that could have a material adverse effect on the
performance by it of its trustee obligations under this Servicing Agreement or any other
Securitization Transaction as to which it is the trustee; (iii) there are no material legal
or governmental proceedings pending (or known to be contemplated) against it that would be
material to Noteholders; (iv) there are no relationships or transactions (as described in
Item 1119(b) of Regulation AB) relating to the Indenture Trustee with respect to the
Depositor or any sponsor, issuing entity, servicer, trustee, originator, significant
obligor, enhancement or support provider or other material transaction party (as each of
such terms are used in Regulation AB) relating to the Securitization Transaction
contemplated by the Servicing Agreement, as identified by the Depositor to the Indenture
Trustee in writing as of the Closing Date (each, a "Transaction Party") that are outside the
ordinary course of business or on terms other than would be obtained in an arm's length
transaction with an unrelated third party, apart from the Securitization Transaction, and
that are material to the investors' understanding of the Term Notes; and (v) the Indenture
Trustee is not an affiliate (as contemplated by Item 1119(a) of Regulation AB) of any
Transaction Party. The Depositor shall notify the Indenture Trustee of any change in the
identity of a Transaction Party after the Closing Date.
(b) If so requested by the Depositor on any date following the Closing Date, the
Indenture Trustee shall, within five Business Days following such request, confirm in
writing the accuracy of the representations and warranties set forth in paragraph (a) of
this Section or, if any such representation and warranty is not accurate as of the date of
such confirmation, provide the pertinent facts, in writing, to the Depositor. Any such
request from the Depositor shall not be given more than once each calendar quarter, unless
the Depositor shall have a reasonable basis for questioning the accuracy of any of the
representations and warranties.
Section 9.03 INFORMATION TO BE PROVIDED BY THE INDENTURE TRUSTEE.
For so long as the Term Notes are outstanding, for the purpose of satisfying the
Depositor's reporting obligation under the Exchange Act with respect to any class of Term
Notes, the Indenture Trustee shall provide to the Depositor a written description of (a) any
litigation or governmental proceedings pending against the Indenture Trustee as of the last
day of each calendar month that would be material to Noteholders, and (b) any affiliations
or relationships (as described in Item 1119 of Regulation AB) that develop following the
Closing Date between the Indenture Trustee and any Transaction Party of the type described
in Section 9.02(a)(iv) or 9.02(a)(v) as of the last day of each calendar year. Any
descriptions required with respect to legal proceedings, as well as updates to previously
provided descriptions, under this Section 9.03 shall be given no later than five Business
Days prior to the Determination Date following the month in which the relevant event occurs,
and any notices and descriptions required with respect to affiliations, as well as updates
to previously provided descriptions, under this Section 9.03 shall be given no later than
January 31 of the calendar year following the year in which the relevant event occurs. As
of the related Payment Date with respect to each Report on Form 10-D with respect to the
Term Notes filed by or on behalf of the Depositor, and as of March 15 preceding the date
each Report on Form 10-K with respect to the Term Notes is filed, the Indenture Trustee
shall be deemed to represent and warrant that any information previously provided by the
Indenture Trustee under this Article IX is materially correct and does not have any material
omissions unless the Indenture Trustee has provided an update to such information. The
Depositor will allow the Indenture Trustee to review any disclosure relating to material
litigation against the Indenture Trustee prior to filing such disclosure with the Commission
to the extent the Depositor changes the information provided by the Indenture Trustee.
Section 9.04 REPORT ON ASSESSMENT OF COMPLIANCE AND ATTESTATION.
On or before March 15 of each calendar year, the Indenture Trustee shall:
(a) deliver to the Depositor a report (in form and substance reasonably
satisfactory to the Depositor) regarding the Indenture Trustee's assessment of compliance
with the applicable Servicing Criteria during the immediately preceding calendar year, as
required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB.
Such report shall be signed by an authorized officer of the Indenture Trustee, and shall
address each of the Servicing Criteria specified on Exhibit G hereto; and
(b) deliver to the Depositor a report of a registered public accounting firm
satisfying the requirements of Rule 2-01 of Regulation S-X under the Securities Act and the
Exchange Act that attests to, and reports on, the assessment of compliance made by the
Indenture Trustee and delivered pursuant to the preceding paragraph. Such attestation shall
be in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities
Act and the Exchange Act.
Section 9.05 INDEMNIFICATION; REMEDIES.
(a) The Indenture Trustee shall indemnify the Depositor, each affiliate of the
Depositor, the Master Servicer and each affiliate of the Master Servicer, and the respective
present and former directors, officers, employees and agents of each of the foregoing, and
shall hold each of them harmless from and against any losses, damages, penalties, fines,
forfeitures, legal fees and expenses and related costs, judgments, and any other costs, fees
and expenses that any of them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or alleged to
be contained in any information, report, certification, accountants' attestation or other
material provided under this Article IX by or on behalf of the Indenture Trustee
(collectively, the "Indenture Trustee Information"), or (B) the omission or alleged omission
to state in the Indenture Trustee Information a material fact required to be stated in the
Indenture Trustee Information or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; or
(ii) any failure by the Indenture Trustee to deliver any information,
report, certification, or other material when and as required under this Article IX, other
than a failure by the Indenture Trustee to deliver an accountants' attestation.
(b) In the case of any failure of performance described in clause (ii) of Section
9.05(a), as well as a failure to deliver an accountants' attestation, the Indenture Trustee
shall (i) promptly reimburse the Depositor for all costs reasonably incurred by the
Depositor in order to obtain the information, report, certification, accountants' attestation
or other material not delivered by the Indenture Trustee as required and (ii) cooperate with
the Depositor to mitigate any damages that may result from such failure.
(c) The Depositor and the Master Servicer shall indemnify the Indenture Trustee,
each affiliate of the Indenture Trustee and the respective present and former directors,
officers, employees and agents of the Indenture Trustee, and shall hold each of them
harmless from and against any losses, damages, penalties, fines, forfeitures, legal fees and
expenses and related costs, judgments, and any other costs, fees and expenses that any of
them may sustain arising out of or based upon (i) any untrue statement of a material fact
contained or alleged to be contained in any information provided under this Servicing
Agreement by or on behalf of the Depositor or Master Servicer for inclusion in any report
filed with Commission under the Exchange Act (collectively, the "RFC Information"), or (ii)
the omission or alleged omission to state in the RFC Information a material fact required to
be stated in the RFC Information or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(d) Notwithstanding any provision in this Section 9.05 to the contrary, the
parties agree that none of the Indenture Trustee, the Depositor or the Master Servicer shall
be liable to the other for any consequential or punitive damages whatsoever, whether in
contract, tort (including negligence and strict liability), or any other legal or equitable
principle; provided, however, that such limitation shall not be applicable with respect to
third party claims made against a party.
IN WITNESS WHEREOF, the Master Servicer, the Indenture Trustee and the Issuer have
caused this Servicing Agreement to be duly executed by their respective officers or
representatives all as of the day and year first above written.
RESIDENTIAL FUNDING COMPANY, LLC,
as Master Servicer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Associate
HOME EQUITY LOAN TRUST 2007-HSA3
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Sr Financial Services Officer
LASALLE BANK NATIONAL ASSOCIATION,
as Indenture Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
Acknowledged and Agreed
solely with respect to Article IX:
RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
EXHIBIT A-I
GROUP I LOAN SCHEDULE
[ON FILE AT RFC]
EXHIBIT A-II
GROUP II LOAN SCHEDULE
[ON FILE AT RFC]
EXHIBIT B
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PREMISES:
That LaSalle Bank National Association, as Indenture Trustee (the "Indenture
Trustee"), under the Indenture (the "Indenture") between Home Equity Loan Trust 2007-HSA3 and
the Indenture Trustee, a national banking association organized under the federal laws of
the United States of America, and having its principal office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, in the City of Chicago in the State of
Illinois, hath made, constituted and appointed, and does by these presents make, constitute
and appoint Residential Funding Company, LLC, a limited liability company organized and
existing under the laws of the State of Delaware, its true and lawful Attorney-in-Fact, with
full power and authority to sign, execute, acknowledge, deliver, file for record, and record
any instrument on its behalf and to perform such other act or acts as may be customarily and
reasonably necessary and appropriate to effectuate the following enumerated transactions in
respect of any of the mortgages or deeds of trust (the "Mortgages" and the "Deeds of Trust",
respectively) creating a trust or second lien or an estate in fee simple interest in real
property securing a Home Equity Loan and promissory notes secured thereby (the "Mortgage
Notes") for which the undersigned is acting as Indenture Trustee for various Securityholders
(whether the undersigned is named therein as mortgagee or beneficiary or has become
mortgagee by virtue of Endorsement of the Mortgage Note secured by any such Mortgage or Deed
of Trust) and MBIA Insurance Corporation, as credit enhancer, and for which Residential
Funding Company, LLC is acting as master servicer pursuant to a Servicing Agreement, dated
as of May 30, 2007 (the "Servicing Agreement").
This appointment shall apply only to transactions which the Indenture Trustee is
authorized to enter into under the Indenture, but in no event shall apply to any
transactions other than the following enumerated transactions only:
1. The modification or re-recording of a Mortgage or Deed of Trust, where said
modification or re-recording is for the purpose of correcting the Mortgage or Deed of Trust
to conform same to the original intent of the parties thereto or to correct title errors
discovered after such title insurance was issued and said modification or re-recording, in
either instance, does not adversely affect the lien of the Mortgage or Deed of Trust as
insured.
2. The subordination of the lien of a Mortgage or Deed of Trust to an easement in favor
of a public utility company or a government agency or unit with powers of eminent domain;
this section shall include, without limitation, the execution of partial
satisfactions/releases, partial reconveyances or the execution of requests to trustees to
accomplish same.
3. With respect to a Mortgage or Deed of Trust, the foreclosure, the taking of a deed in
lieu of foreclosure, or the completion of judicial or non-judicial foreclosure or
termination, cancellation or rescission of any such foreclosure, including, without
limitation, any and all of the following acts:
a. The substitution of trustee(s) serving under a Deed of Trust, in accordance
with state law and the Deed of Trust;
b. Statements of breach or non-performance;
c. Notices of default;
d. Cancellations/rescissions of notices of default and/or notices of sale;
e. The taking of a deed in lieu of foreclosure; and
f. Such other documents and actions as may be necessary under the terms of the
Mortgage, Deed of Trust or state law to expeditiously complete said transactions.
4. The conveyance of the properties to the mortgage insurer, or the closing of the title
to the property to be acquired as real estate owned, or conveyance of title to real estate
owned.
5. The completion of loan assumption agreements.
6. The full satisfaction/release of a Mortgage or Deed of Trust or full reconveyance
upon payment and discharge of all sums secured thereby, including, without limitation,
cancellation of the related Mortgage Note.
7. The assignment of any Mortgage or Deed of Trust and the related Mortgage Note, in
connection with the repurchase of the Home Equity Loan secured and evidenced thereby
pursuant to the requirements of a Residential Funding Company, LLC Seller Contract,
including, with limitation, by reason of conversion of an adjustable rate mortgage loan from
a variable rate to a fixed rate.
8. The full assignment of a Mortgage or Deed of Trust upon payment and discharge of all
sums secured thereby in conjunction with the refinancing thereof, including, without
limitation, the endorsement of the related Mortgage Note.
9. The modification or re-recording of a Mortgage or Deed of Trust, where said
modification or re-recording is for the purpose of any modification pursuant to Section 3.01
of the Servicing Agreement.
10. The subordination of the lien of a Mortgage or Deed of Trust, where said
subordination is in connection with any modification pursuant to Section 3.01 of the
Servicing Agreement, and the execution of partial satisfactions/releases in connection with
such same Section 3.01.
The undersigned gives said Attorney-in-Fact full power and authority to execute such
instruments and to do and perform all and every act and thing necessary and proper to carry
into effect the power or powers granted by or under this Limited Power of Attorney as fully
as the undersigned might or could do, and hereby does ratify and confirm to all that said
Attorney-in-Fact shall lawfully do or cause to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the power granted under
this Limited Power of Attorney; and may be satisfied that this Limited Power of Attorney
shall continue in full force and effect has not been revoked unless an instrument of
revocation has been made in writing by the undersigned.
Notwithstanding anything contained in this Limited Power of Attorney to the contrary, the
Master Servicer shall not, without the Indenture Trustee's written consent: (i) initiate any
action, suit or proceeding directly relating to the servicing of a Home Equity Loan solely
under the Indenture Trustee's name without indicating the Master Servicer's representative
capacity; (ii) initiate any other action, suit or proceeding not directly relating to the
servicing of a Home Equity Loan (including but not limited to actions, suits or proceedings
against Securityholders, or against the Depositor or any Home Equity Loan Seller for
breaches of representations and warranties) solely under the Indenture Trustee's name; (iii)
engage counsel to represent the Indenture Trustee in any action, suit or proceeding not
directly relating to the servicing of a Home Equity Loan (including but not limited to
actions, suits or proceedings against Securityholders, or against the Depositor or any Home
Equity Loan Seller for breaches of representations and warranties); or (iv) prepare, execute
or deliver any government filings, forms, permits, registrations or other documents or take
any action with the intent to cause, and that actually causes, the Indenture Trustee to be
registered to do business in any state.
LASALLE BANK NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Indenture
Trustee under the Indenture
By: _____________________________
Name:
Title:
STATE OF )
SS.
COUNTY OF )
On this ____ day of _____, 2007, before me the undersigned, Notary Public of said
State, ____________ personally appeared personally known to me to be duly authorized
officers of LaSalle Bank National Association that executed the within instrument and
personally known to me to be the persons who executed the within instrument on behalf of
LaSalle Bank National Association therein named, and acknowledged to me such LaSalle Bank
National Association executed the within instrument pursuant to its by-laws.
WITNESS my hand and official seal.
Notary Public in and for the
State of
After recording, please mail to:
Attn:
EXHIBIT C
FORM OF REQUEST FOR RELEASE
DATE:
TO:
Re: REQUEST FOR RELEASE OF DOCUMENTS
In connection with your administration of the Home Equity Loans, we request the release of
the Mortgage File described below.
Servicing Agreement Dated:
Series #:
Account #:
Pool #:
Loan #:
Borrower Name(s):
Reason for Document Request: (circle one) Home Equity Loan Prepaid in Full
Home Equity Loan Repurchased
"We hereby certify that all amounts received or to be received in connection with such
payments which are required to be deposited have been or will be so deposited as provided in
the Servicing Agreement."
Residential Funding Company, LLC
Authorized Signature
...............................................................................................
TO CUSTODIAN/INDENTURE TRUSTEE: Please acknowledge this request, and check off documents
being enclosed with a copy of this form. You should retain this form for your files in
accordance with the terms of the Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or
Deed of Trust
[ ] Title Insurance Policy
[ ] Other:
Name _______________
Title
Date
EXHIBIT D
FORM OF LENDER CERTIFICATION FOR ASSIGNMENT OF
HOME EQUITY LOAN
________ , 20
Residential Funding Mortgage Securities II, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LaSalle Bank National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Residential Funding Company, LLC Series 2007-HSA3
Re: Home Equity Loan Pass-Through Certificates,
Series 2007-HSA3, Assignment of Home Equity Loan
Ladies and Gentlemen:
This letter is delivered to you in connection with the assignment by
__________ (the "Indenture Trustee") to ________________________ (the "Lender") of (the
"Home Equity Loan") pursuant to Section 3.05 of the Servicing Agreement (the "Servicing
Agreement"), dated as of May 30, 2007 among Home Equity Loan Trust 2007-HSA3, as issuer,
Residential Funding Company, LLC, as master servicer, and the Indenture Trustee. All terms
used herein and not otherwise defined shall have the meanings set forth in the Servicing
Agreement. The Lender hereby certifies, represents and warrants to, and covenants with, the
Master Servicer and the Indenture Trustee that:
(i) the Home Equity Loan is secured by Mortgaged Property located in a
jurisdiction in which an assignment in lieu of satisfaction is required to preserve lien
priority, minimize or avoid mortgage recording taxes or otherwise comply with, or facilitate
a refinancing under, the laws of such jurisdiction;
(ii) the substance of the assignment is, and is intended to be, a
refinancing of such Home Equity Loan and the form of the transaction is solely to comply
with, or facilitate the transaction under, such local laws;
(iii) the Home Equity Loan following the proposed assignment will be modified
to have a rate of interest at least 0.25 percent below or above the rate of interest on such
Home Equity Loan prior to such proposed assignment; and
(iv) such assignment is at the request of the borrower under the related
Home Equity Loan.
Very truly yours,
(Lender)
By: __________________________
Name:
Title:
EXHIBIT E
FORM OF FORM 10-K CERTIFICATE
I, [identify the certifying individual], certify that:
1. I have reviewed this report on Form 10-K and all reports on Form 10-D required to be
filed in respect of the period covered by this report on Form 10-K of the trust (the
Exchange Act periodic reports) pursuant to the Servicing Agreement dated May 30, 2007 (the
"Agreement") among Residential Funding Company, LLC (the "Master Servicer"), Home Equity Loan
Trust 2007-HSA3 (the "Issuer") and LaSalle Bank National Association (the "Indenture
Trustee") and acknowledged and agreed to by Residential Funding Mortgage Securities II, Inc.
2. Based on my knowledge, Exchange Act periodic reports, taken as a whole, do not
contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, all of the distribution, servicing and other information
required to be provided under Form 10-D for the period covered by this report is included in
the Exchange Act periodic reports;
4. I am responsible for reviewing the activities performed by the Master Servicer and
based on my knowledge and the compliance review conducted in preparing the servicer
compliance statement required in this report under Item 1123 of Regulation AB and except as
disclosed in the Exchange Act periodic reports, the Master Servicer has fulfilled its
obligations under the Agreement; and
5. All of the reports on assessment of compliance with servicing criteria for
asset-backed securities and their related attestation reports on assessment of compliance
with servicing criteria for asset-backed securities required to be included in this report
in accordance with Item 1122 of Regulation AB and Exchange Act Rules 13a-18 and 15d-18 have
been included as an exhibit to this report, except as otherwise disclosed in this report.
Any material instances of noncompliance described in such reports have been disclosed in
this report on Form 10-K.
In giving the certifications above, I have reasonably relied on the information
provided to me by the following unaffiliated parties: [the Indenture Trustee].
Date:____________
_________________________________*
[Signature]
Name:
Title:
* - to be signed by the senior officer in charge of the servicing functions of the Master
Servicer
EXHIBIT F
[FORM OF BACK-UP CERTIFICATION TO FORM 10-K CERTIFICATE]
The undersigned, a Responsible Officer of [__________] (the "Indenture Trustee")
certifies that:
(a) The Indenture Trustee has performed all of the duties specifically required to
be performed by it pursuant to the provisions of the Servicing Agreement dated as of May
30, 2007 (the "Agreement") by and among Residential Funding Company, LLC, as Master
Servicer, Home Equity Loan Trust 2007-HSA3, as Issuer and the Indenture Trustee in
accordance with the standards set forth therein.
(b) Based on my knowledge, the list of Securityholders as shown on the Certificate
Register and the Note Register as of the end of each calendar year that is provided by
the Indenture Trustee pursuant to the Agreement is accurate as of the last day of the
20[__] calendar year.
Capitalized terms used and not defined herein shall have the meanings given
such terms in the Agreement.
IN WITNESS WHEREOF, I have duly executed this certificate as of _________, 20__.]
Name: ____________________
Title:
EXHIBIT G
SERVICING CRITERIA
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by the Indenture Trustee shall address,
at a minimum, the criteria identified as below as "Applicable Servicing Criteria":
-------------------------------------------------------------------------------------------------- -------------------------
APPLICABLE SERVICING
SERVICING CRITERIA CRITERIA
-------------------------------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
REFERENCE CRITERIA
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
GENERAL SERVICING CONSIDERATIONS
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(1)(i) Policies and procedures are instituted to monitor any performance or
other triggers and events of default in accordance with the transaction
agreements.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(1)(ii) If any material servicing activities are outsourced to third parties,
policies and procedures are instituted to monitor the third party's
performance and compliance with such servicing activities.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(1)(iii) Any requirements in the transaction agreements to maintain a back-up
servicer for the pool assets are maintained.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(1)(iv) A fidelity bond and errors and omissions policy is in effect on the party
participating in the servicing function throughout the reporting period
in the amount of coverage required by and otherwise in accordance with
the terms of the transaction agreements.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
CASH COLLECTION AND ADMINISTRATION
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(2)(i) Payments on pool assets are deposited into the appropriate custodial bank |X| (as to accounts
accounts and related bank clearing accounts no more than two business
days following receipt, or such other number of days specified in the
transaction agreements. held by Trustee)
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(2)(ii) Disbursements made via wire transfer on behalf of an obligor or to an |X| (as to investors
investor are made only by authorized personnel. only)
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(2)(iii) Advances of funds or guarantees regarding collections, cash flows or
distributions, and any interest or other fees charged for such advances,
are made, reviewed and approved as specified in the transaction
agreements.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
The related accounts for the transaction, such as cash reserve accounts
or accounts established as a form of overcollateralization, are |X| (as to accounts
separately maintained (e.g., with respect to commingling of cash) as set held by Trustee)
1122(d)(2)(iv) forth in the transaction agreements.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(2)(v) Each custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes of
this criterion, "federally insured depository institution" with respect
to a foreign financial institution means a foreign financial institution
that meets the requirements of Rule 13k-1(b)(1) of the Securities
Exchange Act.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized access.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(2)(vii) Reconciliations are prepared on a monthly basis for all asset-backed
securities related bank accounts, including custodial accounts and
related bank clearing accounts. These reconciliations are (A)
mathematically accurate; (B) prepared within 30 calendar days after the
bank statement cutoff date, or such other number of days specified in the
transaction agreements; (C) reviewed and approved by someone other than
the person who prepared the reconciliation; and (D) contain explanations
for reconciling items. These reconciling items are resolved within 90
calendar days of their original identification, or such other number of
days specified in the transaction agreements.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
INVESTOR REMITTANCES AND REPORTING
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(3)(i) Reports to investors, including those to be filed with the Commission,
are maintained in accordance with the transaction agreements and
applicable Commission requirements. Specifically, such reports (A) are
prepared in accordance with timeframes and other terms set forth in the
transaction agreements; (B) provide information calculated in accordance
with the terms specified in the transaction agreements; (C) are filed
with the Commission as required by its rules and regulations; and (D)
agree with investors' or the trustee's records as to the total unpaid
principal balance and number of pool assets serviced by the servicer.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(3)(ii) Amounts due to investors are allocated and remitted in accordance with |X|
timeframes, distribution priority and other terms set forth in the
transaction agreements.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
Disbursements made to an investor are posted within two business days to
the servicer's investor records, or such other number of days specified |X|
1122(d)(3)(iii) in the transaction agreements.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
Amounts remitted to investors per the investor reports agree with |X|
1122(d)(3)(iv) cancelled checks, or other form of payment, or custodial bank statements.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
POOL ASSET ADMINISTRATION
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(4)(i) Collateral or security on pool assets is maintained as required by the
transaction agreements or related asset pool documents.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
Pool assets and related documents are safeguarded as required by the
1122(d)(4)(ii) transaction agreements
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(4)(iii) Any additions, removals or substitutions to the asset pool are made,
reviewed and approved in accordance with any conditions or requirements
in the transaction agreements.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(4)(iv) Payments on pool assets, including any payoffs, made in accordance with
the related pool asset documents are posted to the servicer's obligor
records maintained no more than two business days after receipt, or such
other number of days specified in the transaction agreements, and
allocated to principal, interest or other items (e.g., escrow) in
accordance with the related pool asset documents.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(4)(v) The servicer's records regarding the pool assets agree with the
servicer's records with respect to an obligor's unpaid principal balance.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(4)(vi) Changes with respect to the terms or status of an obligor's pool asset
(e.g., loan modifications or re-agings) are made, reviewed and approved
by authorized personnel in accordance with the transaction agreements and
related pool asset documents.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., forbearance plans,
modifications and deeds in lieu of foreclosure, foreclosures and
repossessions, as applicable) are initiated, conducted and concluded in
accordance with the timeframes or other requirements established by the
transaction agreements.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(4)(viii) Records documenting collection efforts are maintained during the period a
pool asset is delinquent in accordance with the transaction agreements.
Such records are maintained on at least a monthly basis, or such other
period specified in the transaction agreements, and describe the entity's
activities in monitoring delinquent pool assets including, for example,
phone calls, letters and payment rescheduling plans in cases where
delinquency is deemed temporary (e.g., illness or unemployment).
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(4)(ix) Adjustments to interest rates or rates of return for pool assets with
variable rates are computed based on the related pool asset documents.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(4)(x) Regarding any funds held in trust for an obligor (such as escrow
accounts): (A) such funds are analyzed, in accordance with the obligor's
pool asset documents, on at least an annual basis, or such other period
specified in the transaction agreements; (B) interest on such funds is
paid, or credited, to obligors in accordance with applicable pool asset
documents and state laws; and (C) such funds are returned to the obligor
within 30 calendar days of full repayment of the related pool asset, or
such other number of days specified in the transaction agreements.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(4)(xi) Payments made on behalf of an obligor (such as tax or insurance payments)
are made on or before the related penalty or expiration dates, as
indicated on the appropriate bills or notices for such payments, provided
that such support has been received by the servicer at least 30 calendar
days prior to these dates, or such other number of days specified in the
transaction agreements.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(4)(xii) Any late payment penalties in connection with any payment to be made on
behalf of an obligor are paid from the servicer's funds and not charged
to the obligor, unless the late payment was due to the obligor's error or
omission.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
Disbursements made on behalf of an obligor are posted within two business
days to the obligor's records maintained by the servicer, or such other
1122(d)(4)(xiii) number of days specified in the transaction agreements.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible accounts are recognized and
recorded in accordance with the transaction agreements.
---------------------- --------------------------------------------------------------------------- -------------------------
---------------------- --------------------------------------------------------------------------- -------------------------
Any external enhancement or other support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation AB, is maintained as set forth in |X|
1122(d)(4)(xv) the transaction agreements.
---------------------- --------------------------------------------------------------------------- -------------------------
TABLE OF CONTENTS
PAGE
ARTICLE I Definitions...............................................................1
Section 1.01 Definitions...............................................................1
Section 1.02 Other Definitional Provisions.............................................1
Section 1.03 Interest Calculations; Servicing Fee......................................2
ARTICLE II Representations and Warranties............................................2
Section 2.01 Representations and Warranties Regarding the Master Servicer..............2
Section 2.02 Representations and Warranties of the Issuer..............................3
Section 2.03 Enforcement of Representations and Warranties.............................4
ARTICLE III Administration and Servicing of Home Equity Loans.........................5
Section 3.01 The Master Servicer.......................................................5
Section 3.02 Collection of Certain Home Equity Loan Payments..........................10
Section 3.03 Permitted Withdrawals from the Custodial Account.........................13
Section 3.04 Maintenance of Hazard Insurance; Property Protection Expenses............14
Section 3.05 Enforcement of Due-on-Sale Clauses; Assumption and Modification
Agreements; Release or Substitution of Lien..............................15
Section 3.06 Trust Estate; Related Documents..........................................18
Section 3.07 Realization Upon Defaulted Home Equity Loans; Loss Mitigation............18
Section 3.08 Issuer and Indenture Trustee to Cooperate................................21
Section 3.09 Servicing Compensation; Payment of Certain Expenses by Master............22
Section 3.10 Annual Statement as to Compliance........................................22
Section 3.11 Annual Servicing Report..................................................23
Section 3.12 Access to Certain Documentation and Information Regarding the Home
Equity Loans.............................................................23
Section 3.13 Maintenance of Certain Servicing Insurance Policies......................24
Section 3.14 Information Required by the Internal Revenue Service and Reports of
Foreclosures and Abandonments of Mortgaged Property......................24
Section 3.15 Optional Repurchase or Transfer of Home Equity Loans.....................24
ARTICLE IV Servicing Certificate....................................................26
Section 4.01 Statements to Securityholders............................................26
Section 4.02 Tax Reporting............................................................29
Section 4.03 Exchange Act Reporting...................................................29
ARTICLE V Payment Account..........................................................30
Section 5.01 Payment Account..........................................................30
ARTICLE VI The Master Servicer......................................................30
Section 6.01 Liability of the Master Servicer.........................................31
Section 6.02 Merger or Consolidation of, or Assumption of the Obligations of,
the Master Servicer......................................................31
Section 6.03 Limitation on Liability of the Master Servicer and Others................31
Section 6.04 Master Servicer Not to Resign............................................32
Section 6.05 Delegation of Duties.....................................................32
Section 6.06 Master Servicer to Pay Indenture Trustee's and Owner Trustee's Fees
and Expenses; Indemnification............................................32
ARTICLE VII Default..................................................................34
Section 7.01 Servicing Default........................................................34
Section 7.02 Indenture Trustee to Act; Appointment of Successor.......................36
Section 7.03 Notification to Securityholders..........................................37
Section 7.04 Servicing Trigger; Removal of Master Servicer............................37
ARTICLE VIII Miscellaneous Provisions.................................................38
Section 8.01 Amendment................................................................38
Section 8.02 GOVERNING LAW............................................................38
Section 8.03 Notices..................................................................39
Section 8.04 Severability of Provisions...............................................39
Section 8.05 Third-Party Beneficiaries................................................39
Section 8.06 Counterparts.............................................................40
Section 8.07 Effect of Headings and Table of Contents.................................40
Section 8.08 Termination Upon Purchase by the Master Servicer or Liquidation of
Home Equity Loans........................................................40
Section 8.09 Certain Matters Affecting the Indenture Trustee..........................41
Section 8.10 Owner Trustee Not Liable for Related Documents...........................41
ARTICLE IX Compliance with Regulation AB............................................41
Section 9.01 Intent of the Parties; Reasonableness....................................41
Section 9.02 Additional Representations and Warranties of the Indenture Trustee.......42
Section 9.03 Information to be provided by the Indenture Trustee......................43
Section 9.04 Report on Assessment of Compliance and Attestation.......................43
Section 9.05 Indemnification; Remedies................................................43
EXHIBITS
Exhibit A-I Group I Loan Schedule.................................................A-1-1
Exhibit A-II Group II LoanSchedule.................................................A-2-1
Exhibit B Limited Power of Attorney............................................ B-1
Exhibit C Form of Request for Release...........................................C-1
Exhibit D Form of Lender Certification for Assignment
of Home Equity Loan....................................................D-1
Exhibit E Form 10-K Certificate..................................................E-1
Exhibit F Form of Back-Up Certification to Form 10-K Certificate.................F-1
Exhibit G Servicing Criteria.....................................................G-1