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EXHIBIT 10.4
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PACIFICAMERICA MONEY CENTER, INC.,
as Master Servicer,
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Indenture Trustee,
and
PACIFICAMERICA HOME EQUITY LOAN TRUST SERIES 1998-2F,
as Issuer
________________________
SERVICING AGREEMENT
Dated as of June 1, 1998
________________________
Fixed Rate Home Equity Loans
PacificAmerica Home Equity Loan Asset-Backed Notes, Series 1998-2F
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions
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Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.03. Interest Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
Representations and Warranties
3
Section 2.01. Representations and Warranties Regarding the Master Servicer . . . . . . . . . . . . . . . 3
Section 2.02. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.03. Enforcement of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
Administration and Servicing of Mortgage Loans
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Section 3.01. Servicer to Assure Servicing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.02. Subservicing Agreements Between Master Servicer and Subservicers . . . . . . . . . . . . . 7
Section 3.03. Successor Subservicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.04. Liability of the Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.05. Assumption or Termination of Subservicing Agreements by Indenture Trustee . . . . . . . . 9
Section 3.06. Collection of Mortgage Loan Payments; Collection Account . . . . . . . . . . . . . . . . . 9
Section 3.07. Withdrawals from the Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.08. Collection of Taxes, Assessments and Similar Items; Servicing Accounts . . . . . . . . . . 13
Section 3.09. Access to Certain Documentation and Information Regarding the Mortgage Loans . . . . . . . 14
Section 3.10. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.11. Maintenance of Hazard Insurance and Fidelity Coverage . . . . . . . . . . . . . . . . . . 14
Section 3.12. Due-on-Sale Clauses; Assumption Agreements . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.13. Realization Upon Defaulted Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.14. Indenture Trustee to Cooperate; Release of Mortgage Files. . . . . . . . . . . . . . . . . 19
Section 3.15. Servicing Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.16. Annual Statements of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.17. Annual Independent Public Accountants' Servicing Report . . . . . . . . . . . . . . . . . 21
Section 3.18. Optional Purchase of Defaulted Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . 22
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Section 3.19. Information Required by the Internal Revenue Service Generally and Reports of
Foreclosures and Abandonments of Mortgaged Property. . . . . . . . . . . . . . . . . . . . 22
Section 3.20. Master Servicer to Act as Agent and Bailee of the Indenture Trustee . . . . . . . . . . . 22
ARTICLE IV
Remittance Reports
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Section 4.01. Remittance Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.02. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.03. Compensating Interest Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
The Master Servicer
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Section 5.01. Liability of the Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.02. Merger or Consolidation of, or Assumption of the Obligations of, the Master Servicer . . . 24
Section 5.03. Limitation on Liability of the Master Servicer and Others . . . . . . . . . . . . . . . . 24
Section 5.04. Master Servicer Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.05. Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.06. Master Servicer to Pay Indenture Trustee's and Owner Trustee's Expenses; Indemnification . 26
Section 5.07. Assignment of Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VI
Default
27
Section 6.01. Servicing Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.02. Indenture Trustee to Act; Appointment of Successor . . . . . . . . . . . . . . . . . . . . 30
Section 6.03. Notification to Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.04. Waiver of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VII
Miscellaneous Provisions
33
Section 7.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.02. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.04. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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Section 7.05. Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.06. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.07. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.08. Termination Upon Purchase by the Master Servicer . . . . . . . . . . . . . . . . . . . . . 35
Section 7.09. No Petition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.10. No Recourse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VIII
Administrative Duties of the Master Servicer
36
Section 8.01. Administrative Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.02. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.03. Additional Information to be Furnished . . . . . . . . . . . . . . . . . . . . . . . . . . 37
EXHIBIT A - MORTGAGE LOAN SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B - FORM OF REQUEST FOR RELEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C - FORM OF LIQUIDATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
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This Servicing Agreement, dated as of June 1, 1998, among
PacificAmerica Money Center, Inc., as Master Servicer (in such capacity, the
"Master Servicer"), Bankers Trust Company of California, N.A., as Indenture
Trustee, and PacificAmerica Home Equity Loan Trust Series 1998-2F, as Issuer
(the "Issuer").
W I T N E S S E T H T H A T:
WHEREAS, pursuant to the terms of the Home Equity Loan
Purchase Agreement, the Seller will sell (i) the Initial Mortgage Loans to the
Company on the Closing Date and (ii) the Subsequent Mortgage Loans to the
Issuer on each Subsequent Transfer Date ;
WHEREAS, the Company will sell the Initial Mortgage Loans and
transfer all of its rights under the Home Equity Loan Purchase Agreement to the
Issuer on the Closing Date;
WHEREAS, pursuant to the terms of the Trust Agreement, the
Issuer will issue the Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer
will issue and transfer to or at the direction of the Company, the Notes; and
WHEREAS, pursuant to the terms of this Servicing Agreement,
the Master Servicer will service the Mortgage Loans directly or through one or
more Subservicers;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. For all purposes of this 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 as of June 1, 1998 (the "Indenture") between the Issuer
and the Indenture Trustee, which Definitions are incorporated by reference
herein. All other capitalized terms used herein shall have the meanings
specified herein.
Section 1.02. Other Definitional Provisions. (a) All terms
defined in this Servicing Agreement shall have the defined meanings when used
in any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.
(b) As used in this Servicing Agreement and in any certificate or
other document made or delivered pursuant hereto or thereto, accounting terms
not defined in this Servicing Agreement or in any such certificate or other
document, and accounting terms partly defined in this Servicing Agreement or in
any such certificate or other document, to the extent not defined, shall have
the
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respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Servicing Agreement or in any such certificate or other document are
inconsistent with the meanings of such terms under generally accepted
accounting principles, the definitions contained in this Servicing Agreement or
in any such certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Servicing Agreement shall refer to this Servicing
Agreement as a whole and not to any particular provision of this Servicing
Agreement; Section and Exhibit references contained in this Servicing Agreement
are references to Sections and Exhibits in or to this Servicing Agreement
unless otherwise specified; and the term "including" shall mean "including
without limitation".
(d) The definitions contained in this Servicing Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments incorporated
therein; references to a Person are also to its permitted successors and
assigns.
Section 1.03. Interest Calculations. All calculations of interest
hereunder that are made in respect of the Principal Balance of a Mortgage Loan
shall be made in accordance with the terms of the related Mortgage Note and
Mortgage. The calculation of the Servicing Fee shall be made on the basis of a
360-day year consisting o f twelve 30-day months. All dollar amounts
calculated hereunder shall be rounded to the nearest ▇▇▇▇▇ with one-half of one
▇▇▇▇▇ being rounded up.
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ARTICLE II
Representations and Warranties
Section 2.01. Representations and Warranties Regarding the Master
Servicer. The Master Servicer represents and warrants to the Issuer and for
the benefit of the Indenture Trustee, as pledgee of the Mortgage Loans, the
Note Insurer and the Noteholders, as of the Closing Date, that:
(i) The Master Servicer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power to own its assets and to
transact the business in which it is currently engaged. The Master
Servicer is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires
such qualification and in which the failure to so qualify would have a
material adverse effect on the business, properties, assets, or
condition (financial or other) of the Master Servicer or the validity
or enforceability of the Mortgage Loans; provided that the Master
Servicer is not qualified as a servicer in any jurisdiction as of the
date hereof;
(ii) The Master Servicer has the corporate power
and authority to make, execute, deliver and perform this Servicing
Agreement and all of the transactions contemplated under this
Servicing Agreement, and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Servicing
Agreement. When executed and delivered, this Servicing Agreement will
constitute the legal, valid and binding obligation of the Master
Servicer enforceable in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect,
affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies (whether at law or in equity);
(iii) The Master Servicer is not required to obtain
the consent of any other Person or any consent, license, approval or
authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Servicing Agreement, except for such consent, license, approval or
authorization, or registration or declaration, as shall have been
obtained or filed, as the case may be;
(iv) The execution and delivery of this Servicing
Agreement and the performance of the transactions contemplated hereby
by the Master Servicer will not violate any provision of any existing
law or regulation or any order or decree of any court applicable to
the Master Servicer or any provision of the certificate of
incorporation or bylaws of the Master Servicer, or constitute a
material breach of any mortgage, indenture, contract or other
agreement to which the Master Servicer is a party or by which the
Master Servicer may be bound, nor, to the Master Servicer's knowledge,
will any such mortgage,
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indenture, contract or other agreement materially affect in the future
the ability of the Master Servicer to perform its obligations under
this Agreement or its business, properties, assets, or condition
(financial or other); and
(v) 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 Notes or the Certificates which, to
the knowledge of the Master Servicer, has a reasonable likelihood of
resulting in a material adverse effect on the transactions
contemplated by this Servicing Agreement.
The foregoing representations and warranties shall survive any
termination of the Master Servicer hereunder.
Section 2.02. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the
State of Delaware and will obtain and preserve its qualification to do business
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Servicing Agreement.
Section 2.03. Enforcement of Representations and Warranties. The
Master Servicer, on behalf of and subject to the direction of the Note Insurer
or, if a Note Insurer Default exists, the Indenture Trustee, as pledgee of the
Mortgage Loans, or the Note Insurer, shall enforce the representations and
warranties and related obligations for breaches thereof of the Seller pursuant
to the Home Equity Loan Purchase Agreement upon notice of breach of such
representations and warranties from the Indenture Trustee, the Issuer, the
Owner Trustee, the Seller, the Note Insurer or the Company. Upon the discovery
by the Seller, the Master Servicer, the Indenture Trustee, the Issuer, the
Owner Trustee, the Note Insurer or the Company of a breach of any of the
representations and warranties made in the Home Equity Loan Purchase Agreement,
in respect of any Mortgage Loan which materially and adversely affects the
value of the related Mortgage Loan or the interests of the Noteholders or the
Certificateholders or the Note Insurer, the party discovering such breach shall
give prompt written notice to the other parties. The Note Insurer or the
Indenture Trustee may, and the Master Servicer shall, request that (or if the
Seller is the Master Servicer, the Seller shall) pursuant to the terms of the
Home Equity Loan Purchase Agreement, either (i) cure such breach in all
material respects or (ii) purchase such Mortgage Loan, in each instance in
accordance with the Home Equity Loan Purchase Agreement; provided that the
Seller shall, subject to the conditions set forth in the Home Equity Loan
Purchase Agreement, have the option to substitute an Eligible Substitute
Mortgage Loan or Eligible Substitute Mortgage Loans for such Mortgage Loan.
Monthly Payments due with respect to Eligible Substitute Mortgage Loans in the
month of substitution shall not be part of the Trust Estate and will be
retained by the Master Servicer and remitted by the Master Servicer to the
Seller on the next succeeding Payment Date. For the month of substitution,
distributions to the Payment Account pursuant to the Servicing Agreement will
include the Monthly Payment due on a Deleted Mortgage Loan for such month and
thereafter the Seller shall be entitled to retain all amounts received in
respect of such Deleted Mortgage Loan. The Master Servicer shall amend or
cause to be amended the Mortgage Loan Schedule to reflect the removal of such
Mortgage
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Loan and the substitution of the Eligible Substitute Mortgage Loans and the
Master Servicer shall promptly deliver the amended Mortgage Loan Schedule to
the related Subservicer, if any, the Note Insurer, the Owner Trustee and the
Indenture Trustee.
In connection with the substitution of one or more Eligible Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer will
determine the amount (such amount, a "Substitution Adjustment Amount"), if any,
by which the aggregate principal balance of all such Eligible Substitute
Mortgage Loans as of the date of substitution is less than the aggregate
principal balance of all such Deleted Mortgage Loans (after application of the
principal portion of the Monthly Payments due in the month of substitution that
are to be distributed to the Payment Account in the month of substitution).
The Seller shall pay the Substitution Adjustment Amount to the Master Servicer
and the Master Servicer shall deposit such Substitution Adjustment Amount into
the Collection Account upon receipt.
It is understood and agreed that the obligation of the Seller to cure
such breach or purchase or substitute for such Mortgage Loan as to which such a
breach has occurred and is continuing shall constitute the sole remedy
respecting such breach available to the Issuer and the Indenture Trustee, as
pledgee of the Mortgage Loans, against the Seller. In connection with the
purchase of or substitution for any such Mortgage Loan by the Seller, the
Issuer shall assign to the Seller all of its right, title and interest in
respect of the Home Equity Loan Purchase Agreement applicable to such Mortgage
Loan. Upon receipt of the Repurchase Price, or upon completion of such
substitution, the Master Servicer shall notify the Indenture Trustee by
delivering a request for Release in the form of Exhibit B hereto, and then the
Indenture Trustee shall deliver the Mortgage Files relating to such Mortgage
Loan to the Master Servicer, together with all relevant endorsements and
assignments prepared by the Master Servicer which the Indenture Trustee shall
execute.
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ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. Servicer to Assure Servicing. (a) The Master
Servicer shall supervise, or take such actions as are necessary to ensure, the
servicing and administration of the Mortgage Loans and any REO Property in
accordance with this Servicing Agreement and Accepted Servicing Procedures,
which generally shall conform to the standards of an institution prudently
servicing mortgage loans for its own account and shall have full authority to
do anything it reasonably deems appropriate or desirable in connection with
such servicing and administration. The Master Servicer may perform its
responsibilities relating to servicing through other agents or independent
contractors, but shall not thereby be released from any of its responsibilities
as hereinafter set forth. The authority of the Master Servicer, in its
capacity as Master Servicer, and any Subservicer acting on its behalf, shall
include, without limitation, the power to (i) consult with and advise any
Subservicer regarding administration of a related Mortgage Loan, (ii) direct a
Subservicer to foreclose on a related Mortgage Loan, (iii) supervise the filing
and collection of insurance claims and take or cause to be taken such actions
on behalf of the insured Person thereunder as shall be reasonably necessary to
prevent the denial of coverage thereunder, and (iv) effectuate foreclosure or
other conversion of the ownership of the Mortgaged Property securing a related
Mortgage Loan, including the employment of attorneys, the institution of legal
proceedings, the collection of deficiency judgments, the acceptance of
compromise proposals and any other matter pertaining to a delinquent Mortgage
Loan; provided, however, with respect to clause (ii) above, the Subservicer
shall follow such procedures as set forth in the Sub-Servicing Agreement. The
authority of the Master Servicer shall include, in addition, the power on
behalf of the Noteholders, the Indenture Trustee, the Note Insurer or any of
them to (i) execute and deliver customary consents or waivers and other
instruments and documents, (ii) consent to transfer of any related Mortgaged
Property and assumptions of the related Mortgage Notes and Security Instruments
(pursuant to the provisions of this Servicing Agreement) and (iii) collect any
Insurance Proceeds and Liquidation Proceeds. Without limiting the generality
of the foregoing, the Master Servicer and any Subservicer acting on its behalf
may, and is hereby authorized, and empowered by the Indenture Trustee when the
Master Servicer believes it is reasonably necessary in its best judgment in
order to comply with its servicing duties hereunder, to execute and deliver, on
behalf of itself, the Noteholders, the Indenture Trustee, the Note Insurer or
any of them, any instruments of satisfaction, cancellation, partial or full
release, discharge and all other comparable instruments, with respect to the
related Mortgage Loans, the Insurance Policies and the accounts related
thereto, and the Mortgaged Properties. The Master Servicer may exercise this
power in its own name or through the appointment of a Subservicer.
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.
The relationship of the Master Servicer (and of any successor to the
Master Servicer as Master Servicer under this Servicing Agreement) to the
Issuer and 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.
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(b) Notwithstanding the provisions of Subsection 3.01(a), the
Master Servicer shall not take any action inconsistent with the interests of
the Indenture Trustee, the Note Insurer or the Noteholders or with the rights
and interests of the Indenture Trustee, the Note Insurer or the Noteholders
under this Servicing Agreement; provided, however, that in the event the
interests of the parties conflict, the Master Servicer shall act to maximize
the value to the Trust Estate.
(c) The Indenture Trustee shall furnish the Master Servicer with
any powers of attorney and other documents in form as provided to it necessary
or appropriate to enable the Master Servicer to service and administer the
related Mortgage Loans and REO Property and the Indenture Trustee shall not be
liable for the actions of the Master Servicer or any Subservicers under such
powers of attorney.
Section 3.02. Subservicing Agreements Between Master Servicer and
Subservicers. (a) With the consent of the Note Insurer, the Master Servicer
may enter into Subservicing Agreements with Subservicers for the servicing and
administration of the Mortgage Loans and for the performance of any and all
other activities of the Master Servicer hereunder. Each Subservicer shall be
either (i) an institution the accounts of which are insured by the FDIC or (ii)
another entity that engages in the business of originating or servicing
mortgage loans comparable to the Mortgage Loans, and in either case shall be
authorized to transact business in the state or states in which the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Subservicer to perform its obligations
hereunder and under the Subservicing Agreement. Any Subservicing Agreement
entered into by the Master Servicer shall include the provision that such
Agreement may be immediately terminated (i) (x) with cause and without any
termination fee by the Note Insurer or the Master Servicer hereunder and/or (y)
without cause by the Master Servicer (with the consent of the Note Insurer,
which consent shall not be unreasonably withheld), in which case the Master
Servicer shall be solely responsible for any termination fee or penalty
resulting therefrom (which shall not be the responsibility of the Indenture
Trustee) and (ii) at the option of the Note Insurer upon the termination or
resignation of the Master Servicer hereunder, in which case the Master Servicer
shall be solely responsible for any termination fee or penalty resulting
therefrom. In addition, each Subservicing Agreement shall provide for
servicing of the Mortgage Loans consistent with the terms of this Servicing
Agreement and shall provide, in the event of termination or resignation of the
Master Servicer, that (i) the Subservicer thereunder may become the successor
Master Servicer, with the approval of the Note Insurer, and (ii) if the
Subservicer does not elect to become the Master Servicer or is not approved as
the successor Master Servicer by the Note Insurer, the Note Insurer may
terminate the Subservicer without any termination fee; provided, however, the
Master Servicer shall be responsible for any such termination fee. With the
consent of the Note Insurer, the Master Servicer and the Subservicers may enter
into Subservicing Agreements and make amendments to the Subservicing Agreements
or enter into different forms of Subservicing Agreements providing for, among
other things, the delegation by the Master Servicer to a Subservicer of
additional duties regarding the administration of the Mortgage Loans.
As of the date hereof, the Master Servicer has entered into the
Sub-Servicing Agreement with the Sub-Servicer for the servicing and
administration of the Mortgage Loans and, with the consent of the Note Insurer,
may enter into additional subservicing agreements with subservicers
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acceptable to the Indenture Trustee and the Note Insurer for the servicing and
administration of certain of the Mortgage Loans.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Indenture Trustee, the Note Insurer and the
Noteholders, shall enforce the obligations of each Subservicer under the
related Subservicing Agreement. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Subservicing
Agreements and the pursuit of other appropriate remedies, shall be in such form
and carried out to such an extent and at such time as the Master Servicer, in
its good faith business judgment, would require were it the owner of the
related Mortgage Loans. The Master Servicer shall pay the costs of such
enforcement at its own expense, but shall be reimbursed therefor only (i) from
a general recovery resulting from such enforcement only to the extent, if any,
that such recovery exceeds all amounts due in respect of the related Mortgage
Loan or (ii) from a specific recovery of costs, expenses or attorneys' fees
against the party against whom such enforcement is directed.
Section 3.03. Successor Subservicers. The Master Servicer shall be
entitled to terminate any Subservicing Agreement that may exist in accordance
with the terms and conditions of such Subservicing Agreement and without any
limitation by virtue of this Servicing Agreement, but only with the written
consent of the Note Insurer; provided, however, that upon termination, the
Master Servicer shall either act as Master Servicer of the related Mortgage
Loans or enter into an appropriate contract with a successor Subservicer
reasonably acceptable to the Indenture Trustee and the Note Insurer, pursuant
to which such successor Subservicer will be bound by all relevant terms of the
related Subservicing Agreement pertaining to the servicing of such Mortgage
Loan, which Subservicing Agreement shall be acceptable to and acknowledged by
the Note Insurer and acknowledged by the Indenture Trustee.
Section 3.04. Liability of the Master Servicer. (a)
Notwithstanding any Subservicing Agreement, any of the provisions of this
Servicing Agreement relating to agreements or arrangements between the Master
Servicer and a Subservicer or reference to actions taken through a Subservicer
or otherwise, the Master Servicer shall under all circumstances remain
obligated and primarily liable to the Indenture Trustee, the Noteholders and
the Note Insurer for the servicing and administering of the Mortgage Loans and
any REO Property in accordance with this Servicing Agreement. The obligations
and liability of the Master Servicer shall not be diminished by virtue of
Subservicing Agreements or by virtue of indemnification of the Master Servicer
by any Subservicer, or any other Person. The obligations and liability of the
Master Servicer shall remain of the same nature and under the same terms and
conditions as if the Master Servicer alone were servicing and administering the
related Mortgage Loans. The Master Servicer shall, however, be entitled to
enter into indemnification agreements with any Subservicer or other Person and
nothing in this Servicing Agreement shall be deemed to limit or modify such
indemnification. For the purposes of this Servicing Agreement, the Master
Servicer shall be deemed to have received any payment on a Mortgage Loan on the
date the Subservicer received such payment; provided, however, that this
sentence shall not apply to the Indenture Trustee acting as the Master
Servicer; provided, further, however, that the foregoing provision shall not
affect the obligation of the Master Servicer if it is also the Indenture
Trustee to advance amounts which are not Nonrecoverable Advances.
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(b) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Master Servicer alone, and the Indenture Trustee, the
Note Insurer and the Noteholders shall not be deemed parties thereto and shall
have no claims, rights, obligations, duties or liabilities with respect to the
Subservicer except as set forth in Sections 3.05 and 7.05.
Section 3.05. Assumption or Termination of Subservicing Agreements
by Indenture Trustee. (a) If the Indenture Trustee or its designee shall
assume the servicing obligations of the Master Servicer in accordance with
Section 6.02 below, the Indenture Trustee, to the extent necessary to permit
the Indenture Trustee to carry out the provisions of Section 6.02 with respect
to the Mortgage Loans, shall succeed to all of the rights and obligations of
the Master Servicer under each of the Subservicing Agreements and each
Subservicing Agreement shall provide for such successor. In such event, the
Indenture Trustee or its designee as the successor Master Servicer shall be
deemed to have assumed all of the Master Servicer's rights and obligations
therein and to have replaced the Master Servicer as a party to such
Subservicing Agreements to the same extent as if such Subservicing Agreements
had been assigned to the Indenture Trustee or its designee as a successor
Master Servicer, except that the Indenture Trustee or its designee as a
successor Master Servicer shall not be deemed to have assumed any obligations
or liabilities of the Master Servicer arising prior to such assumption and the
Master Servicer shall not thereby be relieved of any liability or obligations
under such Subservicing Agreements arising prior to such assumption; provided,
however, that if the Master Servicer resigns or is terminated due to an Event
of Default not caused by the Subservicer, the Subservicer shall have the option
if it so chooses, with the consent of the Note Insurer, to become the successor
Master Servicer in which event the Indenture Trustee shall name the Subservicer
as the successor Master Servicer. Nothing in the foregoing shall be deemed to
entitle the Indenture Trustee or its designee as a successor Master Servicer at
any time to receive any portion of the servicing compensation provided under
Section 3.17 except for such portion as the Master Servicer would be entitled
to receive.
(b) In the event that the Indenture Trustee or its designee as
successor Master Servicer for the Indenture Trustee assumes the servicing
obligations of the Master Servicer under Section 6.02, upon the request of the
Indenture Trustee or such designee as successor Master Servicer, the Master
Servicer shall at its own expense deliver to the Indenture Trustee, or at its
written request to such designee, originals or, if originals are not available,
photocopies of all documents, files and records, electronic or otherwise,
relating to the Subservicing Agreements and the related Mortgage Loans or REO
Property then being serviced and an accounting of amounts collected and held by
it, if any, and will otherwise cooperate and use its reasonable efforts to
effect the orderly and efficient transfer of the Subservicing Agreements, or
responsibilities hereunder to the Indenture Trustee, or at its written request
to such designee as successor Master Servicer.
Section 3.06. Collection of Mortgage Loan Payments; Collection
Account. (a) The Master Servicer will coordinate and monitor remittances by
Subservicers with respect to the Mortgage Loans in accordance with this
Servicing Agreement.
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(b) The Master Servicer shall make its best reasonable efforts to
collect or cause to be collected all payments required under the terms and
provisions of the Mortgage Loans and shall follow, and use its best reasonable
efforts to cause Subservicers to follow, collection procedures comparable to
the collection procedures of prudent mortgage lenders servicing mortgage loans
for their own account to the extent such procedures shall be consistent with
this Servicing Agreement. Consistent with the foregoing, the Master Servicer or
the related Subservicer may in its discretion (i) waive or permit to be waived
any late payment charge or assumption fee, and (ii) suspend or reduce or permit
to be suspended or reduced regular monthly payments for a period of up to six
months, or arrange or permit an arrangement with a Mortgagor for a scheduled
liquidation of delinquencies; provided, however, that the Master Servicer or
the related Subservicer may permit the foregoing only if it believes, in its
good faith business judgment, that recoveries of Monthly Payments will be
maximized as a result of such actions; provided further, however, that the
Master Servicer shall not permit any waiver, modification or variance which
would (a) change the loan rate, (b) forgive any payment of principal or
interest, (c) lessen the lien priority or (d) extend the final maturity date of
a Mortgage Loan past 12 months after to the final maturity date on the Notes;
provided, however, that the Master Servicer may approve (x)(a) through (d) if
it believes it is in the best interests of the Noteholders and the Note Insurer
and (y)(a) or (d) if the Mortgagor requests such modification and the Note
Insurer consents thereto (such consent shall be deemed not given if the Note
Insurer does not approve within 5 Business Days after written notice of such
proposed modification is provided, but if the Note Insurer gives such consent
after five Business Days then the Note Insurer's consent shall be deemed
given); provided further, however, with respect to clause (y) in no event shall
the Master Servicer modify such Mortgage Loan if at the time the aggregate
amount of all such modified Mortgage Loans equals or exceeds 5% of the Original
Pool Balance. In the event the Master Servicer or related Subservicer shall
consent to the deferment of the due dates for payments due on a Mortgage Note,
the Master Servicer shall nonetheless make an Advance or shall cause the
related Subservicer to make an advance to the same extent as if such
installment were due, owing and delinquent and had not been deferred through
liquidation of the Mortgaged Property; provided, however, that the obligation
of the Master Servicer or the related Subservicer to make an Advance shall
apply only to the extent that the Master Servicer believes, in its good faith
business judgment, that such advances are not Nonrecoverable Advances.
(c) Promptly after the Master Servicer has determined that all
amounts which it expects to recover from or on account of a Mortgage Loan have
been recovered and that no further Liquidation Proceeds will be received in
connection therewith, the Master Servicer shall provide to (i) the Indenture
Trustee a certificate of a Servicing Officer that such Mortgage Loan became a
Liquidated Mortgage Loan as of the date of such determination and (ii) the Note
Insurer and the Indenture Trustee a Liquidation Report in the form attached
hereto as Exhibit C.
(d) The Master Servicer shall establish a segregated account in
the name of the Indenture Trustee (the "Collection Account"), which shall be an
Eligible Account, in which the Master Servicer shall deposit or cause to be
deposited any amounts representing payments on and any collections in respect
of the Initial Mortgage Loans received by it after the Cut-Off Date or, with
respect to the Subsequent Mortgage Loans, the Subsequent Cut-off Date (other
than in respect of the payments described in the proviso immediately following
item (vii) of this
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subsection (d)) within two Business Days following receipt thereof, including
the following payments and collections received or made by it (without
duplication):
(i) all payments of principal of or interest on
the Mortgage Loans received by the Master Servicer after the Cut- off
Date or the Subsequent Cut-off Date directly from Mortgagors or from
the respective Subservicer;
(ii) the aggregate Repurchase Price of the
Mortgage Loans purchased by the Master Servicer pursuant to Section
3.18;
(iii) Net Liquidation Proceeds;
(iv) all proceeds of any Mortgage Loans
repurchased by the Seller pursuant to the Home Equity Loan Purchase
Agreement, and all Substitution Adjustment Amounts required to be
deposited in connection with the substitution of an Eligible
Substitute Mortgage Loan pursuant to the Home Equity Loan Purchase
Agreement;
(v) Insurance Proceeds, other than Net
Liquidation Proceeds, resulting from any insurance policy maintained
on a Mortgaged Property;
(vi) any Advance and any Compensating Interest
payments; and
(vii) any other amounts received by the Master
Servicer, including any other fees that are required to be deposited
in the Collection Account pursuant to this Servicing Agreement.
provided, however, that with respect to each Due Period, the Master Servicer
shall be permitted to retain from payments in respect of interest on the
Mortgage Loans, the Servicing Fee, for such Due Period. The foregoing
requirements respecting deposits to the Collection Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the
Master Servicer need not deposit in the Collection Account late payment charges
payable by Mortgagors, as further described in Section 3.15, or amounts
received by the Subservicer for the accounts of Mortgagors for application
towards the payment of taxes, insurance premiums, assessments and similar
items. In the event any amount not required to be deposited in the Collection
Account is so deposited, the Master Servicer may at any time (prior to being
terminated under this Agreement) withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding. The Master
Servicer shall keep records that accurately reflect the funds on deposit in the
Collection Account that have been identified by it as being attributable to the
Mortgage Loans and shall hold all collections in the Collection Account for the
benefit of the Owner Trustee, the Indenture Trustee, the Noteholders and the
Note Insurer, as their interests may appear.
(e) Funds in the Collection Account may be invested in Eligible
Investments, but shall not be commingled with the Master Servicer's own funds
or general assets or with funds
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respecting payments on mortgage loans or with any other funds not related to
the Notes. Income earned on such Eligible Investments shall be for the account
of the Master Servicer.
(f) Payments in the nature of prepayment penalties received on the
Mortgage Loans or Foreclosure Profits shall not be deposited in the Collection
Account, but rather shall be received and held by the Master Servicer (or the
Subservicer) solely for the benefit of and at the direction of the Seller.
Such amounts shall not be applied or made available by the Master Servicer (or
the Subservicer) for any other purpose.
(g) The Master Servicer will require each Subservicer to hold all
funds constituting collections on the Mortgage Loans, pending remittance
thereof to the Master Servicer, in one or more accounts in the name of the
Indenture Trustee meeting the requirements of an Eligible Account. The
Subservicer shall segregate and hold all funds collected and received pursuant
to each Mortgage Loan separate and apart from any of its own funds and general
assets and any other funds. Each Subservicer shall make remittances to the
Master Servicer no later than one Business Day following receipt thereof and
the Master Servicer shall deposit any such remittances received from any
Subservicer within two Business Days following receipt by the Master Servicer.
Section 3.07. Withdrawals from the Collection Account. (a) The
Master Servicer shall, from time to time as provided herein, make withdrawals
from the Collection Account of amounts on deposit therein pursuant to Section
3.06 that are attributable to the Mortgage Loans for the following purposes
(without duplication):
(i) to deposit in the Payment Account, by the
fifth Business Day prior to each Payment Date, all collections on the
Mortgage Loans required to be distributed from the Payment Account on
a Payment Date;
(ii) to the extent deposited to the Collection
Account, to reimburse itself or the related Subservicer for previously
unreimbursed Servicing Advances, expenses incurred in maintaining
individual insurance policies pursuant to Section 3.11, or Liquidation
Expenses, paid pursuant to Section 3.13, such withdrawal right being
limited to amounts received on particular Mortgage 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;
(iii) to pay to itself out of each payment received
on account of interest on a Mortgage Loan as contemplated by Section
3.15, an amount equal to the related Servicing Fee (to the extent not
retained pursuant to Section 3.06), net of any amount retained by the
Subservicer in respect of the Subservicing Fee pursuant to Section
3.07(b);
(iv) to pay to itself or the Seller, with respect
to any Mortgage Loan or property acquired in respect thereof that has
been purchased by the Seller, the Master Servicer or other entity, all
amounts received thereon and not required to be distributed to
Noteholders as of the date on which the related Repurchase Price is
determined;
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(v) to reimburse the Master Servicer or any
Subservicer for any unreimbursed Advance of its own funds or any
unreimbursed advance of such Subservicer's own funds, the right of the
Master Servicer or a Subservicer to reimbursement pursuant to this
subclause (v) being limited to amounts received on a particular
Mortgage Loan (including, for this purpose, the Repurchase Price
therefor, Insurance Proceeds and Liquidation Proceeds) which
represent late payments or recoveries of the principal of or interest
on such Mortgage Loan respecting which such Advance or advance was
made;
(vi) to reimburse the Master Servicer or any
Subservicer from Insurance Proceeds or Liquidation Proceeds relating
to a particular Mortgage Loan for amounts expended by the Master
Servicer or such Subservicer pursuant to Section 3.13 in good faith in
connection with the restoration of the related Mortgage Property which
was damaged by the uninsured cause or in connection with the
liquidation of such Mortgage Loan;
(vii) to reimburse the Master Servicer or any
Subservicer for any unreimbursed Nonrecoverable Advance previously
made, and otherwise not reimbursed pursuant to this Subsection
3.07(a);
(viii) to withdraw any other amount deposited in the
Collection Account that was not required to be deposited therein
pursuant to Section 3.06;
(ix) to reimburse the Master Servicer for costs
associated with any environmental report specified in Section 3.13(c);
(x) to clear and terminate the Collection Account
upon a termination pursuant to Section 7.08; and
(xi) to pay to the Master Servicer or any
Subservicer income earned on Eligible Investments in the Collection
Account.
In connection with withdrawals pursuant to clauses (ii), (iii), (iv), (v) and
(vi), the Master Servicer's entitlement thereto is limited to collections or
other recoveries on the related Mortgage Loan, and the Master Servicer shall
keep or cause the Subservicer to keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account pursuant to such clauses.
(b) Notwithstanding the provisions of this Section 3.07, the
Master Servicer may, but is not required to, allow the Subservicers to deduct
from amounts received by them or from the related account maintained by a
Subservicer, prior to deposit in the Collection Account, any portion to which
such Subservicers are entitled as reimbursement of any reimbursable Advances,
Servicing Advances and Nonrecoverable Advances made by such Subservicers or the
Sub-Servicing Fee; provided that any amount so retained in respect of the
Subservicing Fee shall be deemed to have been received by the Master Servicer
in respect of the Servicing Fee.
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Section 3.08. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.
(a) The Master Servicer shall establish and maintain or cause the
related Subservicer to establish and maintain, one or more Servicing Accounts.
The Master Servicer or a Subservicer will deposit and retain therein all
collections from the Mortgagors for the payment of taxes, assessments,
insurance premiums, or comparable items as agent of the Mortgagors.
(b) The deposits in the Servicing Accounts shall be held in trust
by the Master Servicer or a Subservicer (and its successors and assigns) in the
name of the Indenture Trustee. Such Servicing Accounts shall be Eligible
Accounts and, if permitted by applicable law, invested in Eligible Investments
held in trust by the Master Servicer or a Subservicer as described above and
maturing, or be subject to redemption or withdrawal, no later than the date on
which such funds are required to be withdrawn; withdrawals of amounts from the
Servicing Accounts may be made only to effect timely payment of taxes,
assessments, insurance premiums, or comparable items, to reimburse the Master
Servicer or a Subservicer for any advances made with respect to such items, to
refund to any Mortgagors any sums as may be determined to be overages, to pay
interest, if required, to Mortgagors on balances in the Servicing Accounts or
to clear and terminate the Servicing Accounts at or any time after the
termination of this Servicing Agreement. Amounts received from Mortgagors for
deposit into the Servicing Accounts shall be deposited in the Servicing
Accounts by the Master Servicer within two days of receipt. The Master
Servicer shall advance from its own funds amounts needed to pay items payable
from the Servicing Accounts if the Master Servicer reasonably believes that
such amounts are recoverable from the related Mortgagor. The Master Servicer
shall comply with all laws relating to the Servicing Accounts, including laws
relating to payment of interest on the Servicing Accounts. The Master Servicer
agrees to abide by applicable law with respect to the payment of interest on
escrow accounts to Mortgagors. The Servicing Accounts shall not be the
property of the Issuer, the Note Insurer or the Noteholders.
Section 3.09. Access to Certain Documentation and Information
Regarding the Mortgage Loans. The Master Servicer or the Seller shall provide,
and shall cause any Subservicer to provide, to the Indenture Trustee and the
Note Insurer access to the documentation regarding the related Mortgage Loans
and REO Property and to the Noteholders, the FDIC, and the supervisory agents
and examiners of the FDIC (to which the Indenture Trustee shall also provide)
access to the documentation regarding the related Mortgage Loans required by
applicable regulations, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Master Servicer or the Subservicers that are designated by these entities;
provided, however, that, unless otherwise required by law, the Master Servicer,
the Seller or the Subservicer shall not be required to provide access to such
documentation if the provision thereof would violate the legal right to privacy
of any Mortgagor; provided, further, however, that the Indenture Trustee and
the Note Insurer shall coordinate their requests for such access so as not to
impose an unreasonable burden on, or cause an unreasonable interruption of, the
business of the Master Servicer, the Seller or any Subservicer. The Master
Servicer, the Seller and the Subservicers shall allow representatives of the
above entities to photocopy any of the documentation and shall provide
equipment for that purpose at a charge that covers their own actual
out-of-pocket costs.
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Section 3.10. Reserved.
Section 3.11. Maintenance of Hazard Insurance and Fidelity
Coverage. (a) The Master Servicer shall maintain and keep, or cause each
Subservicer to maintain and keep, with respect to each Mortgage Loan and each
REO Property, in full force and effect hazard insurance (fire insurance with
extended coverage) equal to at least the lesser of the Principal Balance of the
Mortgage Loan or the current replacement cost of the Mortgaged Property, and
containing a standard mortgagee clause, provided, however, that the amount of
hazard insurance may not be less than the amount necessary to prevent loss due
to the application of any co-insurance provision of the related policy. If the
Master Servicer shall obtain and maintain a blanket policy consistent with its
general mortgage servicing activities from an insurer insuring against hazard
losses on all of the Mortgage Loans, it shall conclusively be deemed to have
satisfied its obligations as set forth in this Section 3.11(a), 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 this
Section 3.11(a) and there shall have been a loss which would have been covered
by such policy, deposit in the Collection Account the amount not otherwise
payable under the blanket policy because of such deductible clause without any
right of reimbursement. Any such deposit by the Master Servicer shall be made
on the last Business Day of the Due Period in the month in which payments under
any such policy would have been deposited in the Collection Account. In
connection with its activities as Master Servicer of the Mortgage Loans, the
Master Servicer agrees to present, on behalf of itself, the Issuer, the Note
Insurer and the Indenture Trustee, claims under any such blanket policy.
(b) Any amounts collected by the Master Servicer or a Subservicer
under any such hazard insurance policy (other than amounts to be applied to the
restoration or repair of the Mortgaged Property or amounts released to the
Mortgagor in accordance with the Master Servicer's or a Subservicer's normal
servicing procedures, the Mortgage Note, the Security Instrument or applicable
law) shall be deposited in the Collection Account.
(c) Any cost incurred by a Master Servicer or a Subservicer in
maintaining any such individual hazard insurance policies shall not be added to
the amount owing under the Mortgage Loan for the purpose of calculating monthly
distributions to Noteholders, notwithstanding that the terms of the Mortgage
Loan so permit. Such costs of maintaining individual hazard insurance policies
shall be recoverable by the Master Servicer or a Subservicer out of related
late payments by the Mortgagor or out of Insurance Proceeds or Liquidation
Proceeds or by the Master Servicer from the Repurchase Price, to the extent
permitted by Section 3.07.
(d) No earthquake or other additional insurance is to be required
of any Mortgagor or maintained on property acquired with respect to a Security
Instrument other than pursuant to such applicable laws and regulations as shall
at any time be in force and shall require such additional insurance. When, at
the time of origination of the Mortgage Loan or at any subsequent time, the
Mortgaged Property is located in a federally designated special flood hazard
area, the Master Servicer shall use its best reasonable efforts to cause with
respect to the Mortgage Loans and each REO Property flood insurance (to the
extent available and in accordance with mortgage servicing
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industry practice) to be maintained. Such flood insurance shall cover the
Mortgaged Property, including all items taken into account in arriving at the
Appraised Value on which the Mortgage Loan was based, and shall be in an amount
equal to the lesser of (i) the Principal Balance of the related Mortgage Loan
and (ii) the minimum amount required under the terms of coverage to compensate
for any damage or loss on a replacement cost basis, but not more than the
maximum amount of such insurance available for the related Mortgaged Property
under either the regular or emergency programs of the National Flood Insurance
Program (assuming that the area in which such Mortgaged Property is located is
participating in such program).
(e) If insurance has not been maintained complying with
Subsections 3.11 (a) and (d) and there shall have been a loss which would have
been covered by such insurance had it been maintained, the Master Servicer
shall pay, or cause the related Subservicer to pay, for any necessary repairs
without any right of reimbursement.
(f) The Master Servicer shall present, or cause the related
Subservicer to present, claims under any related hazard insurance or flood
insurance policy.
(g) The Master Servicer shall obtain and maintain at its own
expense, and shall cause each Subservicer to obtain and maintain at its own
expense, and for the duration of this Servicing Agreement, a blanket fidelity
bond and an errors and omissions insurance policy covering the Master
Servicer's and such Subservicer's officers, employees and other persons acting
on its behalf in connection with its activities under this Servicing Agreement.
The amount of coverage shall be consistent with industry standards. The Master
Servicer shall promptly notify the Indenture Trustee and the Note Insurer of
any material change in the terms of such bond or policy. To the extent
requested, the Master Servicer shall provide to the Indenture Trustee and the
Note Insurer a certificate of insurance that such bond and policy are in
effect. If any such bond or policy ceases to be in effect, the Master Servicer
shall, to the extent possible, give the Indenture Trustee and the Note Insurer
ten days' notice prior to any such cessation and shall use its reasonable best
efforts to obtain a comparable replacement bond or policy, as the case may be.
Any amounts relating to the Mortgage Loans collected under such bond or policy
shall be deposited in the Collection Account.
Section 3.12. Due-on-Sale Clauses; Assumption Agreements. (a) In
any case in which the Master Servicer is notified by any Mortgagor or
Subservicer that a Mortgaged Property relating to a Mortgage Loan has been or
is about to be conveyed by the Mortgagor, the Master Servicer shall enforce, or
shall instruct such Subservicer to enforce, any due-on-sale clause contained in
the related Security Instrument to the extent permitted under the terms of the
related Mortgage Note and by applicable law. The Master Servicer or the related
Subservicer may repurchase a Mortgage Loan at the Repurchase Price when the
Master Servicer requires acceleration of the Mortgage Loan, but only if the
Master Servicer is satisfied, as evidenced by an Officer's Certificate
delivered to the Indenture Trustee and the Note Insurer, that such Mortgage
Loan is in default or default is reasonably foreseeable. If the Master Servicer
reasonably believes that such due-on-sale clause cannot be enforced under
applicable law, that enforcement thereof is not in the best interests of the
Noteholders and the Note Insurer or, if a Note Insurer Default exists, of the
Noteholders or if the Mortgage Loan does not contain a due-on-sale clause,
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the Master Servicer is authorized, and may authorize any Subservicer, to
consent to a conveyance subject to the lien of the Mortgage, and to take or
enter into an assumption agreement from or with the Person to whom such
property has been or is about to be conveyed, pursuant to which such Person
becomes liable under the related Mortgage Note and unless prohibited by
applicable state law, such Mortgagor remains liable thereon, on condition,
however, that the related Mortgage Loan shall continue to be covered by a
hazard policy. In connection with any such assumption, no material term of the
related Mortgage Note may be changed. The Master Servicer shall notify the
Indenture Trustee and the Note Insurer, whenever possible, before the
completion of such assumption agreement, and shall forward to the Indenture
Trustee the original copy of such assumption agreement, which copy shall be
added by the Indenture Trustee to the related Mortgage File and which shall,
for all purposes, be considered a part of such Mortgage File to the same extent
as all other documents and instruments constituting a part thereof. Upon the
instruction of the Master Servicer, the Indenture Trustee shall execute all
agreements relating to the foregoing.
(b) Notwithstanding the foregoing paragraph or any other provision
of this Servicing Agreement, the Master Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason
of any assumption of a Mortgage Loan by operation of law or any conveyance by
the Mortgagor of the related Mortgaged Property or assumption of a Mortgage
Loan which the Master Servicer reasonably believes it may be restricted by law
from preventing, for any reason whatsoever or if the exercise of such right
would impair or threaten to impair any recovery under any applicable insurance
policy.
Section 3.13. Realization Upon Defaulted Mortgage Loans. (a) The
Master Servicer shall, or shall direct the related Subservicer to, foreclose
upon or otherwise comparably convert the ownership of properties securing any
Mortgage Loans that come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.06, except that the Master Servicer shall not, and shall
not direct the related Subservicer to, foreclose upon or otherwise comparably
convert a Mortgaged Property if there is evidence of toxic waste or other
environmental hazards thereon unless the Master Servicer follows the procedures
in Subsection (c) below. In connection with such foreclosure or other
conversion, the Master Servicer in conjunction with the related Subservicer, if
any, shall use its best reasonable efforts to preserve REO Property and to
realize upon defaulted Mortgage Loans in such manner as to maximize the receipt
of principal and interest by the Noteholders, taking into account, among other
things, the timing of foreclosure and the considerations set forth in
Subsection 3.13(b). The foregoing is subject to the proviso that the Master
Servicer shall not be required to expend its own funds in connection with any
foreclosure or towards the restoration of any property unless it determines in
good faith (i) that such restoration or foreclosure will increase the proceeds
of liquidation of the Mortgage Loan to Noteholders after reimbursement to
itself for such expenses and (ii) that such expenses will be recoverable to it
either through Liquidation Proceeds (respecting which it shall have priority
for purposes of reimbursements from the Collection Account pursuant to Section
3.07) or through Insurance Proceeds (respecting which it shall have similar
priority). The Master Servicer shall be responsible for all costs and expenses
constituting Liquidation Expenses incurred by it in any such proceedings;
provided, however, that it shall be entitled to reimbursement thereof (as well
as its normal servicing compensation) as set
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forth in Section 3.07. Any income from or other funds (net of any income
taxes) generated by REO Property shall be deemed for purposes of this Servicing
Agreement to be Liquidation Proceeds.
Any subsequent collections with respect to any Liquidated Mortgage
Loan shall be deposited to the Collection Account. For purposes of determining
the amount of any Liquidation Proceeds or Insurance Proceeds, or other
unscheduled collections, the Master Servicer may take into account any
estimated additional Liquidation Expenses expected to be incurred in connection
with the related defaulted Mortgage Loan.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Indenture Trustee, who shall hold the same on behalf of
the Issuer in accordance with the Indenture. Notwithstanding any such
acquisition of title and cancellation of the related Mortgage Loan, such
Mortgaged Property shall (except as otherwise expressly provided herein) be
considered to be an outstanding Mortgage Loan held as an asset of the Issuer
until such time as such property shall be sold.
(b) The Master Servicer shall not acquire any real property (or
any personal property incident to such real property) on behalf of the Issuer
except in connection with a default or reasonably foreseeable default of a
Mortgage Loan. In the event that the Master Servicer acquires any real property
(or personal property incident to such real property) on behalf of the Trust
Estate in connection with a default or imminent default of a Mortgage Loan,
such property shall be disposed of by the Master Servicer on behalf of the
Issuer within two years after its acquisition on behalf of the Trust Estate.
(c) With respect to any Mortgage Loan as to which the Master
Servicer or a Subservicer has received notice of, or has actual knowledge of,
the presence of any toxic or hazardous substance on the Mortgaged Property, the
Master Servicer shall promptly notify the Indenture Trustee, the Owner Trustee
and the Note Insurer and shall act in accordance with any such directions and
instructions provided by the Note Insurer, or if a Note Insurer Default exists,
by the Issuer. Notwithstanding the preceding sentence of this Section 3.13(c),
with respect to any Mortgage Loan described by such sentence, the Master
Servicer shall, if requested by the Note Insurer, obtain and deliver to the
Issuer, the Indenture Trustee and the Note Insurer an environmental audit
report prepared by a Person who regularly conducts environmental audits using
customary industry standards. The Master Servicer shall be entitled to
reimbursement for such report pursuant to Section 3.07. If the Note Insurer
has not provided directions and instructions to the Master Servicer in
connection with any such Mortgage Loan within 30 days of a request by the
Master Servicer for such directions and instructions, then the Master Servicer
shall take such action as it deems to be in the best economic interest of the
Trust Estate (other than proceeding against the Mortgaged Property) and is
hereby authorized at such time as it deems appropriate to release such
Mortgaged Property from the lien of the related Mortgage. The parties hereto
acknowledge that the Master Servicer shall not obtain on behalf of the Issuer a
deed as a result or in lieu of foreclosure, and shall not otherwise acquire
possession of or title to, or commence any proceedings to acquire possession of
or title to, or take any other action with respect to, any Mortgaged Property,
if the Owner Trustee or the Indenture Trustee could
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reasonably be considered to be a responsible party for any liability arising
from the presence of any toxic or hazardous substance on the Mortgaged
Property, unless the Owner Trustee or the Indenture Trustee has been
indemnified by the Trust Fund to its reasonable satisfaction against such
liability.
Section 3.14. Indenture Trustee to Cooperate; Release of Mortgage
Files. (a) Upon payment in full of any Mortgage Loan or the realization of all
amounts expected to be collected thereon (including the repurchase or
liquidation through foreclosure or otherwise), the Master Servicer will
immediately deliver to the Indenture Trustee a Request for Release in the form
of Exhibit B hereto signed by a Servicing Officer (which certification shall
include a statement to the effect that all amounts received in connection with
such payment which are required to be deposited in the Collection Account have
been so deposited) and shall request delivery to the Master Servicer or
Subservicer, as the case may be, of the Mortgage File. Upon receipt of such
certification and request, the Indenture Trustee shall promptly release the
related Mortgage File to the Master Servicer or Subservicer and execute and
deliver to the Master Servicer, without recourse, the request for reconveyance,
deed of reconveyance or release or satisfaction of mortgage or such instrument
releasing the lien of the Security Instrument (furnished by the Master
Servicer), together with the Mortgage Note with written evidence of
cancellation thereon.
(b) Each Request for Release may be delivered to the Indenture
Trustee (i) via mail or courier, (ii) via facsimile or (iii) by such other
means, including, without limitation, electronic or computer readable medium,
as the Master Servicer and the Indenture Trustee shall mutually agree. The
Indenture Trustee shall promptly release the related Mortgage File(s) within
seven (7) Business Days of receipt of a properly completed Request for Release
pursuant to clause (i), (ii) or (iii) above, which shall be authorization to
the Indenture Trustee to release such Mortgage Files, provided the Indenture
Trustee has determined that such Request for Release has been executed, with
respect to clause (i) or (ii) above, or approved, with respect to clause (iii)
above, by an authorized Servicing Officer of the Master Servicer, and so long
as the Indenture Trustee complies with its duties and obligations under this
Agreement. If the Indenture Trustee is unable to release the Mortgage Files
within the time frames previously specified, the Indenture Trustee shall
immediately notify the Master Servicer indicating the reason for such delay,
but in no event shall such notification be later than five Business Days after
receipt of a Request for Release. If the Master Servicer is required to pay
penalties or damages due the Indenture Trustee's negligent failure to release
the related Mortgage File or the Indenture Trustee's negligent failure to
execute and release documents in a timely manner, the Indenture Trustee shall
be liable for such penalties or damages.
On each day that the Master Servicer remits to the Indenture Trustee
Requests for Releases pursuant to clauses (ii) or (iii) above, the Master
Servicer shall also submit to the Indenture Trustee a summary of the total
amount of such Requests for Releases requested on such day by the same method
as described in such clauses (ii) and (iii) above.
(c) From time to time as is appropriate, for the servicing or
foreclosure of any Mortgage Loan or collection under an insurance policy, the
Master Servicer may deliver to the Indenture Trustee a Request for Release
signed by a Servicing Officer on behalf of the Master
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Servicer in substantially the form attached as Exhibit B hereto. Upon receipt
of the Request for Release, the Indenture Trustee shall deliver the Mortgage
File or any document therein to the Master Servicer or Subservicer, as the case
may be, as bailee for the Indenture Trustee.
(d) The Master Servicer shall cause each Mortgage File or any
document therein released pursuant to Subsection 3.14(c) to be returned to the
Indenture Trustee when the need therefor no longer exists, unless the Mortgage
Loan has become a Liquidated Mortgage Loan and the Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the Collection Account or
such Mortgage File is being used to pursue foreclosure or other legal
proceedings. Prior to return of a Mortgage File or any document to the
Indenture Trustee, the Master Servicer, the related insurer or Subservicer to
whom such file or document was delivered shall retain such file or document in
its respective control as bailee for the Indenture Trustee unless the Mortgage
File or such document has been delivered to an attorney, or to a public trustee
or other public official as required by law, to initiate or pursue legal action
or other proceedings for the foreclosure of the Mortgaged Property either
judicially or non-judicially, and the Master Servicer has delivered to the
Indenture Trustee a certificate of a Servicing Officer certifying as to the
name and address of the Person to which such Mortgage File or such document was
delivered and the purpose or purposes of such delivery. If a Mortgage Loan
becomes a Liquidated Mortgage Loan, the Indenture Trustee shall deliver a copy
of the Request for Release with respect thereto to the Master Servicer upon
deposit of the related Liquidation Proceeds in the Collection Account.
(e) The Indenture Trustee shall execute and deliver to the Master
Servicer any court pleadings, requests for trustee's sale or other documents
necessary to (i) the foreclosure or trustee's sale with respect to a Mortgaged
Property; (ii) any legal action brought to obtain judgment against any
Mortgagor on the Mortgage Note or Security Instrument; (iii) obtain a
deficiency judgment against the Mortgagor; or (iv) enforce any other rights or
remedies provided by the Mortgage Note or Security Instrument or otherwise
available at law or equity. Together with such documents or pleadings the
Master Servicer shall deliver to the Indenture Trustee a certificate of a
Servicing Officer in which it requests the Indenture Trustee to execute the
pleadings or documents. The certificate shall certify and explain the reasons
for which the pleadings or documents are required. It shall further certify
that the Indenture Trustee's execution and delivery of the pleadings or
documents will not invalidate any insurance coverage under the insurance
policies or invalidate or otherwise affect the lien of the Security Instrument,
except for the termination of such a lien upon completion of the foreclosure or
trustee's sale.
Section 3.15. Servicing Compensation. (a) As compensation for its
activities hereunder, the Master Servicer shall be entitled to receive the
Servicing Fee from payments of accrued interest on each Mortgage Loan. The
Master Servicer shall be solely responsible for paying any and all fees with
respect to a Subservicer and the Trust Estate shall not bear any fees, expenses
or other costs directly associated with any Subservicer.
(b) The Master Servicer may retain additional servicing
compensation in the form of late payment charges, release fees, bad check
charges, assumption fees and any other servicing-related fees, to the extent
such charges are collected from the related Mortgagors, and investment earnings
on the Collection Account. The Master Servicer shall be required to pay all
expenses
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it incurs in connection with servicing activities under this Servicing
Agreement and shall not be entitled in connection with servicing activities
under this Servicing Agreement to reimbursement except as provided in this
Servicing Agreement. Expenses to be paid by the Master Servicer without
reimbursement under this Subsection 3.15(b) shall include payment of the
expenses of the accountants retained pursuant to Section 3.17.
Section 3.16. Annual Statements of Compliance. Within 120 days
after December 31 of each year, beginning with December 31, 1998, the Master
Servicer at its own expense shall deliver to the Indenture Trustee, with a copy
to the Note Insurer and the Rating Agencies, an Officer's Certificate stating,
as to the signer thereof, that (i) a review of the activities of the Master
Servicer during the preceding calendar year and of performance under this
Servicing Agreement has been made under such officer's supervision, (ii) to the
best of such officer's knowledge, based on such review, the Master Servicer has
fulfilled its obligations under this Servicing Agreement in all material
respects for such year, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and the
nature and status thereof including the steps being taken by the Master
Servicer to remedy such default; (iii) a review of the activities of each
Subservicer during the Subservicer's most recently ended calendar year and its
performance under its Subservicing Agreement has been made under such officer's
supervision; and (iv) to the best of the Servicing Officer's knowledge, based
on his review and the certification of an officer of the Subservicer (unless
the Servicing Officer has reason to believe that reliance on such certification
is not justified), either each Subservicer has performed and fulfilled its
duties, responsibilities and obligations under this Servicing Agreement and its
Subservicing Agreement in all material respects throughout the year, or, if
there has been a default in performance or fulfillment of any such duties,
responsibilities or obligations, specifying the nature and status of each such
default known to the Servicing Officer. Copies of such statements shall be
provided by the Master Servicer to the Noteholders upon request or by the
Indenture Trustee at the expense of the Master Servicer should the Master
Servicer fail to provide such copies.
Section 3.17. Annual Independent Public Accountants' Servicing
Report. (a) Within 120 days after December 31 of each year, beginning with
December 31, 1998, the Master Servicer, at its expense, shall cause a firm of
Independent nationally-recognized certified public accountants who are members
of the American Institute of Certified Public Accountants and who are
acceptable to the Note Insurer to furnish a statement to the Master Servicer,
which will be provided to the Indenture Trustee, the Note Insurer and the
Rating Agencies, to the effect that, in connection with the firm's examination
of the Master Servicer's financial statements as of the end of such calendar
year, nothing came to their attention that indicated that the Master Servicer
was not in compliance with Sections 3.06, 3.07 and 3.08 except for (i) such
exceptions as such firm believes to be immaterial and (ii) such other
exceptions as are set forth in such statement; provided, however, that for
purposes of complying with this Section such a statement furnished to a
Subservicer otherwise satisfying the requirements of this Section shall be
deemed to satisfy the obligations of the Master Servicer.
(b) Within 120 days after December 31 of each year,
beginning with December 31, 1998, the Master Servicer, at its expense, shall,
and shall cause each Subservicer to cause,
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a nationally recognized firm of independent certified public accountants to
furnish to the Master Servicer or such Subservicer, as the case may be, a
report stating that (i) it has obtained a letter of representation regarding
certain matters from the management of the Master Servicer or such Subservicer,
as the case may be, which includes an assertion that the Master Servicer or
such Subservicer, as the case may be, has complied with certain minimum
mortgage loan servicing standards identified in the Uniform Single Attestation
Program for Mortgage Bankers established by the Mortgage Bankers Association of
America with respect to the servicing of first and second lien single family
mortgage loans during the most recently completed calendar year and (ii) on the
basis of an examination conducted by such firm in accordance with standards
established by the American Institute of Certified Public Accountants, such
representation is fairly stated in all material respects, subject to such
exceptions and other qualifications that may be appropriate. Immediately upon
receipt of such report, the Master Servicer shall or shall cause each
Subservicer to furnish a copy of such report to the Indenture Trustee, the
Rating Agencies and the Note Insurer.
Section 3.18. Optional Purchase of Defaulted Mortgage Loans. The
Master Servicer may repurchase any Mortgage Loan delinquent in payment for a
period of 90 days or longer for a price equal to the Repurchase Price;
provided, however, that whenever the Master Servicer repurchases any such
Mortgage Loan on the basis of delinquency it shall purchase the most delinquent
Mortgage Loan first (unless otherwise agreed to by the Note Insurer). Prior to
such repurchase the Master Servicer shall deliver a notice to the Note Insurer
(a) indicating its intent to repurchase a Mortgage Loan (b) specifying the date
of such repurchase, and (c) confirming that such Mortgage Loan is the greatest
number of days delinquent of all delinquent Mortgage Loans. The procedure for
such repurchase shall be the same as for repurchase by the Seller under the
Home Equity Loan Purchase Agreement. Notwithstanding the foregoing, the
Indenture Trustee, whether acting as Indenture Trustee or in the capacity of
successor Master Servicer, shall have no obligation to repurchase any Mortgage
Loan.
Section 3.19. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
The Master Servicer shall prepare and deliver all federal and state information
reports when and as required by all applicable state and federal income tax
laws. In particular, with respect to the requirement under Section 6050J of
the Code to the effect that the Master Servicer or Subservicer shall make
reports of foreclosures and abandonments of any mortgaged property for each
year beginning in 1998, the Master Servicer or Subservicer shall file reports
relating to each instance occurring during the previous calendar year in which
the Master Servicer (i) acquires an interest in any Mortgaged Property through
foreclosure or other comparable conversion in full or partial satisfaction of a
Mortgage Loan, or (ii) knows or has reason to know that any Mortgaged Property
has been abandoned. The reports from the Master Servicer or Subservicer shall
be in form and substance sufficient to meet the reporting requirements imposed
by Section 6050J, Section 6050H (reports relating to mortgage interest
received) and Section 6050P of the Code (reports relating to cancellation of
indebtedness).
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Section 3.20. Master Servicer to Act as Agent and Bailee of the
Indenture Trustee. The Master Servicer hereby agrees to act as agent and
bailee of the Indenture Trustee for the purposes set forth in Section 3.14 of
the Indenture.
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ARTICLE IV
Remittance Reports
Section 4.01. Remittance Reports. On the second Business Day
following each Determination Date, the Master Servicer shall deliver or cause
the Subservicer to deliver to the Indenture Trustee a report, prepared as of
the close of business on such Determination Date (the "Determination Date
Report"), and shall forward to the Indenture Trustee in the form of computer
readable electromagnetic tape or disk of such report. The Determination Date
Report and any written information supplemental thereto shall include such
information with respect to the Mortgage Loans that is reasonably available to
the Master Servicer and that is required by the Indenture Trustee for purposes
of making the calculations and providing the reports referred to in the
Indenture, as set forth in written specifications or guidelines issued by the
Indenture Trustee from time to time and agreed to by the Master Servicer. Such
information shall include the aggregate amounts required to be withdrawn from
the Collection Account and deposited into the Payment Account pursuant to
Section 3.07. The Master Servicer agrees to cooperate with the Indenture
Trustee in providing all information as is reasonably requested by the
Indenture Trustee to prepare the reports required under the Indenture. The
Master Servicer shall deliver the Determination Date Report to the Note
Insurer.
The determination by the Master Servicer of such amounts shall, in the
absence of obvious error, be presumptively deemed to be correct for all
purposes hereunder and the Owner Trustee and Indenture Trustee shall be
protected in relying upon the same without any independent check or
verification.
Section 4.02. Advances. If any portion of a Monthly Payment relating
to interest payments (together with any advances from the Subservicers) on a
Mortgage Loan that was due on the immediately preceding Due Date and delinquent
on the Determination Date is delinquent other than as a result of application
of the Relief Act, the Master Servicer will deposit or cause the Subservicer to
deposit in the Collection Account not later than the fourth Business Day
immediately preceding the related Payment Date an amount equal to such
deficiency net of the related Servicing Fee for such Mortgage Loan, except to
the extent the Master Servicer determines any such advance to be a
Nonrecoverable Advance. Subject to the foregoing and in the absence of such a
determination, the Master Servicer shall continue to make such advances through
the date that the related Mortgaged Property has, in the judgment of the Master
Servicer, been completely liquidated. If applicable, on the fourth Business
Day immediately preceding the related Payment Date, the Master Servicer shall
present an Officer's Certificate to the Indenture Trustee and the Note Insurer
(i) stating that the Master Servicer elects not to make an Advance in a stated
amount and (ii) detailing the reason it deems the advance to be a
Nonrecoverable Advance. Such advances may be made in whole or in part from
funds in the Collection Account being held for future distributions or
withdrawal on or in connection with Payment Dates in subsequent months. Any
funds being held for future distributions shall be replaced by the Master
Servicer from its own funds by deposit in the Collection Account on or before
the fifth Business Day preceding any Payment Date on which there would
otherwise be insufficient funds in the
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Collection Account, for transfer to the Payment Account, to permit payment of
all amounts required to be paid pursuant to Section 3.05 of the Indenture.
Section 4.03. Compensating Interest Payments. The Master Servicer
shall deposit or cause the Subservicer to deposit in the Collection Account not
later than the fourth Business Day immediately preceding the Payment Date an
amount equal to the Compensating Interest related to the related Determination
Date. The Master Servicer shall not be entitled to any reimbursement of any
Compensating Interest payment.
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ARTICLE V
The Master Servicer
Section 5.01. Liability of the Master Servicer. The Master
Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Master Servicer
herein.
Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Master Servicer. Any corporation into which the Master
Servicer may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Master Servicer shall be a party, or any corporation succeeding to the
business of the Master Servicer, shall be, with the consent of the Note
Insurer, 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 fully assign all of 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
reasonably satisfactory to the Indenture Trustee (as pledgee of the Mortgage
Loans) and the Company and satisfactory to the Note Insurer (in its sole
discretion), is willing to service the Mortgage Loans and executes and delivers
to the Indenture Trustee and the Issuer an agreement, in form and substance
reasonably satisfactory to the Note Insurer, 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 Notes that would be in effect
immediately prior to such assignment and delegation, without taking into
account the Note Insurance Policy, would 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).
Section 5.03. Limitation on Liability of the Master Servicer and
Others. Neither the Master Servicer nor any of the directors or officers or
employees or agents of the Master Servicer shall be under any liability to the
Issuer, the Owner Trustee, the Indenture Trustee, the Note Insurer or the
Noteholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Servicing Agreement, provided, however,
that this provision shall not protect the Master Servicer or any such Person
against any liability which would otherwise be imposed by reason of its willful
misfeasance, bad faith or 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 Notes, including any
amount paid to the Owner Trustee or the Indenture Trustee pursuant to Section
5.06(b), other than any loss, liability or expense related to
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any specific Mortgage Loan or Mortgage Loans (except as any such loss,
liability or expense shall be otherwise reimbursable pursuant to this Servicing
Agreement) and any loss, liability or expense incurred by reason of its willful
misfeasance, bad faith or negligence in the performance of its duties hereunder
or by reason of its reckless disregard of its obligations and duties hereunder.
The Master Servicer shall not be under any obligation to appear in, prosecute
or defend any legal action which is not incidental to its duties to service the
Mortgage Loans in accordance with this Servicing Agreement, and which in its
opinion may involve it in any expense or liability; provided, however, that the
Master Servicer may in its sole discretion undertake any such action which it
may deem necessary or desirable in respect of this Servicing Agreement, and the
rights and duties of the parties hereto and the interests of the Noteholders
hereunder. In such event, the reasonable legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs and
liabilities of the 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 5.03 shall survive any resignation or termination of
the Master Servicer pursuant to Section 5.04 or 6.01 with respect to any
losses, expenses, costs or liabilities arising prior to such resignation or
termination (or arising from events that occurred prior to such resignation or
termination). Any reimbursements or indemnification to the Master Servicer
from the Issuer pursuant to this Section 5.03 shall be payable in the priority
set forth in Section 3.05(a)(ix) of the Indenture.
Section 5.04. Master Servicer Not to Resign. Subject to the
provisions of Section 5.02, the Master Servicer shall not resign from the
obligations and duties hereby imposed on it except (i) upon determination that
the performance of its obligations or duties hereunder are no longer
permissible under applicable law or (ii) upon satisfaction of the following
conditions: (a) the Master Servicer has proposed a successor Master Servicer
to the Issuer, the Note Insurer and the Indenture Trustee in writing and such
proposed successor Master Servicer is reasonably acceptable to the Issuer and
the Indenture Trustee; (b) each Rating Agency shall have delivered a letter to
the Issuer, the Note Insurer and the Indenture Trustee prior to the appointment
of the successor Master Servicer stating that the proposed appointment of such
successor Master Servicer as Master Servicer hereunder will not result in the
reduction or withdrawal of the then current rating of the Notes or the rating
of the Notes that would be in effect without taking into account the Note
Insurance Policy; and (c) such proposed successor Master Servicer is acceptable
to the Note Insurer, as evidenced by a letter to the Issuer, the Master
Servicer and the Indenture Trustee; provided, however, that no such resignation
by the Master Servicer shall become effective until such successor Master
Servicer or, in the case of (i) above, the Indenture Trustee, as pledgee of the
Mortgage Loans, shall have assumed the Master Servicer's responsibilities and
obligations hereunder or the Indenture Trustee, as pledgee of the Mortgage
Loans, shall have designated a successor Master Servicer in accordance with
Section 6.02; provided, however, if the Master Servicer resigns, Advanta
Mortgage Corp. USA ("Advanta"), if it so chooses and it is acceptable to the
Note Insurer, shall be the successor Master Servicer. Any such resignation
shall not relieve the Master Servicer of responsibility for any of the
obligations specified in Sections 6.01 and 6.02 as obligations that survive the
resignation or termination of the Master Servicer. The Master Servicer shall
have no claim (whether by subrogation or otherwise) or other action against any
Noteholder or the Note Insurer for any amounts paid by the Master Servicer
pursuant to any provision of this Servicing Agreement. Any such determination
permitting the resignation of the
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Master Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered to the Indenture Trustee and the Note Insurer.
Section 5.05. Delegation of Duties. In the ordinary course of
business, the Master Servicer at any time may, with the consent of the Note
Insurer, delegate any of its duties hereunder to any Person, including any of
its Affiliates, who agrees to conduct such duties in accordance with the same
standards with which the Master Servicer complies pursuant to Section 3.01.
Such delegation shall not relieve the Master Servicer of its liabilities and
responsibilities with respect to such duties and shall not constitute a
resignation within the meaning of Section 5.04.
Section 5.06. Master Servicer to Pay Indenture Trustee's and Owner
Trustee's Expenses; Indemnification. (a) The Master Servicer covenants and
agrees to pay to the Owner Trustee and the Indenture Trustee all
indemnification payments (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust) in connection with
the exercise and performance of any of the powers and duties pursuant to
Section 7.02 of the Trust Agreement or Section 6.07 of the Indenture, as the
case may be.
(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 claim, tax, penalty,
loss, liability or expense of any kind whatsoever, incurred without negligence
(or gross negligence on the part of the Owner Trustee) or willful misconduct on
its part, arising out of, or in connection with, the failure by the Master
Servicer to perform its duties in compliance with this Servicing Agreement,
including the reasonable costs and expenses (including reasonable legal fees
and expenses) of defending itself 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 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 5.06 of the Master Servicer to indemnify the Indenture Trustee
and the Owner Trustee under the conditions and to the extent set forth herein.
This section shall survive the termination or
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assignment of this Servicing Agreement and the resignation or removal of the
Indenture Trustee. Any amounts to be paid by the Master Servicer pursuant to
this Subsection may not be paid from the Trust Estate.
Notwithstanding the foregoing, the indemnification provided by the
Master Servicer in this Section 5.06 shall not pertain to 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 Securityholders, as the case may be, pursuant to the terms of
this Servicing Agreement.
Section 5.07. Assignment of Servicing Agreement. This Agreement
shall bind and inure to the benefit of and be enforceable by the Master
Servicer, the Issuer and the Indenture Trustee and their respective successors
and assigns. The obligations of the Master Servicer may be assigned or
delegated only to affiliates of the Master Servicer.
ARTICLE VI
Default
Section 6.01. Servicing Default. If any one of the following
events (a "Servicing Default") shall occur and be continuing:
(i) Any failure by the Master Servicer to deposit
in the Collection Account or Payment Account any deposit required to
be made under the terms of this Servicing Agreement, including any
Advances (other than Servicing Advances) and Compensating Interest,
which continues unremedied for a period of two Business Days after the
date upon which such payment was required; or
(ii) 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 this Servicing
Agreement, which failure, in each case, materially and adversely
affects the interests of Noteholders or the Note Insurer or the breach
of any representation or warranty of the Master Servicer in this
Servicing Agreement or in the Insurance Agreement which materially and
adversely affects the interests of the Noteholders or the Note
Insurer, and which in either case continues unremedied for a period of
60 days after the date on which written notice of such failure,
requiring the same to be remedied, and stating that such notice is a
"Notice of Default" hereunder, shall have been given to the Master
Servicer by the Company, the Issuer or the Indenture Trustee, with a
copy to the Note Insurer, or to the Master Servicer, the Company, the
Issuer and the Indenture Trustee by the Note Insurer; or
(iii) The entry against the Master Servicer of a
decree or order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment
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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
(iv) The Master Servicer shall voluntarily go into
liquidation, consent to the appointment of a conservator, receiver,
liquidator or similar person in any insolvency, readjustment of debt,
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; or
(v) Any "Event of Default" under Section 5.01 of
the Insurance Agreement or "Event of Default" under Section 5.01 of
the Series 1998-2F Insurance Agreement;
(vi) So long as the Seller is the Master Servicer
or is an affiliate, the parent of or under the common control with,
the Master Servicer, any failure of the Seller to repurchase any
Mortgage Loan required to be repurchased, or to pay any amount due,
pursuant to the Home Equity Loan Purchase Agreement or to pay any
amount due, pursuant to the Series 1998-2F Home Equity Loan Purchase
Agreement; or
(vii) The occurrence of a Performance Test
Violation;
then, (a) and in every such case, other than that set forth in (v) or (vi)
hereof, so long as a Servicing Default shall not have been remedied by the
Master Servicer, either the Issuer, subject to the direction of the Indenture
Trustee as pledgee of the Mortgage Loans, with the consent of the Note Insurer,
or the Note Insurer, or if a Note Insurer Default exists, the holders of at
least 51% of the aggregate Note Principal Balance of the Notes, by notice then
given in writing to the Master Servicer (and to the Indenture Trustee and the
Issuer if given by the Note Insurer or the Noteholders in the case of a Note
Insurer Default) or (b) in the case of the events set forth in (v) or (vi)
hereof, the Note Insurer or, if a Note Insurer Default exists, the holders of
at least 51% of the aggregate Note Principal Balance of the Notes, may, by
notice to the Master Servicer, terminate all of the rights and obligations of
the Master Servicer as Master Servicer under this Servicing Agreement other
than its right to receive servicing compensation and expenses for servicing the
Mortgage Loans hereunder during any period prior to the date of such
termination and the Issuer, subject to the direction of the Indenture Trustee
as pledgee of the Mortgage Loans, with the consent of the Note Insurer, or the
Note Insurer may exercise any and all other remedies
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available at law or equity. Any such notice to the Master Servicer shall also
be given to each Rating Agency, the Note Insurer, the Indenture Trustee and
the Issuer. On or after the receipt by the Master Servicer of such written
notice, all authority and power of the Master Servicer under this Servicing
Agreement, whether with respect to the Notes or the Mortgage Loans or
otherwise, shall pass to and be vested in the Indenture Trustee, pursuant to
and under this Section 6.01; and, without limitation, the Indenture Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan and related
documents, or otherwise. 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 within one Business Day to the Indenture Trustee for the
administration by it of all cash amounts relating to the Mortgage Loans that
shall at the time be held by the Master Servicer and to be deposited by it in
the Collection Account, or that have been deposited by the Master Servicer in
the Collection Account or thereafter received by the Master Servicer with
respect to the Mortgage Loans. In addition, the Master Servicer agrees
promptly to provide the Indenture Trustee with all documents and records
requested by it to enable it to assume the Master Servicer's functions under
this Agreement. 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 6.01 shall be paid by the predecessor Master Servicer (or if the
predecessor Master Servicer is the Indenture Trustee, the Master Servicer
succeeded by the Indenture Trustee) upon presentation of reasonable
documentation of such costs and expenses. For purposes of this Section 6.01,
the Indenture Trustee shall not be deemed to have knowledge of a Master
Servicer Default unless a Responsible Officer of the Indenture Trustee assigned
to and working in the Indenture Trustee's Corporate Trust Office has actual
knowledge thereof or unless written notice of any event which is in fact such a
Servicing Default is received by the Indenture Trustee and such notice
references the Notes or this Agreement.
Notwithstanding any termination of the activities of the Master
Servicer hereunder, the Master Servicer shall be entitled to receive, out of
any late collection of a payment on a Mortgage Loan which was due prior to the
notice terminating the Master Servicer's rights and obligations hereunder and
received after such notice, that portion to which the Master Servicer would
have been entitled pursuant to Sections 3.07 and 3.15 as well as its Servicing
Fee in respect thereof, and any other amounts payable to the Master Servicer
hereunder the entitlement to which arose prior to the termination of its
activities hereunder.
Upon the occurrence of a Servicing Default, if not terminated pursuant
to this Section 6.01, the Master Servicer shall continue to act as Master
Servicer under this Agreement, subject to the continuing right of removal
pursuant to this Section 6.01, for an initial term, commencing on the date
which such Servicing Default occurred and ending on the last day of the
calendar quarter in which such Servicing Default occurred, which period may be
extended by the Note Insurer, in its sole discretion, for successive terms of
three calendar months thereafter, until the satisfaction and discharge of the
Indenture under Section 4.10 thereof. Each such notice of extension (a "Master
Servicer Extension Notice") shall be delivered by the Note Insurer to the
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Indenture Trustee and the Master Servicer. The Master Servicer hereby agrees
that, upon its receipt of any such Master Servicer Extension Notice, the Master
Servicer shall become bound for the duration of the term covered by such Master
Servicer Extension Notice to continue as the Master Servicer subject to and in
accordance with the other provisions of this Agreement; provided, that nothing
herein shall prohibit the Note Insurer or the Indenture Trustee from thereafter
removing the Master Servicer pursuant to this Section 6.01 or any other
provision of this Agreement. The Indenture Trustee agrees that if as of the
fifteenth (15) day prior to the last day of any term of the Master Servicer the
Indenture Trustee shall not have received any Master Servicer Extension Notice
from the Note Insurer, the Indenture Trustee will within five (5) days
thereafter, give written notice of such non-receipt to the Note Insurer and the
Master Servicer. The failure of the Note Insurer to deliver a Master Servicer
Extension Notice by the end of a calendar term shall result in the termination
of the Master Servicer. The foregoing provisions of this paragraph shall not
apply to the Indenture Trustee in the event the Indenture Trustee succeeds to
the rights and obligations of the Master Servicer and the Indenture Trustee
shall continue in such capacity until the earlier of the termination of this
Agreement pursuant to Section 7.08 or the appointment of a successor master
servicer.
The Master Servicer shall immediately notify the Indenture Trustee,
the Note Insurer and the Owner Trustee in writing of any Servicing Default.
Section 6.02. Indenture Trustee to Act; Appointment of Successor.
(a) On and after the time the Master Servicer receives a notice of termination
pursuant to Section 6.01, sends a notice pursuant to Section 5.04, or its term
expires and is not renewed pursuant to the penultimate paragraph of Section
6.01, the Indenture Trustee on behalf of the Noteholders and the Note Insurer
shall be the successor in all respects to the Master Servicer in its capacity
as Master Servicer under this Servicing Agreement and the transactions set
forth or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof, including but not limited to the provisions of
Article VIII. Nothing in this Servicing Agreement shall be construed to permit
or require the Indenture Trustee to (i) be responsible or accountable for any
act or omission of the Master Servicer prior to the issuance of a notice of
termination hereunder, (ii) require or obligate the Indenture Trustee, in its
capacity as successor Master Servicer, to purchase, repurchase or substitute
any Mortgage Loan, (iii) fund any losses on any Eligible Investment directed by
any other Master Servicer, or (iv) be responsible for the representations and
warranties of the Master Servicer; provided, however, that the Indenture
Trustee, as successor Master Servicer, shall be required to make any required
Advances to the extent that the Master Servicer failed to make such Advances.
As compensation therefor, the Indenture Trustee shall be entitled to such
compensation as the Master Servicer would have been entitled to hereunder if no
such notice of termination had been given. Notwithstanding the above, (i) if
the Indenture Trustee is unwilling to act as successor Master Servicer, or (ii)
if the Indenture Trustee is legally unable so to act, the Indenture Trustee
shall so notify the Note Insurer, and the Note Insurer may appoint a successor
Master Servicer if no Note Insurer Default exists and, if it does not do so
within 30 days after receipt of such notice, the Indenture Trustee 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 Master Servicer
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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
Note Insurer, as evidenced by the Note Insurer'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 Notes by
the Rating Agencies or the ratings assigned to the Notes without taking into
account the Note Insurance Policy; provided, however, Advanta shall become the
successor Master Servicer if the Master Servicer was terminated for reasons
other than due to any action or inaction on the part of Advanta. Pending
appointment of a successor to the Master Servicer hereunder, 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 Mortgage Loans in an amount equal to the
compensation which the Master Servicer would otherwise have received pursuant
to Section 3.15 (or such lesser compensation as the Indenture Trustee and such
successor shall agree). The appointment of a successor Master Servicer shall
not affect any liability of the predecessor Master Servicer which may have
arisen under this Servicing Agreement prior to its termination as Master
Servicer (including, without limitation, the obligation to purchase Mortgage
Loans pursuant to Section 3.01, to pay any deductible under an insurance policy
pursuant to Section 3.11 or to indemnify the Indenture Trustee pursuant to
Section 5.06), nor shall any successor Master Servicer be liable for any acts
or omissions of the predecessor Master Servicer or for any breach by such
Master Servicer of any of its representations or warranties contained herein or
in any related document or agreement. The Indenture Trustee 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 on behalf of
the Noteholders, to the Master Servicer as Master Servicer shall during the
term of its service as Master Servicer (i) continue to service and administer
the Mortgage Loans for the benefit of the Noteholders and the Note Insurer,
(ii) maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Master Servicer hereunder
and a fidelity bond in respect of its officers, employees and agents to the
same extent as the Master Servicer is so required pursuant to Section 3.11.
(c) Any successor Master Servicer, including the Indenture Trustee
on behalf of the Noteholders and the Note Insurer, shall not be deemed to be in
default or to have breached its duties hereunder if the predecessor Master
Servicer shall fail to deliver any required deposit to the Collection Account
or otherwise cooperate with any required servicing transfer or succession
hereunder.
Section 6.03. Notification to Noteholders. Upon any termination or
appointment of a successor to the Master Servicer pursuant to this Article VI
or Section 5.04, the Indenture Trustee shall give prompt written notice thereof
to the Noteholders, the Note Insurer, the Owner Trustee, the Company, the
Issuer and each Rating Agency.
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Section 6.04. Waiver of Defaults. The Indenture Trustee shall
transmit by mail to all Noteholders and the Note Insurer, within 5 days after
the occurrence of any Servicing Default known to the Indenture Trustee, unless
such Servicing Default shall have been cured, notice of each such Servicing
Default hereunder known to the Indenture Trustee. The Note Insurer or, if a
Note Insurer Default exists, the holders of at least 51% of the aggregate Note
Principal Balance of the Notes may waive any default by the Master Servicer in
the performance of its obligations hereunder and the consequences thereof,
except a default in the making of or the causing to be made any required
distribution on the Notes or, in the case of Noteholders, payment of the Note
Insurance Premium. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereon except to the extent expressly
so waived. The Master Servicer shall give notice of any such waiver to the
Rating Agencies.
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ARTICLE VII
Miscellaneous Provisions
Section 7.01. Amendment. This Servicing Agreement may be amended
from time to time by the parties hereto with the prior written consent of the
Note Insurer, and of the Subservicer (which consent of the Subservicer shall
not be unreasonably withheld), provided that any amendment be accompanied by a
letter from the Rating Agencies to the effect that the amendment will not
result in the downgrading or withdrawal of the rating then assigned to the
Notes or the rating that would then be assigned to the Notes without taking
into account the Note Insurance Policy.
Section 7.02. GOVERNING LAW. THIS SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
Section 7.03. 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: PacificAmerica Money Center, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
(b) in the case of the Note Insurer: Financial Security Assurance
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Surveillance Department
Re: (PacificAmerica Home Equity Loan
Asset-Backed Notes, Series 1998-2F)
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
In each case in which a notice or other communication to the Note Insurer
refers to a Master Servicer Event of Default or a claim on the Note Insurance
Policy or with respect to which failure on the part of the Note Insurer to
respond be deemed to constitute consent or acceptance, then a copy of such
notice or other communication should also be sent to the attention of the
General Counsel and the Head Financial Guaranty Group and shall be marked to
indicate "URGENT MATERIAL ENCLOSED."
(c) in the case of Rating Agencies: ▇▇▇▇▇'▇ Investors Service, Inc.
▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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New York, NY 10007
Attention: Residential Mortgage
Monitoring Department
Standard & Poor's Rating Services
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Asset Backed Surveillance
Group
(d) in the case of the Owner Trustee,
the Corporate Trust Office: Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust
Administration
(e) in the case of the Issuer,
to the Owner Trustee: Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust
Administration
(f) in the case of the Indenture
Trustee: Bankers Trust Company of California,
N.A.
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Department
PacificAmerica Home Equity Loan Trust
Series 1998-2F
or, as to each party, at such other address as shall be designated by such
party in a written notice to each other party. Any notice required or
permitted to be mailed to a Noteholder shall be given by first class mail,
postage prepaid, at the address of such Noteholder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Servicing
Agreement shall be conclusively presumed to have been duly given, whether or
not the Noteholder receives such notice. Any notice or other document required
to be delivered or mailed by the Indenture Trustee to any Rating Agency shall
be given on a reasonable efforts basis and only as a matter of courtesy
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and accommodation and the Indenture Trustee shall have no liability for failure
to deliver such notice or document to any Rating Agency.
Section 7.04. Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Servicing Agreement
shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Servicing Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Servicing Agreement or of the Notes or the rights of the Noteholders
thereof.
Section 7.05. Third-Party Beneficiaries. This Servicing Agreement
will inure to the benefit of and be binding upon the parties hereto, the
Noteholders, the Note Insurer, the Owner Trustee, the Indenture Trustee and
their respective successors and permitted assigns. Except as otherwise
provided in this Servicing Agreement, no other Person will have any right or
obligation hereunder. The Indenture Trustee shall have the right to exercise
all rights of the Issuer under this Agreement.
Section 7.06. Counterparts. This instrument may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 7.07. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 7.08. Termination Upon Purchase by the Master Servicer.
Except with respect to obligations of the Master Servicer relating to any
representations and warranties or indemnities made by it in this Agreement, the
respective obligations and responsibilities of the Master Servicer and the
Issuer created hereby shall terminate upon the satisfaction and discharge of
the Indenture pursuant to Section 4.10 thereof.
Section 7.09. No Petition. The Master Servicer, by entering into
this Servicing Agreement, hereby covenants and agrees that it will not at any
time institute against the Issuer, or join in any institution against the
Issuer, any bankruptcy proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations of the Issuer.
This section shall survive the termination of this Servicing Agreement by one
year.
Section 7.10. No Recourse. The Master Servicer acknowledges that
no recourse may be had against the Issuer, except as may be expressly set forth
in this Servicing Agreement.
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ARTICLE VIII
Administrative Duties of the Master Servicer
Section 8.01. Administrative Duties. (a) Duties with
Respect to the Indenture. The Master Servicer shall perform all its duties and
the duties of the Issuer under the Indenture. In addition, the Master Servicer
shall consult with the Owner Trustee as the Master Servicer deems appropriate
regarding the duties of the Issuer under the Indenture. The Master Servicer
shall monitor the performance of the Issuer and shall advise the Owner Trustee
when action is necessary to comply with the Issuer's duties under the
Indenture. The Master Servicer shall prepare for execution by the Issuer or
shall cause the preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be the
duty of the Issuer to prepare, file or deliver pursuant to the Indenture. In
furtherance of the foregoing, the Master Servicer shall take all necessary
action that is the duty of the Issuer to take pursuant to the Indenture.
(b) Duties with Respect to the Issuer.
(i) In addition to the duties of the Master
Servicer set forth in this Servicing Agreement or any of the Basic Documents,
the Master Servicer shall perform such calculations and shall prepare for
execution by the Issuer or the Owner Trustee or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer or the Owner
Trustee to prepare, file or deliver pursuant to this Servicing Agreement or any
of the Basic Documents or under state and federal tax and securities laws, and
at the request of the Owner Trustee or the Note Insurer shall take all
appropriate action that it is the duty of the Issuer to take pursuant to this
Servicing Agreement or any of the Basic Documents. In accordance with the
directions of the Issuer, the Note Insurer or the Owner Trustee, the Master
Servicer shall administer, perform or supervise the performance of such other
activities in connection with the Notes (including the Basic Documents) as are
not covered by any of the foregoing provisions and as are expressly requested
by the Issuer, the Note Insurer or the Owner Trustee and are reasonably within
the capability of the Master Servicer.
(ii) Notwithstanding anything in this Servicing
Agreement or any of the Basic Documents to the contrary, the Master Servicer
shall be responsible for, upon learning of such event, promptly notifying the
Owner Trustee, the Indenture Trustee and the Note Insurer in the event that any
withholding tax is imposed on the Issuer's payments (or allocations of income)
to an Owner (as defined in the Trust Agreement) as contemplated in Section
5.01(b) of the Trust Agreement. Any such notice shall be in writing and
specify the amount of any withholding tax required to be withheld by the Owner
Trustee pursuant to such provision.
(iii) In carrying out the foregoing duties or any
of its other obligations under this Servicing Agreement, the Master Servicer
may enter into transactions with or otherwise deal with any of its Affiliates;
provided, however, that the terms of any such transactions or dealings shall be
in accordance with any directions received from the Issuer and shall be, in the
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Master Servicer's opinion, no less favorable to the Issuer in any material
respect than with terms made available to unrelated third-parties.
(c) Tax Matters. The Master Servicer shall provide such
services as are reasonably necessary to assist the Issuer, the Indenture
Trustee or the Owner Trustee, as applicable, in the preparation of tax returns
and information reports as provided in Section 5.03 of the Trust Agreement.
(d) Non-Ministerial Matters. With respect to matters
that in the reasonable judgment of the Master Servicer are non-ministerial,
the Master Servicer shall not take any action pursuant to this Article VIII
unless within a reasonable time before the taking of such action, the Master
Servicer shall have notified the Owner Trustee, the Note Insurer and the
Indenture Trustee of the proposed action and the Owner Trustee, the Note
Insurer and, with respect to items (A), (B), (C) and (D) below, the Indenture
Trustee shall not have withheld consent or provided an alternative direction.
For the purpose of the preceding sentence, "non-ministerial matters" shall
include:
(A) the amendment of or any supplement to the
Indenture; provided that the Issuer cannot agree to any
amendment or supplement to the Indenture without the approval
of the Master Servicer, which consent shall not be
unreasonably withheld;
(B) the initiation of any claim or lawsuit by the
Issuer and the compromise of any action, claim or lawsuit
brought by or against the Issuer (other than in connection
with the collection of the Mortgage Loans);
(C) the amendment, change or modification of this
Agreement or any of the Basic Documents;
(D) the appointment of successor Certificate
Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of successor Master Servicers or
the consent to the assignment by the Certificate Registrar,
Paying Agent or Trustee of its obligations under the
Indenture; and
(E) the removal of the Indenture Trustee.
Section 8.02. Records. The Master Servicer shall maintain
appropriate books of account and records relating to services performed under
this Servicing Agreement, which books of account and records shall be
accessible for inspection by the Issuer, the Indenture Trustee and the Note
Insurer upon reasonable request and at any time during normal business hours.
Section 8.03. Additional Information to be Furnished. The
Master Servicer shall furnish to the Issuer, the Indenture Trustee and the Note
Insurer from time to time such additional information regarding the Notes as
the Issuer or the Note Insurer shall reasonably request.
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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.
PACIFICAMERICA MONEY CENTER, INC.,
as Master Servicer
By
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
PACIFICAMERICA HOME EQUITY LOAN TRUST
SERIES 1998-2F, as Issuer
By Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
not in its individual capacity but solely
as Indenture Trustee
By
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
45
EXHIBIT A
MORTGAGE LOAN SCHEDULE
SEE TAB 12
46
EXHIBIT B
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with your administration of the Mortgage Loans, we request the
release of the Mortgage File described below.
Servicing Agreement Dated:
Series #:
Account #:
Pool #:
Loan #:
Borrower Name(s):
Reason for Document Request: (circle one) Mortgage Loan
Prepaid in Full
Mortgage 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."
_____________________________________ [Send Files To:
[Name of Master Servicer] _____________________________
Authorized Signature _____________________________
_____________________________
Attention:_____________________________
******************************************************************
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
B-1
47
EXHIBIT C
FORM OF LIQUIDATION REPORT
Customer Name:
Account Number:
Original Principal Balance:
1. Type of Liquidation (REO disposition/charge-off/short pay-off)
Date last paid
Date of foreclosure
Date of REO
Date of REO Disposition
Property Sale Price/Estimated Market Value at disposition
2. Liquidation Proceeds
Principal Prepayment $____________
Property Sale Proceeds ____________
Insurance Proceeds ____________
Other (itemize) ____________
Total Proceeds $____________
3. Liquidation Expenses
Servicing Advances ____________
Delinquency Advances ____________
Monthly Advances ____________
Servicing Fees ____________
Other Servicing Compensation ____________
Total Advances $____________
4. Net Liquidation Proceeds $____________
(Item 2 minus Item 3)
5. Principal Balance of Mortgage Loan $____________
6. Loss, if any (Item 5 minus Item 4) $____________
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Name
________________________________
Title
________________________________
Date
C-1