EXHIBIT 99.11
MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT
DATED AS OF AUGUST 1, ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇.,
PURCHASER
CENDANT MORTGAGE CORPORATION AND
▇▇▇▇▇▇'▇ GATE RESIDENTIAL MORTGAGE TRUST
(FORMERLY KNOWN AS CENDANT RESIDENTIAL MORTGAGE TRUST)
SELLERS
AND
REDWOOD TRUST, INC.
GUARANTOR
TABLE OF CONTENTS
PAGE
ARTICLE I: DEFINITIONS.................................................................................... 1
Section 1.01 Defined Terms............................................................................ 1
ARTICLE II: SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS......................................... 13
Section 2.01 Sale and Conveyance of Mortgage Loans.................................................... 13
Section 2.02 Possession of Mortgage Files............................................................. 14
Section 2.03 Books and Records........................................................................ 15
Section 2.04 Defective Documents; Delivery of Mortgage Loan Documents................................. 15
Section 2.05 Transfer of Mortgage Loans............................................................... 16
ARTICLE III: REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER; REPURCHASE AND SUBSTITUTION;
REVIEW OF MORTGAGE LOANS....................................................................... 18
Section 3.01 Representations and Warranties of each Seller............................................ 18
Section 3.02 Representations and Warranties of the Servicer........................................... 20
Section 3.03 Representations and Warranties as to Individual Mortgage Loans........................... 20
Section 3.04 Repurchase and Substitution.............................................................. 29
Section 3.05 Certain Covenants of each Seller and the Servicer........................................ 30
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND CONDITIONS PRECEDENT TO FUNDING............ 31
Section 4.01 Representations and Warranties........................................................... 31
Section 4.02 Conditions Precedent to Closing.......................................................... 33
ARTICLE V: ADMINISTRATION AND SERVICING OF MORTGAGE LOANS................................................. 34
Section 5.01 Cendant Mortgage to Act as Servicer; Servicing Standards; Additional Documents;
Consent of the Purchaser................................................................. 34
Section 5.02 Collection of Mortgage Loan Payments..................................................... 36
Section 5.03 Reports for Specially Serviced Mortgage Loans and Foreclosure Sales...................... 36
Section 5.04 Establishment of Collection Account; Deposits in Collection Account...................... 36
Section 5.05 Permitted Withdrawals from the Collection Account........................................ 37
Section 5.06 Establishment of Escrow Accounts; Deposits in Escrow..................................... 39
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Section 5.07 Permitted Withdrawals From Escrow Accounts............................................... 39
Section 5.08 Payment of Taxes, Insurance and Other Charges; Maintenance of Primary Insurance Policies;
Collections Thereunder................................................................... 39
Section 5.09 Transfer of Accounts..................................................................... 41
Section 5.10 Maintenance of Hazard Insurance.......................................................... 41
Section 5.11 Maintenance of Mortgage Impairment Insurance Policy...................................... 42
Section 5.12 Fidelity Bond; Errors and Omissions Insurance............................................ 42
Section 5.13 Management of REO Properties............................................................. 43
Section 5.14 Sale of Specially Serviced Mortgage Loans and REO Properties............................. 45
Section 5.15 Realization Upon Specially Serviced Mortgage Loans and REO Properties.................... 45
Section 5.16 Investment of Funds in the Collection Account............................................ 47
Section 5.17 Compensating Interest.................................................................... 48
ARTICLE VI: REPORTS; REMITTANCES; ADVANCES................................................................. 48
Section 6.01 Remittances.............................................................................. 48
Section 6.02 Reporting................................................................................ 49
Section 6.03 Monthly Advances by the Servicer......................................................... 49
Section 6.04 Non-recoverable Advances................................................................. 50
Section 6.05 Itemization of Servicing Advances........................................................ 50
Section 6.06 Officer's Certificate.................................................................... 50
ARTICLE VII: GENERAL SERVICING PROCEDURE.................................................................... 50
Section 7.01 Enforcement of Due-on-Sale Clauses, Assumption Agreements................................ 50
Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files.................................. 51
Section 7.03 Servicing Compensation................................................................... 51
Section 7.04 Annual Statement as to Compliance........................................................ 52
Section 7.05 Annual Independent Certified Public Accountants' Servicing Report........................ 52
Section 7.06 Purchaser's Right to Examine Servicer Records............................................ 52
ARTICLE VIII: REPORTS TO BE PREPARED BY THE SERVICER......................................................... 52
Section 8.01 The Servicer's Reporting Requirements.................................................... 52
Section 8.02 Financial Statements..................................................................... 53
ARTICLE IX: THE SELLERS.................................................................................... 54
Section 9.01 Indemnification; Third Party Claims...................................................... 54
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Section 9.02 Merger or Consolidation of the Seller.................................................... 54
Section 9.03 Limitation on Liability of the Sellers and Others........................................ 55
Section 9.04 Servicer Not to Resign................................................................... 55
ARTICLE X: DEFAULT........................................................................................ 55
Section 10.01 Events of Default........................................................................ 55
ARTICLE XI: TERMINATION.................................................................................... 57
Section 11.01 Term and Termination..................................................................... 57
Section 11.02 Survival................................................................................. 57
ARTICLE XII: ARTICLE XII: GENERAL PROVISIONS................................................................ 58
Section 12.01 Successor to the Servicer................................................................ 58
Section 12.02 Governing Law............................................................................ 58
Section 12.03 Notices.................................................................................. 58
Section 12.04 Severability of Provisions............................................................... 59
Section 12.05 Schedules and Exhibits................................................................... 59
Section 12.06 General Interpretive Principles.......................................................... 59
Section 12.07 Waivers and Amendments, Noncontractual Remedies; Preservation of Remedies................ 60
Section 12.08 Captions................................................................................. 60
Section 12.09 Counterparts; Effectiveness.............................................................. 60
Section 12.10 Entire Agreement; Amendment.............................................................. 60
Section 12.11 Further Assurances....................................................................... 60
Section 12.12 Intention of the Seller.................................................................. 61
Section 12.13 Guaranty of Purchaser's Obligations...................................................... 61
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SCHEDULES
A. Mortgage Loan Schedule
B. Content of Mortgage File
B-1 Purchaser's Mortgage File
C. Cendant Guidelines and Restrictions
EXHIBITS
Exhibit 2.05 Form of Assignment, Assumption and Recognition Agreement
Exhibit 5.03(a) Report P-4DL
Exhibit 5.03(b) Report S-5L2
Exhibit 5.03(c) Form of Notice of Foreclosure
Exhibit 5.04-1 Form of Collection Account Certification
Exhibit 5.04-2 Form of Collection Account Letter Agreement
Exhibit 5.06-1 Form of Escrow Account Certification
Exhibit 5.06-2 Form of Escrow Account Letter Agreement
Exhibit 6.02(a) Report P-139 -- Monthly Statement of Mortgage Accounts
Exhibit 6.02(b) Report S-50Y -- Private Pool Detail Report
Exhibit 6.02(c) Report S-213 -- Summary of Curtailments Made Remittance Report
Exhibit 6.02(d) Report S-214 -- Summary of Paid in Full Remittance Report
Exhibit 6.02(e) Report S-215 -- Consolidation of Remittance Report
Exhibit 6.02(f) Report T-62C -- Monthly Accounting Report
Exhibit 6.02(g) Report T-62E -- Liquidation Report
Exhibit 8.01 Report P-195 Delinquency Report
Exhibit 9 Form of Officer's Certificate
Exhibit 10 Form of Warranty ▇▇▇▇ of Sale
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MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT
This Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as
of August 1, 2002, is entered into between RWT Holdings, Inc., as the Purchaser
("Purchaser"), Cendant Mortgage Corporation ("Cendant Mortgage") and ▇▇▇▇▇▇'▇
Gate Residential Mortgage Trust (formerly known as Cendant Residential Mortgage
Trust) (the "Trust," together with Cendant Mortgage, the "Sellers" and
individually, each a "Seller"), as the Sellers, and Redwood Trust, Inc., as the
Guarantor ("Guarantor").
PRELIMINARY STATEMENT
1. Cendant Mortgage is engaged in the business, inter alia, of
making loans to individuals, the repayment of which is secured by a first lien
mortgage on such individuals' residences (each, a "MORTGAGE LOAN"). The Trust is
engaged in the business of purchasing such Mortgage Loans from Cendant Mortgage
and selling same to investors.
2. Purchaser is engaged in the business, inter alia, of
purchasing Mortgage Loans for its own account.
3. Cendant Mortgage has established certain terms, conditions and
loan programs, as described in Cendant Mortgage' s Program and Underwriting
Guidelines (the "CENDANT GUIDE") and Purchaser is willing to purchase Mortgage
Loans that comply with the terms of such terms, conditions and loan programs.
The applicable provisions of the Cendant Guide are attached hereto as Schedule
C.
4. Purchaser and Sellers desire to establish a flow program
whereby Cendant Mortgage will make Mortgage Loans which meet the applicable
provisions of the Cendant Guide, and Purchaser will, on a regular basis,
purchase such Mortgage Loans from Cendant Mortgage or the Trust, as applicable,
provided the parties agree on the price, date and other conditions or
considerations as set forth in this Agreement.
5. Purchaser and Sellers wish to prescribe the terms and manner
of purchase by the Purchaser and sale by the Sellers of the Mortgage Loans, and
the management and servicing of the Mortgage Loans by Cendant Mortgage, as the
Servicer (the " Servicer"), in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, the Purchaser and the Sellers agree as follows:
ARTICLE I:
DEFINITIONS
Section 1.01 Defined Terms. Whenever used in this Agreement, the
following words and phrases shall have the following meaning specified in this
Article:
"Acceptance of Assignment and Assumption of Lease Agreement": The
specific agreement creating a first lien on and pledge of the Cooperative Shares
and the appurtenant Proprietary Lease securing a Cooperative Loan.
"Affiliate": When used with reference to a specified Person, any Person
that (i) directly or indirectly controls or is controlled by or is under common
control with the specified Person,
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(ii) is an officer of, partner in or trustee of, or serves in a similar capacity
with respect to, the specified person or of which the specified Person is an
officer, partner or trustee, or with respect to which the specified Person
serves in a similar capacity, or (iii) directly or indirectly is the beneficial
owner of 10% or more of any class of equity securities of the specified Person
or of which the specified person is directly or indirectly the owner of 10% or
more of any class of equity securities.
"Agreement": This Mortgage Loan Flow Purchase, Sale & Servicing
Agreement between the Purchaser, the Sellers and the Guarantor.
"ALTA": The American Land Title Association.
"Appraised Value": With respect to any Mortgaged Property, the lesser
of: (i) the value thereof as determined by an appraisal made for the originator
of the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of FNMA and FHLMC; or (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan; provided that, in the case of a Refinanced
Mortgage Loan, such value of the Mortgaged Property shall be based solely upon
the value determined by an appraisal made for the originator of such Refinanced
Mortgage Loan at the time of origination of such Refinanced Mortgage Loan by an
appraiser who met the minimum requirements of FNMA and FHLMC.
"ARM Loan": An "adjustable rate" Mortgage Loan, the Note Rate of which
is subject to periodic adjustment in accordance with the terms of the Mortgage
Note.
"Assignment": An individual assignment of a Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
of record the sale or transfer of the Mortgage Loan.
"Assignment of Proprietary Lease": With respect to a Cooperative Loan,
an assignment of the Proprietary Lease sufficient under the laws of the
jurisdiction wherein the related Cooperative Unit is located to reflect the
assignment of such Proprietary Lease.
"Assignment of Recognition Agreement": With respect to a Cooperative
Loan, an assignment of the Recognition Agreement sufficient under the laws of
the jurisdiction wherein the related Cooperative Unit is located to reflect the
assignment of such Recognition Agreement.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (11
U.S.C. Sections 101-1330), as amended, modified, or supplemented from time to
time, and any successor statute, and all rules and regulations issued or
promulgated in connection therewith.
"Business Day": Any day other than (i) a Saturday or Sunday, or (ii) a
day on which the Federal Reserve is closed.
"Cendant Guide": As defined in paragraph 3 of the Preliminary Statement
to this Agreement.
"Code": The Internal Revenue Code of 1986, as amended.
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"Collection Account": The separate trust account or accounts created
and maintained pursuant to Section 5.04 which shall be entitled "Cendant
Mortgage Corporation, as servicer and custodian for the Purchaser of Mortgage
Loans under the Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated
as of August 1, 2002 ."
"Condemnation Proceeds": All awards or settlements in respect of a
taking of an entire Mortgaged Property or a part thereof by exercise of the
power of eminent domain or condemnation.
"Consent": A document executed by the Cooperative Corporation (i)
consenting to the sale of the Cooperative Unit to the Mortgagor and (ii)
certifying that all maintenance charges relating to the Cooperative Unit have
been paid.
"Cooperative Corporation": With respect to any Cooperative Loan, the
cooperative apartment corporation that holds legal title to the related
Cooperative Project and grants occupancy rights to units therein to stockholders
through Proprietary Leases or similar arrangements.
"Cooperative Lien Search": A search for (a) federal tax liens,
mechanics' liens, lis pendens, judgments of record or otherwise against (i) the
Cooperative Corporation and (ii) the seller of the Cooperative Unit, (b) filings
of Financing Statements and (c) the deed of the Cooperative Project into the
Cooperative Corporation.
"Cooperative Loan": A Mortgage Loan that is secured by a first lien on
and a perfected security interest in Cooperative Shares and the related
Proprietary Lease granting exclusive rights to occupy the related Cooperative
Unit in the building owned by the related Cooperative Corporation.
"Cooperative Project": With respect to any Cooperative Loan, all real
property and improvements thereto and rights therein and thereto owned by a
Cooperative Corporation including without limitation the land, separate dwelling
units and all common elements.
"Cooperative Shares": With respect to any Cooperative Loan, the shares
of stock issued by a Cooperative Corporation and allocated to a Cooperative Unit
and represented by a stock certificates.
"Cooperative Unit": With respect to any Cooperative Loan, a specific
unit in a Cooperative Project.
"Credit Documents": Those documents, comprising part of the Mortgage
File, required of the Mortgagor, as described in Section 2 (Specific Loan
Program Guidelines) of the Cendant Guide. The Credit Documents are specified on
Schedule B-3 hereto.
"Cut-off Date" : The first day of the month in which the respective
Funding Date occurs.
"Defective Mortgage Loan": As defined in Section 3.04(3).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced
with a Qualified Substitute Mortgage Loan.
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"Determination Date": The 15th day of each calendar month, commencing
on the 15th day of the month following the Funding Date, or, if such 15th day is
not a Business Day, the Business Day immediately preceding such 15th day.
"Due Date": With respect to any Mortgage Loan, the day of the month on
which each Monthly Payment is due thereon, exclusive of any days of grace.
"Due Period": With respect to each Remittance Date, the period
commencing on the first day of the month immediately preceding the month of such
Remittance Date and ending on the last day of the month immediately preceding
the month of such Remittance Date.
"Eligible Account": One or more accounts (i) that are maintained with a
depository institution the long-term unsecured debt obligations of which have
been rated by each Rating Agency in one of its two highest rating categories at
the time of any deposit therein, (ii) that are trust accounts with any
depository institution held by the depository institution in its capacity as a
corporate trustee, or (iii) the deposits in which are insured by the FDIC (to
the limits established by the FDIC) and the uninsured deposits in which are
otherwise secured such that the Purchaser has a claim with respect to the funds
in such accounts or a perfected first security interest against any collateral
securing such funds that is superior to claims of any other depositors or
creditors of the depository institution with which such accounts are maintained.
In addition, solely with respect to Mortgage Loans which are not part of a
securitization, "Eligible Account" shall include any accounts that meet the
standards established from time to time by FNMA for eligible custodial
depositories.
"Environmental Assessment": A "Phase I" environmental assessment of a
Mortgaged Property prepared by an Independent Person who regularly conducts
environmental assessments and who has any necessary license(s) required by
applicable law and has five years experience in conducting environmental
assessments.
"Environmental Conditions Precedent to Foreclosure": As defined in
Section 5.15.
"Environmental Laws": All federal, state, and local statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees or other governmental
restrictions relating to the environment or to emissions, discharges or releases
of pollutants, contaminants or industrial, toxic or hazardous substances or
wastes into the environment, including ambient air, surface water, ground water,
or land, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants or industrial, toxic or hazardous substances or wastes or the
cleanup or other remediation thereof.
"Escrow Account": The separate trust account or accounts created and
maintained pursuant to Section 5.06 which shall be entitled "Cendant Mortgage
Corporation, as servicer and custodian for the Purchaser under the Mortgage Loan
Flow Purchase, Sale & Servicing Agreement, dated as of August 1, 2002 (as
amended), and various mortgagors."
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard insurance
premiums and other payments required to be escrowed by the Mortgagor with the
mortgagee pursuant to any Mortgage Loan.
"Estoppel Letter": A document executed by the Cooperative Corporation
certifying, with respect to a Cooperative Unit, (i) the appurtenant Proprietary
Lease will be in full force and
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effect as of the date of issuance thereof, (ii) the related Stock Certificate
was registered in the Mortgagor's name and the Cooperative Corporation has not
been notified of any lien upon, pledge of, levy of execution on or disposition
of such Stock Certificate, and (iii) the Mortgagor is not in default under the
appurtenant Proprietary Lease and all charges due the Cooperative Corporation
have been paid.
"Event of Default": Any one of the conditions or circumstances
enumerated in Section 10.01.
"FDIC": The Federal Deposit Insurance Corporation or any successor
organization.
"FHLMC": The Federal Home Loan Mortgage Corporation (also known as
▇▇▇▇▇▇▇ Mac) or any successor organization.
"FHLMC Servicing Guide": The FHLMC/▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' and Servicers'
Guide in effect on and after the Funding Date.
"Fidelity Bond": A fidelity bond to be maintained by the Servicer
pursuant to Section 5.12.
"Financing Statement": A financing statement in the form of a UCC-1
filed pursuant to the Uniform Commercial Code to perfect a security interest in
the Cooperative Shares and Pledge Instruments.
"Financing Statement Change": A financing statement in the form of a
UCC-3 filed to continue, terminate, release, assign or amend an existing
Financing Statement.
"FNMA": The Federal National Mortgage Association (also known as ▇▇▇▇▇▇
▇▇▇) or any successor organization.
"FNMA Guide": The FNMA/▇▇▇▇▇▇ Mae Selling Guide and the Servicing
Guide, collectively, in effect on and after the Funding Date.
"Funding Date": Each date (up to four per month) that Purchaser
purchases Mortgage Loans from the Sellers hereunder.
"Gross Margin": With respect to each ARM Loan, the fixed percentage
added to the Index on each Rate Adjustment Date, as specified in each related
Mortgage Note and listed in the Mortgage Loan Schedule.
"Guarantor": Redwood Trust, Inc., or its successor in interest.
"Independent": With respect to any specified Person, such Person who:
(i) does not have any direct financial interest or any material indirect
financial interest in the applicable Mortgagor, the Sellers, the Purchaser, or
their Affiliates; and (b) is not connected with the applicable Mortgagor, the
Sellers, the Purchaser, or their respective Affiliates as an officer, employee,
promoter, underwriter, trustee, member, partner, shareholder, director, or
Person performing similar functions.
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"Index": With respect to each ARM Loan, on each Rate Adjustment Date,
the applicable rate index set forth on the Mortgage Loan Schedule, which shall
be an index described on such Mortgage Loan Schedule.
"Insolvency Proceeding": With respect to any Person: (i) any case,
action, or proceeding with respect to such Person before any court or other
governmental authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up, or relief of debtors; or
(ii) any general assignment for the benefit of creditors, composition,
marshaling of assets for creditors, or other, similar arrangement in respect of
the creditors generally of such Person or any substantial portion of such
Person's creditors; in any case undertaken under federal, state or foreign law,
including the Bankruptcy Code.
"Insurance Proceeds": Proceeds of any Primary Insurance Policy, title
policy, hazard policy or other insurance policy covering a Mortgage Loan, if
any, to the extent such proceeds are not to be applied to the restoration of the
related Mortgaged Property or released to the Mortgagor in accordance with the
procedures that the Servicer would follow in servicing mortgage loans held for
its own or its Affiliates' account or managed by it for third-party
institutional investors.
"Legal Documents": Those documents, comprising part of the Mortgage
File, set forth in Schedule B-1 of this Agreement.
"Lender-Paid Mortgage Insurance Rate": With respect to any Mortgage
Loan, the Lender-Paid Mortgage Insurance Rate for any "lender-paid" Primary
Insurance Policy shall be a per annum rate equal to the percentage indicated on
the Mortgage Loan Schedule.
"Liquidation Proceeds": Amounts, other than Insurance Proceeds and
Condemnation Proceeds, received by the Servicer in connection with the
liquidation of a defaulted Mortgage Loan through trustee's sale, foreclosure
sale or otherwise, other than amounts received following the acquisition of an
REO Property in accordance with the provisions hereof.
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage Loan, the
original principal balance of such Mortgage Loan divided by the lesser of the
Appraised Value of the related Mortgaged Property or the purchase price. The
Loan-to-Value Ratio of any Additional Collateral Mortgage Loan (as defined in
Exhibit 11 hereto) shall be calculated by reducing the principal balance of such
Additional Collateral Mortgage Loan by the amount of Additional Collateral (as
defined in Exhibit 11 hereto) with respect to such Mortgage Loan.
"MAI Appraiser": With respect to any real property, a member of the
American Institute of Real Estate Appraisers with a minimum of 5 years of
experience appraising real property of a type similar to the real property being
appraised and located in the same geographical area as the real property being
appraised.
"Maximum Rate": With respect to each ARM Loan, the rate per annum set
forth in the related Mortgage Note as the maximum Note Rate thereunder. The
Maximum Rate as to each ARM Loan is set forth on the related Mortgage Loan
Schedule.
"Minimum Rate": With respect to each ARM Loan, the rate per annum set
forth in the related Mortgage Note as the minimum Note Rate thereunder. The
Minimum Rate as to each ARM Loan is set forth on the related Mortgage Loan
Schedule.
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"Monthly Advance": The aggregate amount of the advances made by the
Servicer on any Remittance Date pursuant to and as more fully described in
Section 6.03.
"Monthly Payment": The scheduled monthly payment of principal and
interest on a Mortgage Loan which is payable by a Mortgagor under the related
Mortgage Note.
"Monthly Period": Initially, the period from the Funding Date through
to and including the first Record Date during the term hereof, and, thereafter,
the period commencing on the day after each Record Date during the term hereof
and ending on the next succeeding Record Date during the term hereof (or, if
earlier, the date on which this Agreement terminates).
"Mortgage": The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on either (i) with respect to a
Mortgage Loan other than a Cooperative Loan, an unsubordinated estate in fee
simple in real property or (ii) with respect to a Cooperative Loan, the
Proprietary Lease and related Cooperative Shares, which in either case secures
the Mortgage Note.
"Mortgaged Property": With respect to a Mortgage Loan, the underlying
real property securing repayment of a Mortgage Note, consisting of a fee simple
estate.
"Mortgage File": With respect to a particular Mortgage Loan, those
origination and servicing documents, escrow documents, and other documents as
are specified on Schedule B-1 to this Agreement and any additional documents
required to be added to the Mortgage File pursuant to the related Purchase Price
and Terms Letter.
"Mortgage Loan": Each individual mortgage loan or Cooperative Loan
(including all documents included in the Mortgage File evidencing the same, all
Monthly Payments, Principal Prepayments, Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds, and other proceeds relating thereto, and any and
all rights, benefits, proceeds and obligations arising therefrom or in
connection therewith) which is the subject of this Agreement and the related
Purchase Price and Terms Letter. The Mortgage Loans subject to this Agreement
shall be identified on Mortgage Loan Schedules prepared in connection with each
Funding Date.
"Mortgage Loan Schedule": The list of Mortgage Loans identified on each
Funding Date that sets forth the information with respect to each Mortgage Loan
that is specified on Schedule A hereto (as amended from time to time to reflect
the addition of any Qualified Substitute Mortgage Loans). A Mortgage Loan
Schedule will be prepared for each Funding Date.
"Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
"Mortgagor": The obligor on a Mortgage Note.
"Negative Amortization": That portion of interest accrued at the Note
Rate in any month which exceeds the Monthly Payment on the related Mortgage Loan
for such month and which, pursuant to the terms of the Mortgage Note, is added
to the principal balance of the Mortgage Loan.
"Non-recoverable Advance": As of any date of determination, any Monthly
Advance or Servicing Advance previously made or any Monthly Advance or Servicing
Advance proposed to
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be made in respect of a Mortgage Loan which, in the good faith judgment of the
Servicer and in accordance with the servicing standard set forth in Section
5.01, will not or, in the case of a proposed advance, would not be ultimately
recoverable pursuant to Section 5.05 (3) or (4) hereof. The determination by the
Servicer that it has made a Non-recoverable Advance or that any proposed advance
would constitute a Non-recoverable Advance shall be evidenced by an Officer's
Certificate satisfying the requirements of Section 6.04 hereof and delivered to
the Purchaser on or before the Determination Date in any month.
"Note Rate": With respect to any Mortgage Loan at any time any
determination thereof is to be made, the annual rate at which interest accrues
thereon.
"Offering Materials": All documents, tapes, or other materials relating
to the Mortgage Loans provided by Seller to Purchaser prior to Purchaser
submitting its bid to purchase the Mortgage loans.
"Officers' Certificate": A certificate signed by (i) the President or a
Vice President and (ii) the Treasurer or the Secretary or one of the Assistant
Treasurers or Assistant Secretaries of the Servicer, and delivered by the
Servicer to the Purchaser as required by this Agreement.
"Payment Adjustment Date": The date on which Monthly Payments shall be
adjusted. Payment Adjustment Date shall occur on the date which is eleven months
from the first payment date for the Mortgage Loan, unless otherwise specified in
the Mortgage Note, and on each anniversary of such first Payment Adjustment
Date.
"Payoff": With respect to any Mortgage Loan, any payment or recovery
received in advance of the last scheduled Due Date of such Mortgage Loan, which
payment or recovery consists of principal in an amount equal to the outstanding
principal balance of such Mortgage Loan, all accrued and unpaid prepayment
penalties, premiums, and/or interest with respect thereto, and all other unpaid
sums due with respect to such Mortgage Loan.
"Periodic Rate Cap": With respect to each ARM Loan, the provision in
each Mortgage Note that limits permissible increases and decreases in the Note
Rate on any Rate Adjustment Date to not more than `a specified' percentage
point.
"Permitted Investments": Investments that mature, unless payable on
demand, not later than the Business Day preceding the related Remittance Date;
provided that such investments shall only consist of the following:
(i) direct obligations of, or obligations fully
guaranteed as to principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are backed
by the full faith and credit of the United States;
(ii) repurchase obligations (the collateral for which is
held by a third party) with respect to any security described in clause
(i) above, provided that the long-term unsecured obligations of the
party agreeing to repurchase such obligations are at the time rated by
each Rating Agency in one of its two highest rating categories;
(iii) certificates of deposit, time deposits and bankers'
acceptances of any bank or trust company incorporated under the laws of
the United States or any state, provided that the long-term unsecured
debt obligations of such bank or trust company (or, in the
8
case of the principal depository institution of a depository
institution holding company, the long-term unsecured debt obligations
of the depository institution holding company) at the date of
acquisition thereof have been rated by each Rating Agency in one of its
two highest rating categories;
(iv) commercial paper (having original maturities of not
more than 365 days) of any corporation incorporated under the laws of
the United States or any state thereof which on the date of acquisition
has been rated by each Rating Agency in its highest rating category;
and
(v) any other demand, money market or time deposit
account or obligation, or interest-bearing or other security or
investment, acceptable to the Purchaser (such acceptance evidenced in
writing);
provided further that "Permitted Investments" shall not include any instrument
described hereunder which evidences either the right to receive (a) only
interest with respect to the obligations underlying such instrument or (b) both
principal and interest payments derived from obligations underlying such
instrument and the interest and principal payments with respect to such
instrument provide a yield to maturity at par greater than 120% of the yield to
maturity at par of the underlying obligations.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pledge Instruments": With respect to each Cooperative Loan, the Stock
Power, the Assignment of the Proprietary Lease, the Assignment of the Mortgage
Note and the Acceptance of Assignment and Assumption of Lease Agreement.
"Prepaid Monthly Payment": Any Monthly Payment received prior to its
scheduled Due Date and which is intended to be applied to a Mortgage Loan on its
scheduled Due Date.
"Primary Insurance Policy": Each primary policy of mortgage insurance
in effect with respect to a Mortgage Loan and as so indicated on the Mortgage
Loan Schedule, or any replacement policy therefor obtained by the Servicer
pursuant to Section 5.08.
"Principal Prepayment": Any payment or other recovery of principal on a
Mortgage Loan (including a Payoff), other than a Monthly Payment or a Prepaid
Monthly Payment which is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon, which is not accompanied by
an amount of interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment and which is
intended to reduce the principal balance of the Mortgage Loan.
"Proprietary Lease": The lease on a Cooperative Unit evidencing the
possessory interest of the owner of the Cooperative Shares in such Cooperative
Unit.
"Purchase Price and Terms Letter": With respect to any pool of Mortgage
Loans purchased and sold on any Funding Date, the letter agreement between the
Purchaser and Seller (including any exhibits, schedules and attachments
thereto), setting forth the terms and conditions of such transaction and
describing the Mortgage Loans to be purchased by the
9
Purchaser on such Funding Date. A Purchase Price and Terms Letter may relate to
more than one pool of Mortgage Loans to be purchased on one or more Funding
Dates hereunder.
"Purchaser": RWT Holdings, Inc., or its successor in interest or any
successor under this Agreement appointed as herein provided.
"Purchaser's Account": The account of the Purchaser at a bank or other
entity most recently designated in a written notice by the Purchaser to the
Sellers as the "Purchaser's Account."
"Purchase Price": As to each Mortgage Loan to be sold hereunder, the
price set forth in the Mortgage Loan Schedule and the related Purchase Price and
Terms Letter.
"Qualified Mortgage Insurer": American Guaranty Corporation,
Commonwealth Mortgage Assurance Company, General Electric Mortgage Insurance
Companies, Mortgage Guaranty Insurance Corporation, PMI Mortgage Insurance
Company, Republic Mortgage Insurance Company or United Guaranty Residential
Insurance Corporation.
"Qualified Substitute Mortgage Loan": A Mortgage Loan substituted by a
Seller for a Deleted Mortgage Loan which must, on the date of such substitution,
(i) have an outstanding principal balance, after deduction of all scheduled
payments due and received in the month of substitution (or in the case of a
substitution of more than one mortgage loan for a Deleted Mortgage Loan, an
aggregate principal balance), not in excess of the Unpaid Principal Balance of
the Deleted Mortgage Loan and not less than ninety percent (90%) of the Unpaid
Principal Balance of the Deleted Mortgage Loan (the amount of any shortfall to
be distributed by the applicable Seller to the Purchaser in the month of
substitution), (ii) have a remaining term to maturity not greater than (and not
more than one year less than) that of the Deleted Mortgage Loan, (iii) have a
Note Rate not less than (and not more than one percentage point greater than)
the Note Rate of the Deleted Mortgage Loan, (iv) with respect to each ARM Loan,
have a Minimum Rate not less than that of the Deleted Mortgage Loan, (v) with
respect to each ARM Loan, have a Maximum Rate not less than that of the Deleted
Mortgage Loan and not more than two (2) percentage points above that of the
Deleted Mortgage Loan, (vi) with respect to each Adjustable Rate Mortgage Loan,
have a Gross Margin not less than that of the Deleted Mortgage Loan, (vii) with
respect to each ARM Loan, have a Periodic Rate Cap equal to that of the Deleted
Mortgage Loan, (viii) have a Loan-to-Value Ratio at the time of substitution
equal to or less than the Loan-to-Value Ratio of the Deleted Mortgage Loan at
the time of substitution, (ix) with respect to each ARM Loan, have the same Rate
Adjustment Date as that of the Deleted Mortgage Loan, (x) with respect to each
ARM Loan, have an Index as provided herein for all ARM Loans subject to this
Agreement, (xi) comply as of the date of substitution with each representation
and warranty set forth in Sections 3.01, 3.02 and 3.03, (xii) be in the same
credit grade category as the Deleted Mortgage Loan and (xiii) have the same
prepayment penalty term.
"Rate Adjustment Date": With respect to each ARM Loan, the date on
which the Note Rate adjusts.
"Rating Agency": Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, ▇▇▇▇▇'▇ Investors Service, Inc., and Fitch, Inc.
"Recognition Agreement": An agreement among a Cooperative Corporation,
a lender and a Mortgagor with respect to a Cooperative Loan whereby such parties
(i) acknowledge that
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such lender may make, or intends to make, such Cooperative Loan, and (ii) make
certain agreements with respect to such Cooperative Loan.
"Record Date": The close of business of the last Business Day of the
month immediately preceding the month of the related Remittance Date.
"Refinanced Mortgage Loan": A Mortgage Loan that was made to a
Mortgagor who owned the Mortgaged Property prior to the origination of such
Mortgage Loan and the proceeds of which were used in whole or part to satisfy an
existing mortgage.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Internal Revenue Code or any similar tax vehicle
providing for the pooling of assets (such as a Financial Asset Security
Investment Trust).
"Remittance Date": The 18th day of each calendar month, commencing on
the 18th day of the month following the Funding Date, or, if such 18th day is
not a Business Day, then the next Business Day immediately preceding such 18th
day.
"Remittance Rate": With respect to each Mortgage Loan, the related Note
Rate minus the Servicing Fee Rate.
"REO Disposition": The final sale by the Servicer of any REO Property.
"REO Disposition Proceeds": All amounts received with respect to any
REO Disposition.
"REO Property": A Mortgaged Property acquired by the Servicer on behalf
of the Purchaser as described in Section 5.13.
"Repurchase Price": As to (a) any Defective Mortgage Loan required to
be repurchased hereunder with respect to which a breach occurred or (b) any
Mortgage Loan required to be repurchased pursuant to Section 3.04 and/or Section
7.02, an amount equal to the Unpaid Principal Balance of such Mortgage Loan at
the time of repurchase multiplied by the Purchase Price; plus (2) interest on
such Mortgage Loan at the applicable Note Rate from the last date through which
interest has been paid and distributed to the Purchaser hereunder to the date of
repurchase; minus (3) any amounts received in respect of such Defective Mortgage
Loan which are being held in the Collection Account for future remittance.
"Scheduled Principal Balance": With respect to any Mortgage Loan, (i)
the outstanding principal balance as of the Funding Date after application of
principal payments due on or before such date whether or not received, minus
(ii) all amounts previously remitted to the Purchaser with respect to such
Mortgage Loan representing (a) payments or other recoveries of principal, or (b)
advances of principal made pursuant to Section 6.03.
"Sellers": Cendant Mortgage Corporation, a New Jersey corporation and
▇▇▇▇▇▇'▇ Gate Residential Mortgage Trust (formerly known as Cendant Residential
Mortgage Trust), a Delaware business trust, or their successors in interest or
any successor under this Agreement appointed as herein provided.
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"Servicer": Cendant Mortgage Corporation, a New Jersey corporation.
"Servicer's Mortgage File": The documents pertaining to a particular
Mortgage Loan which are specified on Exhibit B-2 attached hereto and any
additional documents required to be included or added to the "Servicer's
Mortgage File" pursuant to this Agreement.
"Servicing Advances": All "out of pocket" costs and expenses that are
customary, reasonable and necessary which are incurred by the Servicer in the
performance of its servicing obligations hereunder, including (without
duplication) (i) reasonable attorneys' fees and (ii) the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the servicing,
management and liquidation of any Specially Serviced Mortgaged Loans and/or any
REO Property, and (d) compliance with the Servicer's obligations under Section
5.08.
"Servicing Event": Any of the following events with respect to any
Mortgage Loan: (i) any Monthly Payment being more than 60 days delinquent; (ii)
any filing of an Insolvency Proceeding by or on behalf of the related Mortgagor,
any consent by or on behalf of the related Mortgagor to the filing of an
Insolvency Proceeding against such Mortgagor, or any admission by or on behalf
of such Mortgagor of its inability to pay such Person's debts generally as the
same become due; (iii) any filing of an Insolvency Proceeding against the
related Mortgagor that remains undismissed or unstayed for a period of 60 days
after the filing thereof; (iv) any issuance of any attachment or execution
against, or any appointment of a conservator, receiver or liquidator with
respect to, all or substantially all of the assets of the related Mortgagor or
with respect to any Mortgaged Property; (v) any receipt by the Servicer of
notice of the foreclosure or proposed foreclosure of any other lien on the
related Mortgaged Property; (vi) any proposal of a material modification (as
reasonably determined by the Seller) to such Mortgage Loan due to a default or
imminent default under such Mortgage Loan; or (vii) in the reasonable judgment
of the Servicer, the occurrence, or likely occurrence within 60 days, of a
payment default with respect to such Mortgage Loan that is likely to remain
uncured by the related Mortgagor within 60 days thereafter.
"Servicing Fee": The annual fee, payable monthly to the Servicer out of
the interest portion of the Monthly Payment actually received on each Mortgage
Loan. The Servicing Fee with respect to each Mortgage Loan for any calendar
month (or a portion thereof) shall be 1/12 of the product of (i) the Scheduled
Principal Balance of the Mortgage Loan and (ii) the Servicing Fee Rate
applicable to such Mortgage Loan.
"Servicing Fee Rate": (i) with respect to any ARM Loan, 0.375% per
annum; provided that, prior to the first Rate Adjustment Date with respect to
any such Mortgage Loan, such rate may be, at the Servicer's option, not less
than 0.25% per annum; and (ii) with respect to any Mortgage Loan other than an
ARM Loan, 0.25% per annum.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a written list of servicing officers furnished by the Servicer
to the Purchaser upon request therefor by the Purchaser, as such list may from
time to time be amended.
"Specially Serviced Mortgage Loan": A Mortgage Loan as to which a
Servicing Event has occurred and is continuing.
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"Stock Certificate": With respect to a Cooperative Loan, the
certificates evidencing ownership of the Cooperative Shares issued by the
Cooperative Corporation.
"Stock Power": With respect to a Cooperative Loan, an assignment of the
Stock Certificate or an assignment of the Cooperative Shares issued by the
Cooperative Corporation.
"Trust": ▇▇▇▇▇▇'▇ Gate Residential Mortgage Trust.
"Uniform Commercial Code": The Uniform Commercial Code as in effect on
the date hereof in the State of New York; provided that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York,
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
"Unpaid Principal Balance": With respect to any Mortgage Loan, at any
time, the actual outstanding principal balance then payable by the Mortgagor
under the terms of the related Mortgage Note including any cumulative Negative
Amortization.
"Warranty ▇▇▇▇ of Sale": A warranty ▇▇▇▇ of sale with respect to the
Mortgage Loans purchased on a Funding Date in the form annexed hereto as Exhibit
10.
ARTICLE II:
SALE AND CONVEYANCE OF MORTGAGE LOANS;
POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS;
DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Sale and Conveyance of Mortgage Loans.
Seller agrees to sell and Purchaser agrees to purchase, from time to
time, those certain Mortgage Loans identified in a Mortgage Loan Schedule, at
the price and on the terms set forth herein and in the related Purchase Price
and Terms Letter. Purchaser, on any Funding Date, shall be obligated to purchase
only such Mortgage Loans set forth in the applicable Mortgage Loan Schedule,
subject to the terms and conditions of this Agreement and the related Purchase
Price and Terms Letter.
Purchaser will purchase Mortgage Loan(s) from Seller, up to four (4)
times per month on such Funding Dates as may be agreed upon by Purchaser and
Seller. The closing shall, at Purchaser's option be either: by telephone,
confirmed by letter or wire as the parties shall agree; or conducted in person
at such place, as the parties shall agree. On the Funding Date and subject to
the terms and conditions of this Agreement, each Seller will sell, transfer,
assign, set over and convey to the Purchaser, without recourse except as set
forth in this Agreement, and the Purchaser will purchase, all of the right,
title and interest of the applicable Seller in and to the Mortgage Loans being
conveyed by it hereunder, as identified on the Mortgage Loan Schedule.
Examination of the Mortgage Files may be made by Purchaser or its
designee as follows. No later than 5 Business Days prior to the Funding Date,
Seller will deliver to Purchaser or its custodian, Legal Documents required
pursuant to Schedule B-1. Within 30 days following each funding date , Seller
shall make the Credit Documents available to Purchaser upon Purchaser's
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request for review, at Seller's place of business and during reasonable business
hours. If Purchaser makes such examination and identifies any Mortgage Loans
that do not conform to the Cendant Guide, such Mortgage Loans will be deleted
from the Mortgage Loan Schedule at Purchaser's discretion. Purchaser may, at its
option and without notice to Seller, purchase all or part of the Mortgage Loans
without conducting any partial or complete examination. The fact that Purchaser
has conducted or has failed to conduct any partial or complete examination of
the Mortgage Loan files shall not affect Purchaser's rights to demand
repurchase, substitution or other relief as provided herein.
On the Funding Date and in accordance with the terms herein, Purchaser
will pay to Seller, by wire transfer of immediately available funds, the
Purchase Price, together with interest, if any, accrued from the Cut-off Date
through the day immediately preceding the Funding Date, according to the
instructions to be provided, respectively, by Cendant Mortgage and the Trust.
Seller, simultaneously with the payment of the Purchase Price, shall execute and
deliver to Purchaser a Warranty ▇▇▇▇ of Sale with respect to the Mortgage Loans
in the form annexed hereto as Exhibit 10.
Purchaser shall be entitled to all scheduled principal due after the
Cut-off Date, all other recoveries of principal collected after the Cut-off Date
and all payments of interest on the Mortgage Loans (minus that portion of any
such payment which is allocable to the period prior to the Cut-off Date).
Notwithstanding the foregoing, on the first Remittance Date after the Funding
Date the Purchaser shall be entitled to receive the interest accrued from the
Cut-off Date through the day immediately preceding the Funding Date. The
principal balance of each Mortgage Loan as of the Cut-off Date is determined
after application of payments of principal due on or before the Cut-off Date
whether or not collected. Therefore, payments of scheduled principal and
interest prepaid for a due date beyond the Cut-off Date shall not be applied to
the principal balance as of the Cut-off Date. Such prepaid amounts shall be the
property of Purchaser. Seller shall hold any such prepaid amounts for the
benefit of Purchaser for subsequent remittance by Seller to Purchaser. All
scheduled payments of principal due on or before the Cut-off Date and collected
by Seller after the Cut-off Date shall belong to Seller.
Section 2.02 Possession of Mortgage Files.
Upon the sale of any Mortgage Loan, the ownership of such Mortgage
Loan, including the Mortgage Note, the Mortgage, the contents of the related
Mortgage File and all rights, benefits, payments, proceeds and obligations
arising therefrom or in connection therewith, shall then be vested in the
Purchaser, and the ownership of all records and documents with respect to such
Mortgage Loan prepared by or which come into the possession of the Seller shall
immediately vest in the Purchaser and, to the extent retained by the Seller,
shall be retained and maintained, in trust, by the Seller at the will of the
Purchaser in a custodial capacity only. The contents of such Mortgage File not
delivered to the Purchaser are and shall be held in trust by the Seller for the
benefit of the Purchaser as the owner thereof and the Sellers' possession of the
contents of each Mortgage File so retained is at the will of the Purchaser for
the sole purpose of servicing the related Mortgage Loan, and such retention and
possession by the Seller is in a custodial capacity only. Mortgage Files shall
be maintained separately from the other books and records of the Seller. Each
Seller shall release from its custody of the contents of any Mortgage File only
in accordance with written instructions from the Purchaser, except where such
release is required as incidental to the Servicer 's servicing of the Mortgage
Loans or is in connection with a repurchase or substitution of any such Mortgage
Loan pursuant to Section 3.04.
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Any documents released to a Seller or the Servicer in connection with
the foreclosure or servicing of any Mortgage Loan shall be held by such Person
in trust for the benefit of the Purchaser in accordance with this Section 2.02.
Such Person shall return to the Purchaser such documents when such Person's need
therefor in connection with such foreclosure or servicing no longer exists
(unless sooner requested by the Purchaser); provided that, if such Mortgage Loan
is liquidated, then, upon the delivery by a Seller or the Servicer to the
Purchaser of a request for the release of such documents and a certificate
certifying as to such liquidation, the Purchaser shall promptly release and, to
the extent necessary, deliver to such Person such documents.
Section 2.03 Books and Records.
The sale of each of its Mortgage Loans shall be reflected on the
applicable Seller's balance sheet and other financial statements as a sale of
assets by the applicable Seller. Each Seller shall be responsible for
maintaining, and shall maintain, a complete set of books and records for the
Mortgage Loans it conveyed to the Purchaser which shall be clearly marked to
reflect the sale of each Mortgage Loan to the Purchaser and the ownership of
each Mortgage Loan by the Purchaser.
Section 2.04 Defective Documents; Delivery of Mortgage Loan Documents.
If, subsequent to the related Funding Date, the Purchaser or either
Seller finds any document or documents constituting a part of a Mortgage File to
be defective or missing in any material respect (in this Section 2.04, a
"Defect"), the party discovering such Defect shall promptly so notify the other
parties. If the Defect pertains to the Mortgage Note or the Mortgage, then the
applicable Seller shall have a period of 45 days within which to correct or cure
any such defect after the earlier of such Seller's discovery of same or such
Seller being notified of same. If such Defect can ultimately be cured but is not
reasonably expected to be cured within such 45 day period, such Seller shall
have such additional time as is reasonably determined by the Purchaser to cure
or correct such Defect provided that such Seller has commenced curing or
correcting such Defect and is diligently pursuing same. If the Defect pertains
to any other document constituting a part of a Mortgage File, then such Seller
shall have a period of 90 days within which to correct or cure any such Defect
after the earlier of such Seller's discovery of same or such Seller being
notified of same. If such Defect can ultimately be cured but is not reasonably
expected to be cured within the 90 day period, then such Seller shall have such
additional time as is reasonably determined by the Purchaser to cure or correct
such Defect provided such Seller has commenced curing or correcting such Defect
and is diligently pursuing same. Cendant Mortgage hereby covenants and agrees
that, if any material Defect cannot be corrected or cured, the related Mortgage
Loan shall automatically constitute, upon the expiration of the applicable cure
period described above and without any further action by any other party, a
Defective Mortgage Loan, whereupon Cendant Mortgage shall repurchase such
Mortgage Loan by paying to the Purchaser the Repurchase Price therefor in
accordance with Section 3.04(3) and (4).
The applicable Seller will, with respect to each Mortgage Loan to be
purchased by the Purchaser, deliver and release to the Purchaser the Legal
Documents as set forth in Section 2.01. If the applicable Seller cannot deliver
an original Mortgage with evidence of recording thereon, original assumption,
modification and substitution agreements with evidence of recording thereon or
an original intervening assignment with evidence of recording thereon within the
applicable time periods, then such Seller shall promptly deliver to the
Purchaser such original
15
Mortgages and original intervening assignments with evidence of recording
indicated thereon upon receipt thereof from the public recording official,
except in cases where the original Mortgage or original intervening assignments
are retained permanently by the recording office, in which case, such Seller
shall deliver a copy of such Mortgage or intervening assignment, as the case may
be, certified to be a true and complete copy of the recorded original thereof.
If the applicable Seller cannot deliver the original security instrument or if
an original intervening assignment has been lost, then the applicable Seller
will deliver a copy of such security instrument or intervening assignment,
certified by the local public recording official. If the original title policy
has been lost, the applicable Seller will deliver a duplicate original title
policy.
If the original Mortgage was not delivered pursuant to the preceding
paragraph, then the applicable Seller shall use its best efforts to promptly
secure the delivery of such originals and shall cause such originals to be
delivered to the Purchaser promptly upon receipt thereof. Notwithstanding the
foregoing, if the original Mortgage, original assumption, modification, and
substitution agreements, the original of any intervening assignment or the
original policy of title insurance is not so delivered to the Purchaser within
180 days following the Funding Date, then, upon written notice by the Purchaser
to Cendant Mortgage, the Purchaser may, in its sole discretion, then elect (by
providing written notice to Cendant Mortgage) to treat such Mortgage Loan as a
Defective Mortgage Loan, whereupon Cendant Mortgage shall repurchase such
Mortgage Loan by paying to the Purchaser the Repurchase Price therefor in
accordance with Section 3.04(3) and (4) or substitute a Qualified Substitute
Mortgage Loan as therein provided. It is understood that from time to time
certain local recorder offices become backlogged with document volume. It is
agreed that the Seller will provide an Officer's Certificate to document that
the Seller has performed all necessary tasks to insure delivery of the required
documentation within 180 days and the delay beyond 180 is caused by the backlog.
If the delay exceeds 360 days, regardless of the backlog the Purchaser may elect
to collect the documents with its own resources with the reasonable cost and
expense to be borne by the Seller. The fact that the Purchaser has conducted or
failed to conduct any partial or complete examination of the Mortgage Files
shall not affect its right to demand repurchase or any other remedies provided
in this Agreement.
At the Purchaser's request, the Assignments shall be promptly recorded
in the name of the Purchaser or in the name of a Person designated by the
Purchaser in all appropriate public offices for real property records. If any
such Assignment is lost or returned unrecorded because of a defect therein, then
the applicable Seller shall promptly prepare a substitute Assignment to cure
such defect and thereafter cause each such Assignment to be duly recorded. All
recording fees related to such a one-time recordation of the Assignments to or
by a Seller shall be paid by the applicable Seller.
Section 2.05 Transfer of Mortgage Loans.
Subject to the provisions of this Section 2.05, the Purchaser shall
have the right, without the consent of the Sellers, at any time and from time to
time, to assign any of the Mortgage Loans and all or any part of its interest
under this Agreement and designate any person to exercise any rights of the
Purchaser hereunder, and the assignees or designees shall accede to the rights
and obligations hereunder of the Purchaser with respect to such Mortgage Loans.
The Sellers recognize that the Mortgage Loans may be divided into "packages" for
resale ("Mortgage Loan Packages").
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All of the provisions of this Agreement shall inure to the benefit of
the Purchaser and any such assignees or designees. All references to the
Purchaser shall be deemed to include its assignees or designees. Utilizing
resources reasonably available to the Seller without incurring any cost except
the Seller's overhead and employees' salaries, the applicable Seller shall
cooperate in any such assignment of the Mortgage Loans and this Agreement;
provided that the Purchaser shall bear all costs associated with any such
assignment of the Mortgage Loans and this Agreement other than such Seller's
overhead or employees ' salaries.
The Servicer and the Purchaser acknowledge that the Servicer shall
continue to remit payments to the Purchaser on the Remittance Date after the
transfer of the Mortgage Loans, unless the Servicer was notified in writing of
the new record owner of the Mortgage Loans prior to the immediately preceding
Record Date, in which case, the Servicer shall remit to the new record owner (or
trustee or master servicer, as the case may be) of the Mortgage Loans.
The Servicer and Purchaser agree that in no event will the Servicer be
required to remit funds or send remittance reports to more than four (4) Persons
(not including the Servicer or any Affiliate or transferee thereof) at any given
time with respect to any Mortgage Loans sold on a particular Funding Date.
Any prospective assignees of the Purchaser who have entered into a
commitment to purchase any of the Mortgage Loans may review and underwrite the
Servicer's servicing and origination operations, upon reasonable prior notice to
the Servicer, and the Servicer shall cooperate with such review and underwriting
to the extent such prospective assignees request information or documents that
are reasonably available and can be produced without unreasonable expense or
effort. The Servicer shall make the Mortgage Files related to the Mortgage Loans
held by the Servicer available at the Servicer's principal operations center for
review by any such prospective assignees during normal business hours upon
reasonable prior notice to the Servicer (in no event less than 5 Business Days
prior notice). The Servicer may, in its sole discretion, require that such
prospective assignees sign a confidentiality agreement with respect to such
information disclosed to the prospective assignee which is not available to the
public at large and a release agreement with respect to its activities on the
Servicer's premises.
The Servicer shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the Servicer
shall note transfers of Mortgage Loans. The Purchaser may, subject to the terms
of this Agreement, sell and transfer, in whole or in part, any or all of the
Mortgage Loans; provided that no such sale and transfer shall be binding upon
the Servicer unless such transferee shall agree in writing to an Assignment,
Assumption and Recognition Agreement, in substantially the form of Exhibit 2.05
attached hereto, and an executed copy of such Assignment, Assumption and
Recognition Agreement shall have been delivered to the Servicer. The Servicer
shall evidence its acknowledgment of any transfers of the Mortgage Loans to any
assignees of the Purchaser by executing such Assignment, Assumption and
Recognition Agreement. The Servicer shall ▇▇▇▇ its books and records to reflect
the ownership of the Mortgage Loans by any such assignees, and the previous
Purchaser shall be released from its obligations hereunder accruing after the
date of transfer to the extent such obligations relate to Mortgage Loans sold by
the Purchaser. This Agreement shall be binding upon and inure to the benefit of
the Purchaser and the Servicer and their permitted successors, assignees and
designees.
17
ARTICLE III:
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER;
REPURCHASE AND SUBSTITUTION; REVIEW OF MORTGAGE LOANS
Section 3.01 Representations and Warranties of each Seller.
Each Seller, as to itself, represents, warrants and covenants to the
Purchaser that as of each Funding Date or as of such date specifically provided
herein:
(1) Due Organization. The Seller is an entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and has all licenses necessary to carry on its business now being
conducted and is licensed, qualified and in good standing under the laws of each
state where a Mortgaged Property is located or is otherwise exempt under
applicable law from such qualification or is otherwise not required under
applicable law to effect such qualification; no demand for such qualification
has been made upon the Seller by any state having jurisdiction and in any event
the Seller is or will be in compliance with the laws of any such state to the
extent necessary to enforce each Mortgage Loan and with respect to Cendant
Mortgage, service each Mortgage Loan in accordance with the terms of this
Agreement.
(2) Due Authority. The Seller had the full power and authority and
legal right to originate the Mortgage Loans that it originated, if any, and to
acquire the Mortgage Loans that it acquired. The Seller has the full power and
authority to hold each Mortgage Loan, to sell each Mortgage Loan and to execute,
deliver and perform, and to enter into and consummate, all transactions
contemplated by this Agreement. The Seller has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Purchaser, constitutes a legal, valid and binding obligation of
the Seller, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, receivership, conservatorship,
insolvency, moratorium and other laws relating to or affecting creditors' rights
generally or the rights of creditors of banks and to the general principles of
equity (whether such enforceability is considered in a proceeding in equity or
at law).
(3) No Conflict. The execution and delivery of this Agreement, the
acquisition or origination, as applicable, of the Mortgage Loans by the Seller,
the sale of the Mortgage Loans, the consummation of the transactions
contemplated hereby, or the fulfillment of or compliance with the terms and
conditions of this Agreement, will not conflict with or result in a breach of
any of the terms, conditions or provisions of the Seller's organizational
documents and bylaws or any legal restriction or any agreement or instrument to
which the Seller is now a party or by which it is bound, or constitute a default
or result in an acceleration under any of the foregoing, or result in the
violation of any law, rule, regulation, order, judgment or decree to which the
Seller or its property is subject, or impair the ability of the Purchaser to
realize on the Mortgage Loans;
(4) Ability to Perform. The Seller does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(5) No Material Default. Neither the Seller nor any of its
Affiliates is in material default under any agreement, contract, instrument or
indenture of any nature whatsoever to which the Seller or any of its Affiliates
is a party or by which it (or any of its assets) is bound,
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which default would have a material adverse effect on the ability of the Seller
to perform under this Agreement, nor, to the best of the Seller's knowledge, has
any event occurred which, with notice, lapse of time or both, would constitute a
default under any such agreement, contract, instrument or indenture and have a
material adverse effect on the ability of the Seller to perform its obligations
under this Agreement;
(6) Financial Statements. Cendant Mortgage has delivered to the
Purchaser financial statements as to its fiscal year ended December 31, 2000.
Except as has previously been disclosed to the Purchaser in writing: (a) such
financial statements fairly present the results of operations and changes in
financial position for such period and the financial position at the end of such
period of Cendant Mortgage and its subsidiaries; and (b) such financial
statements are true, correct and complete as of their respective dates and have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as set forth in the
notes thereto. The Trust has delivered to the Purchaser financial statements
dated as of December 31, 2000 (the "Trust Financials") and such Trust Financials
fairly present the results of operations and changes in financial position for
such period and the financial position at the end of such period of the Trust.
Except as has previously been disclosed to the Purchaser in writing, there has
been no change in such Trust Financials since their date and the Trust is not
aware of any errors or omissions therein;
(7) No Change in Business. There has been no change in the
business, operations, financial condition, properties or assets of the
applicable Seller since (i) in the case of Cendant Mortgage, the date of its
financial statements and (ii) in the case of the Trust, the date of delivery of
the Trust Financials, that would have a material adverse effect on the ability
of the applicable Seller to perform its obligations under this Agreement;
(8) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to the best of the Seller's knowledge, threatened,
against the Seller, which, either in any one instance or in the aggregate, if
determined adversely to the Seller would adversely affect the sale of the
Mortgage Loans to the Purchaser or the execution, delivery or enforceability of
this Agreement or result in any material liability of the Seller, or draw into
question the validity of this Agreement, or have a material adverse effect on
the financial condition of the Seller;
(9) No Consent Required. No consent, approval, authorization or
order of any court or governmental agency or body is required for the execution,
delivery and performance by the Seller of or compliance by the Seller with this
Agreement, the delivery of the Mortgage Files to the Purchaser, the sale of the
Mortgage Loans to the Purchaser or the consummation of the transactions
contemplated by this Agreement or, if required, such approval has been obtained
prior to the Funding Date;
(10) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement is in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(11) No Broker. The Seller has not dealt with any broker or agent
or anyone else who might be entitled to a fee or commission in connection with
this transaction; and
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(12) No Untrue Information. Neither this Agreement nor any
statement, report or other agreement, document or instrument furnished or to be
furnished pursuant to this Agreement contains or will contain any materially
untrue statement of fact or omits or will omit to state a fact necessary to make
the statements contained therein not misleading.
(13) Non-solicitation. The Seller agrees that it shall not solicit
any Mortgagors (in writing or otherwise) to refinance any of the Mortgage Loans;
provided that mass advertising or mailings (such as placing advertisements on
television, on radio, in magazines or in newspapers or including messages in
billing statements) that are not exclusively directed towards the Mortgagors
shall not constitute solicitation and shall not violate this covenant;
Section 3.02 Representations and Warranties of the Servicer.
The Servicer represents, warrants and covenants to the Purchaser that
as of the Funding Date or as of such date specifically provided herein:
(1) Ability to Service. The Servicer is an approved
seller/servicer for FNMA and FHLMC in good standing and is a mortgagee approved
by the Secretary of Housing and Urban Development pursuant to Section 203 of the
National Housing Act, with facilities, procedures and experienced personnel
necessary for the servicing of mortgage loans of the same type as the Mortgage
Loans. No event has occurred that would make the Servicer unable to comply with
FNMA or FHLMC eligibility requirements or that would require notification to
either FNMA or FHLMC;
(2) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to the best of the Servicer's knowledge, threatened,
against the Servicer which, either in any one instance or in the aggregate, if
determined adversely to the Servicer would adversely affect the ability of the
Servicer to service the Mortgage Loans hereunder in accordance with the terms
hereof or have a material adverse effect on the financial condition of the
Servicer; and
(3) Collection Practices. The collection practices used by the
Servicer with respect to each Mortgage Note and Mortgage have been in all
respects legal, proper and prudent in the mortgage servicing business.
(4) Non-solicitation. The Servicer agrees that it shall not
solicit any Mortgagors (in writing or otherwise) to refinance any of the
Mortgage Loans; provided that mass advertising or mailings (such as placing
advertisements on television, on radio, in magazines or in newspapers or
including messages in billing statements) that are not exclusively directed
towards the Mortgagors shall not constitute solicitation and shall not violate
this covenant;
Section 3.03 Representations and Warranties as to Individual Mortgage
Loans.
With respect to each Mortgage Loan, the applicable Seller hereby makes
the following representations and warranties to the Purchaser on which the
Purchaser specifically relies in purchasing such Mortgage Loan. Such
representations and warranties speak as of the Funding Date unless otherwise
indicated, but shall survive any subsequent transfer, assignment or conveyance
of such Mortgage Loans:
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(1) Mortgage Loan as Described. Such Mortgage Loan complies with
the terms and conditions set forth herein, and all of the information set forth
with respect thereto on the Mortgage Loan Schedule is true and correct in all
material respects;
(2) Complete Mortgage Files. The instruments and documents
specified in Section 2.02 with respect to such Mortgage Loan have been delivered
to the Purchaser in compliance with the requirements of Article II. The Seller
is in possession of a Mortgage File respecting such Mortgage Loan, except for
such documents as have been previously delivered to the Purchaser;
(3) Owner of Record. The Mortgage relating to such Mortgage Loan
has been duly recorded in the appropriate recording office, and the applicable
Seller or Servicer is the owner of record of such Mortgage Loan and the
indebtedness evidenced by the related Mortgage Note;
(4) Payments Current. All payments required to be made up to and
including the Funding Date for such Mortgage Loan under the terms of the
Mortgage Note have been made, such that such Mortgage Loan is not delinquent 30
days or more on the Funding Date. Unless otherwise disclosed in the Offering
Materials or the Mortgage Loan Schedule, there has been no delinquency,
exclusive of any period of grace, in any payment by the Mortgagor thereunder
during the twelve months preceding the Funding Date; and, if the Mortgage Loan
is a Cooperative Loan, no foreclosure action or private or public sale under the
Uniform Commercial Code has ever been threatened or commenced with respect to
the Cooperative Loan;
(5) No Outstanding Charges. There are no delinquent taxes,
insurance premiums, assessments, including assessments payable in future
installments, or other outstanding charges affecting the Mortgaged Property
related to such Mortgage Loan;
(6) Original Terms Unmodified. The terms of the Mortgage Note and
the Mortgage related to such Mortgage Loan (and the Proprietary Lease and the
Pledge Instruments with respect to each Cooperative Loan,) have not been
impaired, waived, altered or modified in any material respect, except as
specifically set forth in the related Mortgage Loan Schedule;
(7) No Defenses. The Mortgage Note and the Mortgage related to
such Mortgage Loan (and the Acceptance of Assignment and Assumption of Lease
Agreement related to each Cooperative Loan) are not subject to any right of
rescission, set-off or defense, including the defense of usury, nor will the
operation of any of the terms of such Mortgage Note and such Mortgage, or the
exercise of any right thereunder, render such Mortgage unenforceable, in whole
or in part, or subject to any right of rescission, set-off or defense, including
the defense of usury and no such right of rescission, set-off or defense has
been asserted with respect thereto;
(8) Hazard Insurance. (a) All buildings upon the Mortgaged
Property related to such Mortgage Loan are insured by an insurer acceptable to
FNMA or FHLMC against loss by fire, hazards of extended coverage and such other
hazards as are customary in the area where such Mortgaged Property is located,
pursuant to insurance policies conforming to the requirements of either Section
5.10 or Section 5.11. All such insurance policies (collectively, the "hazard
insurance policy") contain a standard mortgagee clause naming the originator of
such Mortgage Loan, its successors and assigns, as mortgagee. Such policies are
the valid and binding obligations of the insurer, and all premiums thereon due
to date have been paid. The related Mortgage obligates the Mortgagor thereunder
to maintain all such insurance at such Mortgagor's
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cost and expense, and on such Mortgagor's failure to do so, authorizes the
holder of such Mortgage to maintain such insurance at such Mortgagor's cost and
expense and to seek reimbursement therefor from such Mortgagor; or (b) in the
case of a condominium or unit in a planned unit development ("PUD") project that
is not covered by an individual policy, the condominium or PUD project is
covered by a "master" or "blanket" policy and there exists and is in the
Servicer's Mortgage File a certificate of insurance showing that the individual
unit that secures the first mortgage is covered under such policy. The insurance
policy contains a standard mortgagee clause naming the originator of such
Mortgage Loan (and its successors and assigns), as insured mortgagee. Such
policies are the valid and binding obligations of the insurer, and all premiums
thereon have been paid. The insurance policy provides for advance notice to the
Seller or Servicer if the policy is canceled or not renewed, or if any other
change that adversely affects the Seller's interests is made; the certificate
includes the types and amounts of coverage provided, describes any endorsements
that are part of the "master" policy and would be acceptable pursuant to the
FNMA Guide;
(9) Compliance With Applicable Laws. All requirements of any
federal, state or local law (including usury, truth in lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity or
disclosure laws) applicable to the origination and servicing of such Mortgage
Loan have been complied with in all material respects;
(10) No Satisfaction of Mortgage. The Mortgage related to such
Mortgage Loan has not been satisfied, canceled or subordinated, in whole or in
part, or rescinded, and the related Mortgaged Property has not been released
from the lien of such Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such release, cancellation, subordination or
rescission;
(11) Valid First Lien. The Mortgage including any Negative
Amortization, related to such Mortgage Loan is a valid, subsisting and
enforceable perfected first lien on the related Mortgaged Property, including
all improvements on the related Mortgaged Property, which Mortgaged Property is
free and clear of any encumbrances and liens having priority over the first lien
of the Mortgage subject only to (a) the lien of current real estate taxes and
special assessments not yet due and payable, (b) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record as
of the date of recording of such Mortgage which are acceptable to mortgage
lending institutions generally, are referred to in the lender's title insurance
policy and do not adversely affect the market value or intended use of the
related Mortgaged Property, and (c) other matters to which like properties are
commonly subject which do not individually or in the aggregate materially
interfere with the benefits of the security intended to be provided by such
Mortgage or the use, enjoyment, or market value of the related Mortgaged
Property; with respect to each Cooperative Loan, each Acceptance of Assignment
and Assumption of Lease Agreement creates a valid, enforceable and subsisting
first security interest in the collateral securing the related Mortgage Note
subject only to (a) the lien of the related Cooperative Corporation for unpaid
assessments representing the obligor's pro rata share of the Cooperative
Corporation's payments for its blanket mortgage, current and future real
property taxes, insurance premiums, maintenance fees and other assessments to
which like collateral is commonly subject and (b) other matters to which like
collateral is commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Acceptance of Assignment
and Assumption of Lease Agreement; provided, however, that the appurtenant
Proprietary Lease may be subordinated or otherwise subject to the lien of any
mortgage on the Cooperative Project;
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(12) Validity of Documents. The Mortgage Note and the Mortgage
related to such Mortgage Loan (and the Acceptance of Assignment and Assumption
of Lease Agreement with respect to each Cooperative Loan) are genuine and each
is the legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and general equitable principles
(regardless whether such enforcement is considered in a proceeding in equity or
at law);
(13) Valid Execution of Documents. All parties to the Mortgage Note
and the Mortgage related to such Mortgage Loan had legal capacity to enter into
such Mortgage Loan and to execute and deliver the related Mortgage Note and the
related Mortgage and the related Mortgage Note and the related Mortgage have
been duly and properly executed by such parties; with respect to each
Cooperative Loan, all parties to the Mortgage Note and the Mortgage Loan had
legal capacity to execute and deliver the Mortgage Note, the Acceptance of
Assignment and Assumption of Lease Agreement, the Proprietary Lease, the Stock
Power, the Recognition Agreement, the Financing Statement and the Assignment of
Proprietary Lease and such documents have been duly and properly executed by
such parties; each Stock Power (i) has all signatures guaranteed or (ii) if all
signatures are not guaranteed, then such Cooperative Shares will be transferred
by the stock transfer agent of the Cooperative Corporation if the Seller
undertakes to convert the ownership of the collateral securing the related
Cooperative Loan;
(14) Full Disbursement of Proceeds. Such Mortgage Loan has closed
and the proceeds of such Mortgage Loan have been fully disbursed prior to the
Funding Date; provided that, with respect to any Mortgage Loan originated within
the previous 120 days, alterations and repairs with respect to the related
Mortgaged Property or any part thereof may have required an escrow of funds in
an amount sufficient to pay for all outstanding work within 120 days of the
origination of such Mortgage Loan, and, if so, such funds are held in escrow by
the Seller, a title company or other escrow agent;
(15) Ownership. The Mortgage Note and the Mortgage related to such
Mortgage Loan have not been assigned, pledged or otherwise transferred by the
applicable Seller, in whole or in part, and the Seller has good and marketable
title thereto, and the Seller is the sole owner thereof (and with respect to any
Cooperative Loan, the sole owner of the related Acceptance of Assignment and
Assumption of Lease Agreement)and has full right and authority to transfer and
sell such Mortgage Loan, and is transferring such Mortgage Loan to the Purchaser
free and clear of any encumbrance, equity, lien, pledge, charge, claim or
security interest;
(16) Doing Business. All parties that have had any interest in such
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the related Mortgaged Property is located;
(17) Title Insurance. (a) Such Mortgage Loan is covered by an ALTA
lender's title insurance policy or short form title policy acceptable to FNMA
and FHLMC (or, in jurisdictions where ALTA policies are not generally approved
for use, a lender's title insurance policy acceptable to FNMA and FHLMC), issued
by a title insurer acceptable to FNMA and FHLMC and qualified to do business in
the jurisdiction where the related Mortgaged Property is located, insuring
(subject to the exceptions contained in clauses (11)(a) and (b) above) the
Seller or Servicer, its successors and assigns as to the first priority lien of
the related Mortgage in the
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original principal amount of such Mortgage Loan including any Negative
Amortization and in the case of ARM Loans, against any loss by reason of the
invalidity or unenforceability of the lien resulting from the provisions of such
Mortgage providing for adjustment to the applicable Note Rate and Monthly
Payment. Additionally, either such lender's title insurance policy affirmatively
insures that there is ingress and egress to and from the Mortgaged Property or
the Seller warrants that there is ingress and egress to and from the Mortgaged
Property and the lender' s title insurance policy affirmatively insures against
encroachments by or upon the related Mortgaged Property or any interest therein
or any other adverse circumstance that either is disclosed or would have been
disclosed by an accurate survey. The Seller or Servicer is the sole insured of
such lender's title insurance policy, and such lender's title insurance policy
is in full force and effect and will be in full force and effect upon the
consummation of the transactions contemplated by this Agreement and will inure
to the benefit of the Purchaser without any further act. No claims have been
made under such lender's title insurance policy, neither the Seller, nor to the
best of Seller's knowledge, any prior holder of the related Mortgage has done,
by act or omission, anything that would impair the coverage of such lender's
insurance policy, and there is no act, omission, condition, or information that
would impair the coverage of such lender's insurance policy; (b) The mortgage
title insurance policy covering each unit mortgage in a condominium or PUD
project related to such Mortgage Loan meets all requirements of FNMA and FHLMC;
(18) No Defaults. (a) There is no default, breach, violation or
event of acceleration existing under the Mortgage, the Mortgage Note, or any
other agreements, documents, or instruments related to such Mortgage Loan; (b)
to the best of the Seller's knowledge, there is no event that, with the lapse of
time, the giving of notice, or both, would constitute such a default, breach,
violation or event of acceleration; (c) the Mortgagor(s) with respect to such
Mortgage Loan is (1) not in default under any other Mortgage Loan or (2) the
subject of an Insolvency Proceeding; (d) no event of acceleration has previously
occurred, and no notice of default has been sent, with respect to such Mortgage
Loan; (e) in no event has the Seller waived any of its rights or remedies in
respect of any default, breach, violation or event of acceleration under the
Mortgage, the Mortgage Note, or any other agreements, documents, or instruments
related to such Mortgage Loan; and (f) with respect to each Cooperative Loan,
there is no default in complying with the terms of the Mortgage Note, the
Acceptance of Assignment and Assumption of Lease Agreement and the Proprietary
Lease and all maintenance charges and assessments (including assessments payable
in the future installments, which previously became due and owing) have been
paid, and the Seller has the right under the terms of the Mortgage Note,
Acceptance of Assignment and Assumption of Lease Agreement and Recognition
Agreement to pay any maintenance charges or assessments owed by the Mortgagor;
(19) No Mechanics' Liens. As of the date of origination of such
Mortgage Loan, there were no mechanics' or similar liens, except such liens as
are expressly insured against by a title insurance policy, or claims that have
been filed for work, labor or material (and no rights are outstanding that under
law could give rise to such lien) affecting the related Mortgaged Property that
are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage;
(20) Location of Improvements; No Encroachments. As of the date of
origination of such Mortgage Loan, to the best of the Seller's knowledge, all
improvements that were considered in determining the Appraised Value of the
related Mortgaged Property lay wholly within the boundaries and building
restriction lines of such Mortgaged Property, and no improvements on adjoining
properties encroach upon such Mortgaged Property except as
24
permitted under the terms of the FNMA Guide and the FHLMC Selling Guide; to the
best of the Seller's knowledge, no improvement located on or part of any
Mortgaged Property is in violation of any applicable zoning law or regulation,
and all inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of such Mortgaged Property, and with
respect to the use and occupancy of the same, including certificates of
occupancy, have been made or obtained from the appropriate authorities;
(21) Origination; Payment Terms. Principal payments on such
Mortgage Loan commenced or will commence no more than 60 days after funds were
disbursed in connection with such Mortgage Loan. If the interest rate on the
related Mortgage Note is adjustable, the adjustment is based on the Index set
forth on the related Mortgage Loan Schedule. The related Mortgage Note is
payable on the first day of each month in arrears, in accordance with the
payment terms described on the related Mortgage Loan Schedule. With respect to
any Mortgage Loan subject to Negative Amortization the Monthly Payments are
sufficient during the period following each Payment Adjustment Date to fully
amortize the outstanding principal balance as of the first day of such period
(including any Negative Amortization) over the original term thereof in
accordance with the terms and conditions set forth in the Mortgage Note ;
(22) Due On Sale. Except as noted otherwise on the Mortgage Loan
Schedule, the related Mortgage contains the usual and customary "due-on-sale"
clause or other similar provision for the acceleration of the payment of the
Unpaid Principal Balance of such Mortgage Loan if the related Mortgaged Property
or any interest therein is sold or transferred without the prior consent of the
mortgagee thereunder;
(23) Prepayment Penalty. Except as noted otherwise on the Mortgage
Loan Schedule, such Mortgage Loan is not subject to any Prepayment Penalty;
(24) Mortgaged Property Undamaged; No Condemnation. To the best of
the Seller's knowledge, as of the Funding Date, the related Mortgaged Property
(and with respect to a Cooperative Loan, the related Cooperative Project and
Cooperative Unit) is free of material damage and waste and there is no
proceeding pending for the total or partial condemnation thereof;
(25) Customary Provisions. The related Mortgage contains customary
and enforceable provisions that render the rights and remedies of the holder
thereof adequate for the realization against the related Mortgaged Property of
the benefits of the security provided thereby, including, (a) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (b) in the case
of a Mortgage, otherwise by judicial foreclosure;
(26) Conformance With Underwriting Standards. Such Mortgage Loan
was underwritten in accordance with the Cendant Guide;
(27) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property on forms and with riders approved by FNMA and FHLMC,
signed prior to the approval of such Mortgage Loan application by an appraiser,
duly appointed by the originator of such Mortgage Loan, whose compensation is
not affected by the approval or disapproval of such Mortgage Loan and who met
the minimum qualifications of FNMA and FHLMC for appraisers. Each appraisal of
the Mortgage Loan was made in accordance with the relevant provisions of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989;
25
(28) Deeds of Trust. If the related Mortgage constitutes a deed of
trust, then a trustee, duly qualified under applicable law to serve as such, has
been properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the Purchaser to the
trustee under such deed of trust, except in connection with a trustee's sale
after default by the related Mortgagor;
(29) LTV; Primary Mortgage Insurance Policy. Except with respect to
Additional Collateral Mortgage Loans (as defined in Exhibit 11 hereto), if such
Mortgage Loan had a Loan-to-Value Ratio of more than 80% at origination, such
Mortgage Loan is and will be subject to a Primary Insurance Policy issued by a
Qualified Mortgage Insurer, which insures the Seller or Servicer, its successors
and assigns and insureds in the amount set forth on the Mortgage Loan Schedule;
provided that, a Primary Mortgage Insurance Policy will not be required for any
Cooperative Loan if (i) the proceeds of such Cooperative Loan were used to
purchase a Cooperative Unit at the "insider's price" when the building was
converted to a Cooperative Corporation, (ii) the value of the Cooperative Unit
for purposes of establishing the LTV at origination was such "insider's price",
(iii) the principal amount of the Cooperative Loan at origination was not more
than 100% of such "insider's price" and (iv) the LTV at origination, as
calculated using the Appraised Value at origination, was less than or equal to
80%. All provisions of such Primary Insurance Policy have been and are being
complied with, such policy is in full force and effect, and all premiums due
thereunder have been paid. Any related Mortgage subject to any such Primary
Insurance Policy (other than a "lender-paid" Primary Insurance Policy) obligates
the Mortgagor thereunder to maintain such insurance for the time period required
by law and to pay all premiums and charges in connection therewith. As of the
date of origination, the Loan-to-Value Ratio of such Mortgage Loan is as
specified in the applicable Mortgage Loan Schedule;
(30) Occupancy. As of the date of origination of such Mortgage
Loan, to the best of the Seller's knowledge, the related Mortgaged Property (or
with respect to a Cooperative Loan, the related Cooperative Unit) is lawfully
occupied under applicable law and all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of the
Mortgaged Property (or with respect to a Cooperative Loan, the related
Cooperative Unit) and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy, have been made or
obtained from the appropriate authorities;
(31) Supervision and Examination by a Federal or State Authority.
Each Mortgage Loan either was (a) closed in the name of the Cendant Mortgage, or
(b) closed in the name of another entity that is either a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or an institution which is supervised and examined by a federal or state
authority, or a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act (a "HUD
Approved Mortgagee"), and was so at the time such Mortgage Loan was originated
(Cendant Mortgage or such other entity, the "Originator") or (c) closed in the
name of a loan broker under the circumstances described in the following
sentence. If such Mortgage Loan was originated through a loan broker, such
Mortgage Loan met the Originator's underwriting criteria at the time of
origination and was originated in accordance with the Originator's policies and
procedures and the Originator acquired such Mortgage Loan from the loan broker
contemporaneously with the origination thereof. The Mortgage Loans that the
Trust is selling to Purchaser were originated by or on behalf of Cendant
Mortgage and subsequently assigned to the Trust.
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(32) Adjustments. All of the terms of the related Mortgage Note
pertaining to interest rate adjustments, payment adjustments and adjustments of
the outstanding principal balance, if any, are enforceable and such adjustments
will not affect the priority of the lien of the related Mortgage; all such
adjustments on such Mortgage Loan have been made properly and in accordance with
the provisions of such Mortgage Loan;
(33) Insolvency Proceedings; Soldiers' and Sailors' Relief Act. To
the best of the Seller's knowledge, the related Mortgagor (1) is not the subject
of any Insolvency Proceeding; and (2) has not requested any relief allowed to
such Mortgagor under the Soldiers' and Sailors' Civil Relief Act of 1940;
(34) FNMA/FHLMC Documents. Such Mortgage Loan was closed on
standard FNMA or FHLMC documents or on such documents otherwise acceptable to
them;
(35) Unless otherwise disclosed in the Offering Materials or the
Mortgage Loan Schedule, no Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the Seller, the Mortgagor, or anyone on behalf
of the Mortgagor, (b) paid by any source other than the Mortgagor or (c)
contains any other similar provisions which may constitute a "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other contingent interest
feature;
(36) The Assignment is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is
located;
(37) Any principal advances made to the Mortgagor prior to the
Cut-off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term. The consolidated
principal amount does not exceed the original principal amount of the Mortgage
Loan plus any Negative Amortization;
(38) Unless otherwise disclosed in the Offering Materials or the
Mortgage Loan Schedule, no Mortgage Loan has a balloon payment feature. With
respect to any Mortgage Loan with a balloon payment feature, the Mortgage Note
is payable in Monthly Payments based on a thirty year amortization schedule and
has a final Monthly Payment substantially greater than the proceeding Monthly
Payment which is sufficient to amortize the remaining principal balance of the
Mortgage Loan;
(39) If the residential dwelling on the Mortgaged Property is a
condominium unit or a unit in a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project meets the eligibility requirements of the Cendant Guide;
(40) No Mortgage Loan is subject to the provisions of the
Homeownership and Equity Protection Act of 1994;
(41) Unless otherwise disclosed in the Offering Materials or the
Mortgage Loan Schedule, no Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
trade-in or exchange of a Mortgaged Property;
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(42) The Seller has no knowledge of any circumstances or condition
with respect to the Mortgage, the Mortgage Property (or with respect to a
Cooperative Loan, the Acceptance of Assignment and Assumption of Lease
Agreement, the Cooperative Unit or the Cooperative Project), the Mortgagor or
the Mortgagor's credit standing that can reasonably be expected to cause the
Mortgage Loan to be an unacceptable investment, cause the Mortgage Loan to
become delinquent, or adversely affect the value of the Mortgage Loan;
(43) Interest on each Mortgage Loan is calculated on the basis of a
360-day year consisting of twelve 30-day months;
(44) To the best of Seller's knowledge, the Mortgaged Property is
in material compliance with all applicable environmental laws pertaining to
environmental hazards including, without limitation, asbestos, and neither the
Seller nor, to the Seller's knowledge, the related Mortgagor, has received any
notice of any violation or potential violation of such law;
(45) Unless otherwise disclosed in the Offering Materials or the
Mortgage Loan Schedule, no Mortgage Loan is subject to negative amortization;
(46) With respect to each Cooperative Loan, a Cooperative Lien
Search has been made by a company competent to make the same which company is
acceptable to FNMA and qualified to do business in the jurisdiction where the
Cooperative Unit is located;
(47) With respect to each Cooperative Loan, (i) the terms of the
related Proprietary Lease is longer than the terms of the Cooperative Loan, (ii)
there is no provision in any Proprietary Lease which requires the Mortgagor to
offer for sale the Cooperative Shares owned by such Mortgagor first to the
Cooperative Corporation, (iii) there is no prohibition in any Proprietary Lease
against pledging the Cooperative Shares or assigning the Proprietary Lease and
(iv) the Recognition Agreement is on a form of agreement published by the Aztech
Document Systems, Inc. or includes provisions which are no less favorable to the
lender than those contained in such agreement;
(48) With respect to each Cooperative Loan, each original UCC
financing statement, continuation statement or other governmental filing or
recordation necessary to create or preserve the perfection and priority of the
first priority lien and security interest in the Cooperative Shares and
Proprietary Lease has been timely and properly made. Any security agreement,
chattel mortgage or equivalent document related to the Cooperative Loan and
delivered to the Mortgagor or its designee establishes in the Mortgagor a valid
and subsisting perfected first lien on and security interest in the Mortgaged
Property described therein, and the Mortgagor has full right to sell and assign
the same; and
(49) With respect to each Cooperative Loan, each Acceptance of
Assignment and Assumption of Lease Agreement contains enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the
realization of the benefits of the security provided thereby. The Acceptance of
Assignment and Assumption of Lease Agreement contains an enforceable provision
for the acceleration of the payment of the unpaid principal balance of the
Mortgage Note in the event the Cooperative Unit is transferred or sold without
the consent of the holder thereof.
(50) No fraud, error, omission, misrepresentation, or negligence
with respect to a Mortgage Loan has taken place on the part of any person,
including without limitation, the
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Mortgagor, any appraiser, any builder or developer or any other party involved
in the origination of the Mortgage Loan.
Section 3.04 Repurchase and Substitution.
(1) It is understood and agreed that the representations and
warranties set forth in Sections 3.01, 3.02 and 3.03 shall survive the sale of
the Mortgage Loans to the Purchaser and shall inure to the benefit of the
Purchaser, notwithstanding any restrictive or qualified endorsement on any
Mortgage Note or Assignment or the examination of any Mortgage File.
(2) Upon discovery by either of the Sellers or the Purchaser of a
breach of any of the representations and warranties contained in Sections 3.01,
3.02 or 3.03 that materially and adversely affects the interest of the Purchaser
(or that materially and adversely affects the interests of the Purchaser in the
related Mortgage Loan, in the case of a representation or warranty relating to a
particular Mortgage Loan), the party discovering such breach shall give prompt
written notice to the other.
(3) Unless permitted a greater period of time to cure as set forth
in Section 2.04, the applicable Seller shall have a period of 60 days from the
earlier of either discovery by or receipt of written notice from the Purchaser
to the Seller of any breach of any of the representations and warranties
contained in Sections 3.01, 3.02 or 3.03 that materially and adversely affects
the interest of the Purchaser (or that materially and adversely affects the
interests of the Purchaser in the related Mortgage Loan, in the case of a
representation or warranty relating to a particular Mortgage Loan) (a "Defective
Mortgage Loan"; provided that "Defective Mortgage Loan" shall also include (a)
any Mortgage Loan treated or designated as such in accordance with Section 2.04
and (b) any Mortgage Loan regarding which the Mortgagor fails to make the first
regularly scheduled payment of principal and interest) within which to correct
or cure such breach. If such breach can ultimately be cured but is not
reasonably expected to be cured within the 60-day period, then the applicable
Seller shall have such additional time, if any, as is reasonably determined by
the Purchaser to cure such breach provided that the Seller has commenced curing
or correcting such breach and is diligently pursuing same. Each Seller hereby
covenants and agrees with respect to each Mortgage Loan conveyed by it that, if
any breach relating thereto cannot be corrected or cured within the applicable
cure period or such additional time, if any, as is reasonably determined by the
Purchaser, then such Seller shall, at the direction of the Purchaser, repurchase
the Defective Mortgage Loan at the applicable Repurchase Price. Notwithstanding
anything to the contrary contained herein, if the first regularly scheduled
payment of principal and interest due under any Mortgage Loan has been
delinquent more than 30 days, the Purchaser may, by written notice to the
applicable Seller, require that the Seller repurchase the related Mortgage Loan.
However, if the Seller provides evidence that the delinquency was due to a
servicing setup error, no repurchase shall be required. Within 10 Business Days
following the delivery of any such written notice from the Purchaser, the
applicable Seller shall repurchase the specified Mortgage Loan by paying the
Repurchase Price therefor by wire transfer of immediately available funds
directly to the Purchaser's Account.
Notwithstanding the previous paragraph, the applicable Seller may, at
its option and assuming that such Seller has a Qualified Substitute Mortgage
Loan or Loans, rather than repurchase the Mortgage Loan as provided above,
remove such Mortgage Loan ("Deleted Mortgage Loan") and substitute in its place
a Qualified Substitute Mortgage Loan or Loans, provided that in no event may any
such substitution be made later than the second anniversary
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after the Cut-off Date. If the applicable Seller has no Qualified Substitute
Mortgage Loan, it shall repurchase the Defective Mortgage Loan.
As to any Deleted Mortgage Loan for which the applicable Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, the applicable Seller
shall effect such substitution by delivering to the Purchaser or its designee
for such Qualified Substitute Mortgage Loan or Loans the Legal Documents as are
required by Section 2. Upon such substitution, such Qualified Substitute
Mortgage Loan or Loans shall be subject to the terms of this Agreement in all
respects, and the applicable Seller shall be deemed to have made with respect to
such Qualified Substitute Mortgage Loan or Loans, as of the date of
substitution, the covenants, representations and warranties set forth in
Sections 3.01, 3.02 and 3.03.
For any month in which the applicable Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
applicable Seller will determine the amount (if any) by which the aggregate
principal balance of all such Qualified Substitute Mortgage Loans as of the date
of substitution (after application of scheduled principal payments due in the
month of substitution which have been received or as to which an advance has
been made) is less than the aggregate outstanding principal balance of all such
Deleted Mortgage Loans. The amount of such shortfall shall be paid by the
applicable Seller on the date of such substitution) by wire transfer of
immediately available funds directly to the Purchaser's Account.
(4) Any repurchase of a Defective Mortgage Loan required hereunder
shall be accomplished by payment of the applicable Repurchase Price within 3
Business Days of expiration of the applicable time period referred to above in
paragraph 3.04(3) by wire transfer of immediately available funds directly to
the Purchaser's Account. It is understood and agreed that the obligations of a
Seller (a) set forth in this Section 3.04(3) to cure any breach of such Seller's
representations and warranties contained in Sections 3.01, 3.02 and 3.03 or to
repurchase the Defective Mortgage Loan(s) and (b) set forth in Section 9.01 to
indemnify the Purchaser in connection with any breach of a Seller's
representations and warranties contained in Sections 3.01, 3.02 and 3.03 shall
constitute the sole remedies of the Purchaser respecting a breach of such
representations and warranties.
(5) The parties further agree that, in recognition of the Trust's
rights against Cendant Mortgage with respect to the Mortgage Loans acquired by
it from Cendant Mortgage and conveyed to the Purchaser hereunder, the Purchaser
shall have the right to cause Cendant Mortgage to repurchase directly any
Defective Mortgage Loan (other than as a result of a breach by the Trust of
Section 3.03 (3) or 3.03(15) hereof, in which case the Purchaser shall have the
right to cause the Trust to repurchase directly the Defective Mortgage Loan)
acquired hereunder by the Purchaser from the Trust.
Section 3.05 Certain Covenants of each Seller and the Servicer.
Without incurring undue effort or any cost except the Seller's overhead
or employees ' salaries, each Seller shall take reasonable steps to assist the
Purchaser, if the Purchaser so requests by 30 days' advance written notice to
the related Seller or Sellers, in re-selling the Mortgage Loans in a whole loan
sale or in securitizing the Mortgage Loans and selling undivided interests in
such Mortgage Loans in a public offering or private placement or selling
participating interests in such Mortgage Loans, which steps may include, (a)
providing any information relating to the Mortgage Loans reasonably necessary to
assist in the preparation of any disclosure
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documents, (b) providing information relating to delinquencies and defaults with
respect to the Servicer's servicing portfolio (or such portion thereof as is
similar to the Mortgage Loans), (c) entering into any other servicing, custodial
or other similar agreements, that are consistent with the provisions of this
Agreement, and which contain such provisions as are customary in securitizations
rated "AAA" (including a securitization involving a REMIC or CMO) (a
"Securitization") and (d) provide such opinions of counsel as are customary in
such transactions, provided, however, that any opinion of outside counsel shall
be provided at Purchaser's expense. In connection with such a Securitization,
the Purchaser may be required to engage a master servicer or trustee to
determine the allocation of payments to and make remittances to the
certificateholders, at the Purchaser's sole cost and expense. In the event that
a master servicer or trustee is requested by the Purchaser to determine the
allocation of payments and to make remittances to the certificateholders, the
Servicer agrees to service the Mortgage Loans in accordance with the reasonable
and customary requirements of such Securitization, which may include the
Servicer's acting as a subservicer in a master servicing arrangement. With
respect to the then owners of the Mortgage Loans, the Servicer shall thereafter
deal solely with such master servicer or trustee, as the case may be with
respect to such Mortgage Loans which are subject to the Securitization and shall
not be required to deal with any other party with respect to such Mortgage
Loans. The cost of such securitization shall be borne by the Purchaser, other
than the Seller's overhead or employees' salaries.
ARTICLE IV:
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
AND CONDITIONS PRECEDENT TO FUNDING
Section 4.01 Representations and Warranties.
The Purchaser represents, warrants and covenants to the Seller that as
of each Funding Date or as of such date specifically provided herein:
(1) Due Organization. The Purchaser is an entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and has all licenses necessary to carry on its business now being
conducted and is licensed, qualified and in good standing under the laws of each
state where a Mortgaged Property is located or is otherwise exempt under
applicable law from such qualification or is otherwise not required under
applicable law to effect such qualification; no demand for such qualification
has been made upon the Purchaser by any state having jurisdiction and in any
event the Purchaser is or will be in compliance with the laws of any such state
to the extent necessary to enforce each Mortgage Loan.
(2) Due Authority. The Purchaser had the full power and authority
and legal right to acquire the Mortgage Loans that it acquired. The Purchaser
has the full power and authority to hold each Mortgage Loan, to sell each
Mortgage Loan and to execute, deliver and perform, and to enter into and
consummate, all transactions contemplated by this Agreement. The Purchaser has
duly authorized the execution, delivery and performance of this Agreement, has
duly executed and delivered this Agreement, and this Agreement, assuming due
authorization, execution and delivery by the Seller, constitutes a legal, valid
and binding obligation of the Purchaser, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, reorganization, receivership,
conservatorship, insolvency, moratorium and other laws relating to or affecting
creditors' rights generally or the rights of creditors of banks and to the
general
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principles of equity (whether such enforceability is considered in a proceeding
in equity or at law);
(3) No Conflict. None of the execution and delivery of this
Agreement, the acquisition or origination, as applicable, of the Mortgage Loans
by the Purchaser, the purchase of the Mortgage Loans, the consummation of the
transactions contemplated hereby, or the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Purchaser's organizational
documents and bylaws or any legal restriction or any agreement or instrument to
which the Purchaser is now a party or by which it is bound, or constitute a
default or result in an acceleration under any of the foregoing, or result in
the violation of any law, rule, regulation, order, judgment or decree to which
the Purchaser or its property is subject, or impair the ability of the Purchaser
to realize on the Mortgage Loans, or impair the value of the Mortgage Loans;
(4) Ability to Perform. The Purchaser does not believe, nor does
it have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(5) No Material Default. The Purchaser is not in material default
under any agreement, contract, instrument or indenture of any nature whatsoever
to which the Purchaser is a party or by which it (or any of its assets) is
bound, which default would have a material adverse effect on the ability of the
Purchaser to perform under this Agreement, nor, to the best of the Purchaser's
knowledge, has any event occurred which, with notice, lapse of time or both
would constitute a default under any such agreement, contract, instrument or
indenture and have a material adverse effect on the ability of the Purchaser to
perform its obligations under this Agreement;
(6) No Change in Business. There has been no change in the
business, operations, financial condition, properties or assets of the Purchaser
since the date of the Purchaser's financial statements that would have a
material adverse effect on the ability of the Purchaser to perform its
obligations under this Agreement;
(7) Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to the best of the Purchaser's knowledge, threatened,
against the Purchaser, which, either in any one instance or in the aggregate, if
determined adversely to the Purchaser would adversely affect the purchase of the
Mortgage Loans or the execution, delivery or enforceability of this Agreement or
result in any material liability of the Purchaser, or draw into question the
validity of this Agreement, or the Mortgage Loans or have a material adverse
effect on the financial condition of the Purchaser;
(8) Broker. The Purchaser has not dealt with any broker or agent
or anyone else who might be entitled to a fee or commission in connection with
this transaction.
(9) No Consent Required. No consent, approval, authorization or
order of any court or governmental agency or body is required for the execution,
delivery and performance by the Purchaser of or compliance by the Purchaser with
this Agreement, the purchase of the Mortgage Loans from the Seller or the
consummation of the transactions contemplated by this Agreement or, if required,
such approval has been obtained prior to the Funding Date;
(10) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement is in the ordinary course of
business of the Purchaser;
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(11) Non-Petition Agreement. The Purchaser covenants and agrees
that it shall not, prior to the date which is one year and one day (or if
longer, the applicable preference period then in effect) after the payment in
full of all rated obligations of ▇▇▇▇▇▇'▇ Gate Residential Mortgage Trust,
acquiesce, petition or otherwise, directly or indirectly, invoke or cause
▇▇▇▇▇▇'▇ Gate Residential Mortgage Trust to invoke the process of any
governmental authority for the purpose of commencing or sustaining a case
against ▇▇▇▇▇▇'▇ Gate Residential Mortgage Trust under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator, or other similar official of
▇▇▇▇▇▇'▇ Gate Residential Mortgage Trust. This covenant and agreement shall be
binding upon the Purchaser and any assignee or transferee of the Purchaser;
(12) No Untrue Information. Neither this Agreement nor any
statement, report or other agreement, document or instrument furnished or to be
furnished pursuant to this Agreement contains or will contain any materially
untrue statement of fact or omits or will omit to state a fact necessary to make
the statements contained therein not misleading;
(13) Non-solicitation. The Purchaser agrees that it shall not
solicit any Mortgagors (in writing or otherwise) to refinance any of the
Mortgage Loans; provided that mass advertising or mailings (such as placing
advertisements on television, on radio, in magazines or in newspapers or
including messages in billing statements) that are not exclusively directed
towards the Mortgagors shall not constitute solicitation and shall not violate
this covenant; and
(14) Privacy. Purchaser agrees and acknowledges that as to all
nonpublic personal information received or obtained by it with respect to any
Mortgagor: (a) such information is and shall be held by Purchaser in accordance
with all applicable law, including but not limited to the privacy provisions of
the ▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Act; (b) such information is in connection with a
proposed or actual secondary market sale related to a transaction of the
Mortgagor for purposes of 16 C.F.R. Section 313.14(a)(3); and (c) Purchaser is
hereby prohibited from disclosing or using any such information other than to
carry out the express provisions of this Agreement, or as otherwise permitted by
applicable law.
Section 4.02 Conditions Precedent to Closing.
Each purchase of Mortgage Loans hereunder shall be subject to each of
the following conditions:
(a) All of the representations and warranties of Seller under the
Cendant Guide, and of Seller and Purchaser under this
Agreement shall be true and correct as of the Funding Date,
and no event shall have occurred which, with notice or the
passage of time, would constitute an Event of Default under
this Agreement or under the Cendant Guide;
(b) Purchaser shall have received, or Purchaser's attorneys shall
have received in escrow, all closing documents as specified
herein, in such forms as are agreed upon and acceptable to
Purchaser, duly executed by all signatories other than
Purchaser as required pursuant to the respective terms
thereof;
(c) All other terms and conditions of this Agreement shall have
been complied with.
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Subject to the foregoing conditions, Purchaser shall pay to Seller on
each Funding Date the applicable Purchase Price as provided herein.
ARTICLE V:
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 Cendant Mortgage to Act as Servicer; Servicing Standards;
Additional Documents; Consent of the Purchaser.
(1) The Servicer, as independent contract servicer, shall service
and administer the Mortgage Loans and REO Property from and after each Funding
Date in accordance with the terms and provisions of the Mortgage Loans,
applicable law and the terms and provisions of this Agreement for and on behalf
of, and in the best interests of, the Purchaser (without taking into account any
relationship the Servicer may have with any Mortgagor or other Person, the
participation, if any, of the Servicer in any financing provided in connection
with the sale of any Mortgaged Property, or the Servicer's obligation to advance
any expenses or incur any costs in the performance of its duties hereunder) in
accordance with a standard that is not less than the higher of (a) the same
care, skill, prudence and diligence with which it services similar assets held
for its own or its Affiliates' account and (b) the same care, skill, prudence
and diligence with which it services similar assets for third party
institutional investors, in each case giving due consideration to customary and
usual standards of practice of prudent institutional mortgage loan servicers
utilized with respect to mortgage loans comparable to the Mortgage Loans.
Subject to the foregoing standards, in connection with such servicing and
administration, the Servicer shall seek to maximize the timely recovery of
principal and interest on the Mortgage Notes; provided that nothing contained
herein shall be construed as an express or implied guarantee by the Servicer of
the collectibility of payments on the Mortgage Loans or shall be construed as
impairing or adversely affecting any rights or benefits specifically provided by
this Agreement to the Seller, including with respect to Servicing Fees.
In the event that any of the Mortgage Loans included on the Mortgage
Loan Schedule for a particular Funding Date are Additional Collateral Mortgage
Loans (as defined in Exhibit 11 hereto), Seller and Purchaser shall enter into
an Additional Collateral Assignment and Servicing Agreement, substantially in
the form of Exhibit 11 hereto, and such Additional Collateral Mortgage Loans
will be serviced in accordance with the terms of the related Additional
Collateral Assignment and Servicing Agreement and the terms of this Agreement.
(2) To the extent consistent with Section 5.01(1) and further
subject to any express limitations set forth in this Agreement, the Servicer
(acting alone or, solely in the circumstances permitted hereunder, acting
through a subservicer) shall have full power and authority to do or cause to be
done any and all things that it may deem necessary or desirable in connection
with such servicing and administration, including the power and authority (a) to
execute and deliver, on behalf of the Purchaser, customary consents or waivers
and other instruments and documents (including estoppel certificates), (b) to
consent to transfers of any Mortgaged Property and assumptions of the Mortgage
Notes and related Mortgages, (c) to submit claims to collect any Insurance
Proceeds and Liquidation Proceeds, (d) to consent to the application of any
Insurance Proceeds or Condemnation Proceeds to the restoration of the applicable
Mortgaged Property or otherwise, (e) to bring an action in a court of law,
including an unlawful detainer action, to enforce rights of the Purchaser with
respect to any Mortgaged Property, (f) to execute and deliver, on behalf of the
Purchaser, documents relating to the management, operation,
34
maintenance, repair, leasing, marketing and sale of any Mortgaged Property or
any REO Property, and (g) to effectuate foreclosure or other conversion of the
ownership of the Mortgaged Property securing any Mortgage Loan; provided that
the Servicer shall not take any action not provided for in this Agreement that
is materially inconsistent with or materially prejudices the interest of the
Purchaser in any Mortgage Loan or under this Agreement. If reasonably requested
by the Servicer, the Purchaser shall furnish the Servicer with any powers of
attorney and other documents reasonably necessary or appropriate to enable the
Servicer to service and administer the Mortgage Loans and the REO Properties,
including documents relating to the foreclosure, receivership, management,
operation, maintenance, repair, leasing, marketing and sale (in foreclosure or
otherwise) of any Mortgaged Property or any REO Property.
(3) Notwithstanding anything to the contrary contained herein:
(a) the Servicer acknowledges that the Purchaser will retain title
to, and ownership of, the Mortgage Loans and the REO Properties and that the
Servicer does not hereby acquire any title to, security interest in, or other
rights of any kind in or to any Mortgage Loan or REO Property or any portion
thereof;
(b) the Servicer shall not file any lien or any other encumbrance
on, exercise any right of setoff against, or attach or assert any claim in or on
any Mortgage Loan or REO Property, unless authorized pursuant to a judicial or
administrative proceeding or a court order;
(c) the Servicer shall, in servicing the Mortgage Loans, follow
and comply with the servicing guidelines established by FNMA, provided that the
Servicer shall specifically notify the Purchaser in writing and obtain the
Purchaser's written consent prior to the Servicer taking any of the following
actions: (1) modifying, amending or waiving any of the financial terms of, or
making any other material modifications to, a Mortgage Loan, except the Servicer
may, upon the Mortgagor's request, accept a principal prepayment and re-amortize
the then remaining principal balance over the then remaining term of the loan
(resulting in a lower scheduled monthly payment but no change in the maturity
date); (2) selling any Specially Serviced Mortgage Loan; (3) making, with
respect to any Specially Serviced Mortgage Loan or REO Property, Servicing
Advances provided that the Servicer shall not be required to so advise the
Purchaser to the extent that each related Servicing Advance as to the related
Mortgaged Property or REO Property is in the best interests of the Purchaser or
other owner of the Mortgage Loan and that are deemed to be recoverable by the
Servicer; (4) forgiving principal or interest on, or permitting to be satisfied
at a discount, any Mortgage Loan; (5) accepting substitute or additional
collateral, or releasing any collateral, for a Mortgage Loan. If the Purchaser
has not approved or rejected in writing any proposed action(s) recommended by
the Servicer to be taken hereunder within 20 Business Days of the date such
recommendation is made, then the Purchaser shall be deemed to have rejected such
recommended action(s) and the Servicer shall not take any such action(s);
(d) the Servicer shall notify the Purchaser of any modification,
waiver or amendment of any term of any Mortgage Loan and the date thereof and
shall deliver to the Purchaser, for deposit in the related Mortgage File, an
original counterpart of the agreement relating to such modification, waiver or
amendment promptly following the execution thereof;
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(e) the Servicer shall remain primarily liable for the full
performance of its obligations hereunder notwithstanding any appointment by the
Servicer of a subservicer or subservicers hereunder; and
(f) the Purchaser may at any time and from time to time, in its
sole discretion, upon 10 Business Days written notice to the Servicer, terminate
the Servicer's servicing obligations hereunder with respect to (1) any REO
Property or (2) any Mortgage Loan that, in accordance with the Purchaser's
internal credit classification criteria, has been classified as "doubtful" or a
"loss." Upon the effectiveness of any such termination of the Servicer's
servicing obligations with respect to any such REO Property or Mortgage Loan,
the Servicer shall deliver all agreements, documents, and instruments related
thereto to the Purchaser, in accordance with applicable law.
Section 5.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on
all Mortgage Loans are paid in full, the Servicer will proceed diligently to
collect all payments due under each Mortgage Loan when the same shall become due
and payable and shall, to the extent such procedures shall be consistent with
this Agreement and the terms and provisions of any related Primary Insurance
Policy, follow such collection procedures as it follows with respect to mortgage
loans comparable to the Mortgage Loans, which procedures shall in any event
comply with the servicing standards set forth in Section 5.01. Furthermore, the
Servicer shall ascertain and estimate annual ground rents, taxes, assessments,
fire and hazard insurance premiums, mortgage insurance premiums, and all other
charges that, as provided in the Mortgages, will become due and payable to the
end that the installments payable by the Mortgagors will be sufficient to pay
such charges as and when they become due and payable.
Section 5.03 Reports for Specially Serviced Mortgage Loans and
Foreclosure Sales.
The Servicer shall, within five (5) calendar days following each Record
Date, deliver to the Purchaser monthly reports (substantially in the form of
Exhibit 5.03(a) and Exhibit 5.03(b) attached hereto) with respect to all
Specially Serviced Mortgage Loans. In addition, the Servicer shall, within one
(1) Business Day following the occurrence of any foreclosure sale with respect
to any Mortgaged Property, deliver to the Purchaser a notice of foreclosure sale
substantially in the form of Exhibit 5.03(c) attached hereto.
Section 5.04 Establishment of Collection Account; Deposits in
Collection Account.
The Servicer 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 shall establish and maintain one or more Collection Accounts,
in the form of time deposit or demand accounts. The creation of any Collection
Account shall be evidenced by a certification in the form of Exhibit 5.04-1
attached hereto, in the case of an account established with the Servicer, or a
letter agreement in the form of Exhibit 5.04-2 attached hereto, in the case of
an account held by a depository other than the Servicer. In either case, a copy
of such certification or letter agreement shall be furnished to the Purchaser.
The Servicer shall deposit in the Collection Account on a daily basis,
within two Business Days after receipt (or as otherwise required pursuant to
this Agreement in the case of clauses (8), (9), (10) and (11) of this Section
5.04) and retain therein the following payments and
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collections received or made by it subsequent to each Funding Date, or received
by it prior to the Funding Date but allocable to a period subsequent thereto,
other than in respect of principal and interest on the Mortgage Loans due on or
before the Funding Date:
(4) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(5) all payments on account of interest on the Mortgage Loans;
(6) all Liquidation Proceeds;
(7) all REO Proceeds;
(8) all Insurance Proceeds, including amounts required to be
deposited pursuant to Sections 5.10 and 5.11, other than
proceeds to be held in the Escrow Account and applied to the
restoration or repair of the Mortgaged Properties or released
to the applicable Mortgagors in accordance with the Servicer's
normal servicing procedures, the related Mortgages or
applicable law;
(9) all Condemnation Proceeds affecting any Mortgaged Property
which are not released to a Mortgagor in accordance with the
Servicer's normal servicing procedures, the related Mortgage
or applicable law;
(10) any Monthly Advances in accordance with Section 6.03;
(11) any amounts required to be deposited by the Servicer pursuant
to Section 5.11 in connection with the deductible clause in
any blanket hazard insurance policy, such deposit to be made
from the Servicer's own funds without reimbursement therefor;
(12) any amounts required to be deposited by the Servicer pursuant
to Section 5.16 in connection with any losses on Permitted
Investments;
(13) any amounts required to be deposited in the Collection Account
pursuant to Sections 7.01 or 7.02 or otherwise pursuant to the
terms hereof; and
(11) any amounts required to be deposited in the Collection Account
pursuant to Section 5.17.
The foregoing requirements for deposit in the Collection Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees, to the extent permitted by Section 7.01, need not be deposited by the
Servicer in the Collection Account and shall be retained by the Servicer as
additional compensation.
Section 5.05 Permitted Withdrawals from the Collection Account.
The Servicer may, from time to time in accordance with the provisions
hereof, withdraw amounts from the Collection Account for the following purposes
(without duplication):
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(1) to reimburse itself for unreimbursed Monthly Advances and
Servicing Advances that the Servicer has determined to be Non-Recoverable
Advances as provided in Section 6.04;
(2) to make payments to the Purchaser in the amounts, at the times
and in the manner provided for in Section 6.01;
(3) to reimburse itself for Monthly Advances, the Servicer's right
to reimburse itself pursuant to this Subsection (3) being limited to amounts
received on the related Mortgage Loan which represent late payments of principal
and/or interest with respect to which any such Monthly Advance was made;
(4) to reimburse itself for unreimbursed Servicing Advances and
for unreimbursed Monthly Advances, the Servicer's right to reimburse itself
pursuant to this Subsection (4) with respect to any Mortgage Loan being limited
to related Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds and
such other amounts as may be collected by the Servicer from the Mortgagor or
otherwise relating to the Mortgage Loan, it being understood that, in the case
of such reimbursement, the Servicer's right thereto shall be prior to the rights
of the Purchaser, except that, where a Seller or the Servicer is required to
repurchase (or substitute a Qualified Substitute Mortgage Loan for) a Mortgage
Loan pursuant to Sections 2.04, 3.04 and/or 7.02, the Servicer's right to such
reimbursement shall be subsequent and subordinate to the payment to the
Purchaser of the applicable Repurchase Price (or delivery of a Qualified
Substitute Mortgage Loan) and all other amounts required to be paid to the
Purchaser with respect to such Mortgage Loan;
(5) to pay to itself, solely out of the interest portion of the
Monthly Payment actually received with respect to a Mortgage Loan during the
period ending on the most recent Determination Date, the Servicing Fee with
respect to such Mortgage Loan;
(6) to pay to itself as additional servicing compensation (a) any
interest earned on funds in the Collection Account (all such interest to be
withdrawn monthly not later than each Remittance Date) and (b) any prepayment
penalties or premiums relating to any Principal Prepayments; provided that no
such amounts shall be payable as servicing compensation to the extent they
relate to a Mortgage Loan with respect to which a default, breach, violation, or
event of acceleration exists or would exist but for the lapse of time, the
giving of notice, or both;
(7) to pay to itself with respect to each Mortgage Loan that has
been repurchased pursuant to Sections 2.04, 3.04 and/or 7.02 all amounts
received thereon and not distributed as of the date on which the related
Repurchase Price is determined (except to the extent that such amounts
constitute part of the Repurchase Price to be remitted to the Purchaser);
(8) to remove any amounts deposited into the Collection Account in
error; and
(9) to clear and terminate the Collection Account upon the
termination of this Agreement, with any funds contained therein to be
distributed in accordance with the terms of this Agreement.
The Servicer shall keep and maintain a separate, detailed accounting,
on a Mortgage Loan-by-Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account pursuant to this Section.
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Section 5.06 Establishment of Escrow Accounts; Deposits in Escrow.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts, in the form of time deposit or demand
accounts. The creation of any Escrow Account shall be evidenced by a
certification in the form shown on Exhibit 5.06-1 attached hereto, in the case
of an account established with the Servicer, or a letter agreement in the form
shown on Exhibit 5.06-2 attached hereto, in the case of an account held by a
depository other than the Servicer, such depository having been consented to by
the Purchaser. In either case, a copy of such certification or letter agreement
shall be furnished to the Purchaser.
The Servicer shall deposit in each Escrow Account on a daily basis, and
retain therein, (i) all Escrow Payments collected on account of the related
Mortgage Loans for the purpose of effecting timely payment of any such items as
required under the terms of this Agreement, and (ii) all Insurance Proceeds
which are to be applied to the restoration or repair of any Mortgaged Property.
The Servicer shall make withdrawals therefrom only to effect such payments as
are required under Sections 5.07 and/or 5.08. The Servicer shall be entitled to
retain any interest paid on funds deposited in the Escrow Account by the
depository institution other than interest on escrowed funds required by law to
be paid to the Mortgagor and, to the extent required by law, the Servicer shall
pay interest on escrowed funds to the Mortgagor notwithstanding that the Escrow
Account is non-interest bearing or that interest paid thereon is insufficient
for such purposes, without any right of reimbursement therefor.
Section 5.07 Permitted Withdrawals From Escrow Accounts.
Withdrawals from any Escrow Account may be made by the Servicer only
(i) to effect timely payments of ground rents, taxes, assessments, water rates,
hazard insurance premiums, Primary Insurance Policy premiums, if applicable, and
comparable items constituting Escrow Payments for the related Mortgage, (ii) to
reimburse the Servicer for any Servicing Advance made by the Servicer with
respect to a related Mortgage Loan but only from amounts received on the related
Mortgage Loan that represent late payments or collections of Escrow Payments
thereunder, (iii) to refund to the Mortgagor any funds as may be determined to
be overages, (iv) if permitted by applicable law, for transfer to the Collection
Account in accordance with the terms of this Agreement, (v) for application to
the restoration or repair of the Mortgaged Property in accordance with the terms
of the related Mortgage Loan, (vi) to pay to the Servicer, or to the Mortgagor
to the extent required by law, any interest paid on the funds deposited in the
Escrow Account, (vii) to reimburse a Mortgagor in connection with the making of
the Payoff of the related Mortgage Loan or the termination of all or part of the
escrow requirement in connection with the Mortgage Loan, (viii) to remove any
amounts deposited into the Escrow Account in error; or (ix) to clear and
terminate the Escrow Account on the termination of this Agreement.
Section 5.08 Payment of Taxes, Insurance and Other Charges; Maintenance
of Primary Insurance Policies; Collections Thereunder.
With respect to each Mortgage Loan, the Servicer shall maintain
accurate records reflecting the status of ground rents, taxes, assessments,
water rates and other charges which are or may become a lien upon the Mortgaged
Property and the status of Primary Insurance Policy
39
premiums and fire and hazard insurance coverage and shall obtain, from time to
time, all bills for the payment of such charges, including renewal premiums, and
shall effect payment thereof prior to the applicable penalty or termination date
and at a time appropriate for securing maximum discounts allowable, employing
for such purpose deposits of the Mortgagor in the Escrow Account which shall
have been estimated and accumulated by the Servicer in amounts sufficient for
such purposes, as allowed under the terms of the Mortgage and applicable law. If
a Mortgage does not provide for Escrow Payments, then the Servicer shall require
that any such payments be made by the Mortgagor at the time they first become
due. The Servicer assumes full responsibility for the timely payment of all such
bills and shall effect timely payments of all such bills irrespective of the
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments but shall be entitled to reimbursement thereof in accordance with the
terms of this Agreement.
The Servicer shall maintain in full force and effect a Primary
Insurance Policy, conforming in all respects to the description set forth in
Section 3.03(29), issued by an insurer described in that Section, with respect
to each Mortgage Loan for which such coverage is required. Such coverage will be
maintained until the Loan-to-Value Ratio of the related Mortgage Loan is reduced
to 75% or less in the case of a Mortgage Loan having a Loan-to-Value Ratio at
origination in excess of 80% or until such time, if any, as such insurance is
required to be released in accordance with the provisions of applicable law
including, but not limited to, the Homeowners Protection Act of 1998. The
Servicer shall assure that all premiums due under any Primary Insurance Policy
are paid in a timely manner, but, shall be entitled to reimbursement pursuant to
the terms of this Agreement for premiums paid by the Servicer on behalf of any
Mortgagor who is obligated to pay such premiums but fails to do so. The Servicer
shall not cancel or refuse to renew any Primary Insurance Policy in effect on
the Funding Date that is required to be kept in force under this Agreement
unless a replacement Primary Insurance Policy for such canceled or nonrenewed
policy is obtained from and maintained with an insurer that satisfies the
standards set forth in Section 3.03(29). The Servicer shall not take any action
which would result in noncoverage under any applicable Primary Insurance Policy
of any loss which, but for the actions of the Servicer, would have been covered
thereunder. In connection with any assumption or substitution agreement entered
into or to be entered into pursuant to Section 7.01, the Servicer shall promptly
notify the insurer under the related Primary Insurance Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such
policy and shall take all actions which may be required by such insurer as a
condition to the continuation of coverage under the Primary Insurance Policy. If
such Primary Insurance Policy is terminated as a result of such assumption or
substitution of liability, then the Servicer shall obtain, and, except as
otherwise provided above, maintain, a replacement Primary Insurance Policy as
provided above.
In connection with its activities as servicer, the Servicer agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any Primary Insurance Policy in a timely fashion in accordance
with the terms of such policies and, in this regard, to take such action as
shall be necessary to permit recovery under any Primary Insurance Policy
respecting a defaulted Mortgage Loan. Pursuant to Section 5.04, any amounts
collected by the Servicer under any Primary Insurance Policy shall be deposited
in the Collection Account, subject to withdrawal in accordance with Section
5.05.
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Section 5.09 Transfer of Accounts.
The Servicer may transfer the Collection Account or any Escrow Account
to a different depository institution from time to time; provided that (i) no
such transfer shall be made unless all certifications or letter agreements
required under Section 5.04 have been executed and delivered by the parties
thereto; and (ii) concurrently upon any such transfer, the Servicer shall give
written notice thereof to the Purchaser. Notwithstanding anything to the
contrary contained herein, the Collection Account and each Escrow Account shall
at all times constitute Eligible Accounts.
Section 5.10 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage Loan fire
and hazard insurance with extended coverage as is customary in the area where
the Mortgaged Property is located in an amount that is at least equal to the
lesser of (a) the maximum insurable value of the improvements securing such
Mortgage Loan and (b) the greater of (1) the Unpaid Principal Balance of such
Mortgage Loan or (2) an amount such that the proceeds thereof shall be
sufficient to prevent the Mortgagor and/or the loss payee from becoming a
co-insurer.
If any Mortgaged Property is in an area identified by the Federal
Emergency Management Agency as having special flood hazards and such flood
insurance has been made available, then the Servicer will cause to be maintained
a flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration with a generally acceptable insurance
carrier, in an amount representing coverage not less than the lesser of (a) the
minimum amount required, under the terms of coverage, to compensate for any
damage or loss on a replacement cost basis (or the outstanding principal balance
of the related Mortgage Loan if replacement cost coverage is not available for
the type of building insured) or (b) the maximum amount of insurance which is
available under the Flood Disaster Protection Act of 1973, as amended (assuming
that the area in which such Mortgaged Property is located is participating in
such program).
The Servicer shall also maintain on each REO Property fire, hazard and
liability insurance, and to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance with extended
coverage in an amount which is at least equal to the lesser of (a) the maximum
insurable value of the improvements which are a part of such property and (b)
the outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property plus accrued interest at the Note Rate and related
Servicing Advances.
All such policies shall be endorsed with standard mortgagee clauses
with loss payable to the Servicer, or upon request to the Purchaser, and shall
provide for at least 30 days prior written notice of any cancellation, reduction
in the amount of, or material change in, coverage to the Servicer. The Servicer
shall not interfere with the Mortgagor's freedom of choice in selecting either
his insurance carrier or agent, provided that the Servicer shall not accept any
such insurance policies from insurance companies unless such companies (a)
currently reflect (1) a general policyholder's rating of B+ or better and a
financial size category of III or better in Best's Key Rating Guide, or (2) a
general policyholder's rating of "A" or "A-" or better in Best's Key Rating
Guide, and (b) are licensed to do business in the state wherein the related
Mortgaged Property is located. Notwithstanding the foregoing, the Servicer may
accept a policy underwritten by Lloyd's of London or, if it is the only coverage
available, coverage under a
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state's Fair Access to Insurance Requirement (FAIR) Plan. If a hazard policy
becomes in danger of being terminated, or the insurer ceases to have the ratings
noted above, the Servicer shall notify the Purchaser and the related Mortgagor,
and shall use its best efforts, as permitted by applicable law, to obtain from
another qualified insurer a replacement hazard insurance policy substantially
and materially similar in all respects to the original policy. In no event,
however, shall a Mortgage Loan be without a hazard insurance policy at any time,
subject only to Section 5.11.
Pursuant to Section 5.04, any amounts collected by the Servicer under
any such policies other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the Mortgaged Property or REO Property,
or released to the Mortgagor in accordance with the Servicer's normal servicing
procedures, shall be deposited in the Collection Account within two Business
Days after receipt, subject to withdrawal in accordance with Section 5.05. Any
cost incurred by the Servicer in maintaining any such insurance shall not, for
the purpose of calculating remittances to the Purchaser, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional
insurance need be required by the Servicer of the Mortgagor or maintained on
property acquired in respect of the Mortgage Loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance.
Section 5.11 Maintenance of Mortgage Impairment Insurance Policy.
If the Servicer obtains and maintains a blanket policy issued by an
issuer that has a Best's Key rating of A+:V insuring against hazard losses on
all of the Mortgage Loans, then, to the extent such policy provides coverage in
an amount equal to the amount required pursuant to Section 5.10 and otherwise
complies with all other requirements of Section 5.10, it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 5.10, it being
understood and agreed that such policy may contain a deductible clause, in which
case the Servicer shall, if there shall not have been maintained on the related
Mortgaged Property or REO Property a policy complying with Section 5.10 and
there shall have been one or more losses 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; provided that the Servicer
shall not be entitled to obtain reimbursement therefor. In connection with its
activities as servicer of the Mortgage Loans, the Servicer agrees to prepare and
present, on behalf of the Purchaser, claims under any such blanket policy in a
timely fashion in accordance with the terms of such policy. Upon request of the
Purchaser, the Servicer shall cause to be delivered to the Purchaser a certified
true copy of such policy and a statement from the insurer thereunder that such
policy shall in no event be terminated or materially modified without 30 days'
prior written notice to the Purchaser.
Section 5.12 Fidelity Bond; Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket fidelity
bond and an errors and omissions insurance policy, with broad coverage with
responsible companies that would meet the requirements of FNMA and FHLMC on all
officers, employees or other Persons acting in any capacity with regard to the
Mortgage Loan to handle funds, money, documents and papers relating to the
Mortgage Loans. The Fidelity Bond and errors and omissions insurance shall be
42
in the form of the "Mortgage Banker's Blanket Bond" and shall protect and insure
the Servicer against losses, including losses arising by virtue of any Mortgage
Loan not being satisfied in accordance with the procedures set forth in Section
7.02 and/or losses resulting from or arising in connection with forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of or by such
Persons. Such Fidelity Bond shall also protect and insure the Servicer against
losses in connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Section 5.12 requiring the Fidelity Bond
and errors and omissions insurance shall diminish or relieve the Servicer from
its duties and obligations as set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be at least equal to the
corresponding amounts required by FNMA in the FNMA Guide and by FHLMC in the
FHLMC Servicing Guide. The Servicer shall cause to be delivered to the Purchaser
on or before the Funding Date: (i) a certified true copy of the Fidelity Bond
and insurance policy; (ii) a written statement from the surety and the insurer
that such Fidelity Bond or insurance policy shall in no event be terminated or
materially modified without 30 days' prior written notice to the Purchaser; and
(iii) written evidence reasonably satisfactory to the Purchaser that such
Fidelity Bond or insurance policy provides that the Purchaser is a beneficiary
or loss payee thereunder.
Section 5.13 Management of REO Properties.
If title to any Mortgaged Property is acquired in foreclosure or by
deed in lieu of foreclosure (each, an "REO Property"), the deed or certificate
of sale shall be taken in the name of the Purchaser or the Person (which may be
the Servicer for the benefit of the Purchaser) designated by the Purchaser, or
in the event the Purchaser notifies the Servicer that the Purchaser or such
Person is not authorized or permitted to hold title to real property in the
state where the REO Property is located, or would be adversely affected under
the "doing business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an opinion of counsel obtained by the Purchaser from an
attorney duly licensed to practice law in the state where the REO Property is
located. The Servicer (acting alone or through a subservicer), on behalf of the
Purchaser, shall, subject to Section 5.01(3)(c), dispose of any REO Property
pursuant to Section 5.14. Unless an appraisal prepared by an MAI Appraiser who
is Independent in accordance with the provisions of 12 C.F.R. 225.65 shall have
been obtained in connection with the acquisition of such REO Property, promptly
following any acquisition by the Purchaser (through the Servicer) of an REO
Property, the Servicer shall obtain a narrative appraisal thereof (at the
expense of the Purchaser) in order to determine the fair market value of such
REO Property. The Servicer shall promptly notify the Purchaser of the results of
such appraisal and forward such appraisal to the Purchaser. The Servicer shall
also cause each REO Property to be inspected promptly upon the acquisition of
title thereto and shall cause each REO Property to be inspected at least
annually thereafter, and Servicer shall be entitled to be reimbursed for
expenses in connection therewith in accordance with this Agreement. The Servicer
shall make or cause to be made a written report of each such inspection. Such
reports shall be retained in the Servicer's Mortgage File and copies thereof
shall be forwarded by the Servicer to the Purchaser. The Servicer shall also
furnish to the Purchaser the applicable reports required under Section 8.01.
Notwithstanding anything to the contrary contained herein, if a REMIC
election has been or is to be made with respect to the arrangement under which
the Mortgage Loans and the REO Properties are held, then the Servicer shall
manage, conserve, protect and operate each REO
43
Property in a manner that does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 86OG(a)(8) of the Code or
result in the receipt by such REMIC of any "income from non-permitted assets"
within the meaning of Section 86OF(a)(2)(B) or any "net income from foreclosure
property" within the meaning of Section 86OG(c)(2) of the Code (or comparable
provisions of any successor or similar legislation).
The Servicer shall deposit and hold all revenues and funds collected
and received in connection with the operation of each REO Property in the
Collection Account, and the Servicer shall account separately for revenues and
funds received or expended with respect to each REO Property.
The Servicer shall have full power and authority, subject only to the
specific requirements and prohibitions of this Agreement (and, in particular,
Section 5.01(3)(c)), to do any and all things in connection with any REO
Property as are consistent with the servicing standards set forth in Section
5.01. In connection therewith, the Servicer shall deposit or cause to be
deposited on a daily basis in the Collection Account all revenues and
collections received or collected by it with respect to each REO Property,
including all proceeds of any REO Disposition. Subject to Section 5.15, the
Servicer shall withdraw (without duplication) from the Collection Account, but
solely from the revenues and collections received or collected by it with
respect to a specific REO Property, such funds necessary for the proper
operation, management and maintenance of such REO Property, including the
following:
(10) all insurance premiums due and payable in respect of such REO
Property;
(11) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon;
(12) all customary and reasonable costs and expenses necessary to
maintain, repair, appraise, evaluate, manage or operate such
REO Property (including the customary and reasonable costs
incurred by any "managing agent" retained by the Servicer in
connection with the maintenance, management or operation of
such REO Property);
(13) all reasonable costs and expenses of restoration improvements,
deferred maintenance and tenant improvements; and
(14) all other reasonable costs and expenses, including reasonable
attorneys' fees, that the Servicer may suffer or incur in
connection with its performance of its obligations under this
Section (other than costs and expenses that the Servicer is
expressly obligated to bear pursuant to this Agreement).
To the extent that amounts on deposit in the Collection Account are
insufficient for the purposes set forth in clauses (1) through (5) above, the
Servicer shall, subject to Section 6.04, advance the amount of funds required to
cover the shortfall with respect thereto. The Servicer shall promptly notify the
Purchaser in writing of any failure by the Servicer to make a Servicing Advance
of the type specified in clauses (1) or (2) above (irrespective of whether such
Servicing Advance is claimed to be non-recoverable by the Servicer pursuant to
Section 6.04).
Following the consummation of an REO Disposition, the Servicer shall
remit to the Purchaser, in accordance with Section 6.01, any proceeds from such
REO Disposition in the
44
Collection Account following the payment of all expenses and Servicing Advances
relating to the subject REO Property.
Section 5.14 Sale of Specially Serviced Mortgage Loans and REO
Properties.
Subject to Section 5.01 (and, specifically, Section 5.01(3)(c)) and
Section 5.15, the Servicer shall offer to sell any REO Property in the manner
that is in the best interests of the Purchaser or other owner of the REO, but no
later than the time determined by the Servicer to be sufficient to result in the
sale of such REO Property on or prior to the time specified in Section 5.15. In
accordance with the servicing standards set forth in Section 5.01, the Servicer
or designated agent of the Servicer shall solicit bids and offers from Persons
for the purchase of any Specially Serviced Mortgage Loan or REO Property and,
upon receipt thereof, promptly (but in any event within 3 Business Days) present
such bids and offers to the Purchaser. The Servicer shall not accept any bid or
offer for any Specially Serviced Mortgage Loan or REO Property except in
compliance with Section 5.01(3)(c). The Purchaser may reject any bid or offer if
the Purchaser determines the rejection of such bid or offer would be in the best
interests of the Purchaser. The Purchaser shall notify the Servicer of such
determination within three (3) Business Days of notice of any such bids from the
Servicer. If the Purchaser rejects any bid or offer, the Servicer shall, if
appropriate, seek an extension of the 3 year period referred to in Section 5.15.
Subject to Section 5.01 (and, specifically, Section 5.01(3)(c)) and
Section 5.15, the Servicer shall act on behalf of the Purchaser in negotiating
and taking any other action necessary or appropriate in connection with the sale
of any Specially Serviced Mortgage Loan or REO Property, including the
collection of all amounts payable in connection therewith. The terms of sale of
any Specially Serviced Mortgage Loan or REO Property shall be in the sole
discretion of the Purchaser. Any sale of a Specially Serviced Mortgage Loan or
any REO Disposition shall be without recourse to, or representation or warranty
by, the Purchaser or the Servicer, and, if consummated in accordance with the
terms of this Agreement, then the Servicer shall have no liability to the
Purchaser with respect to the purchase price therefor accepted by the Purchaser.
The proceeds of any sale after deduction of the expenses of such sale incurred
in connection therewith shall be promptly deposited in (a) if such sale is an
REO Disposition, in the Collection Account in accordance with Section 5.13 and
(b) in any other circumstance, the Collection Account in accordance with Section
5.04.
Section 5.15 Realization Upon Specially Serviced Mortgage Loans and REO
Properties.
Subject to Section 5.01(3)(c), the Servicer shall foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Specially Serviced Mortgage Loans as come into and continue in default and as to
which (a) in the reasonable judgment of the Servicer, no satisfactory
arrangements can, in accordance with prudent lending practices, be made for
collection of delinquent payments pursuant to Section 5.01 and (b) such
foreclosure or other conversion is otherwise in accordance with Section 5.01.
The Servicer shall not be required to expend its own funds in connection with
any foreclosure or towards the restoration, repair, protection or maintenance of
any property unless it shall determine that such expenses will be recoverable to
it as Servicing Advances either through Liquidation Proceeds or through
Insurance Proceeds (in accordance with Section 5.05) or from any other source
relating to the Specially Serviced Mortgage Loan. The Servicer shall be required
to advance funds for all other
45
costs and expenses incurred by it in any such foreclosure proceedings; provided
that it shall be entitled to reimbursement thereof from the proceeds of
liquidation of the related Mortgaged Property, as contemplated by Section 5.05.
Upon any Mortgaged Property becoming an REO Property, the Servicer
shall promptly notify the Purchaser thereof, specifying the date on which such
Mortgaged Property became an REO Property. Pursuant to its efforts to sell such
REO Property, the Servicer shall, either itself or through an agent selected by
it, protect and conserve such REO Property in accordance with the servicing
standards set forth in Section 5.01 and may, subject to Section 5.01(3)(c) and
incident to its conservation and protection of the interests of the Purchaser,
rent the same, or any part thereof, for the period to the sale of such REO
Property.
Notwithstanding anything to the contrary contained herein, the
Purchaser shall not, and the Servicer shall not on the Purchaser's behalf,
acquire any real property (or personal property incident to such real property)
except in connection with a default or a default that is imminent on a Mortgage
Loan. If the Purchaser acquires any real property (or personal property incident
to such real property) in connection with such a default, then such property
shall be disposed of by the Servicer in accordance with this Section and Section
5.14 as soon as possible but in no event later than 2 years after its
acquisition by the Servicer on behalf of the Purchaser, unless the Servicer
obtains, at the expense of the Purchaser, in a timely fashion an extension from
the Internal Revenue Service for an additional specified period.
Any recommendation of the Servicer to foreclose on a defaulted Mortgage
Loan shall be subject to a determination by the Servicer that the proceeds of
such foreclosure would exceed the costs and expenses of bringing such a
proceeding. The income earned from the management of any REO Property, net of
reimbursement to the Servicer for Servicing Advances incurred with respect to
such REO Property under Section 5.13, shall be applied to the payment of the
costs and expenses set forth in Section 5.13(4), with any remaining amounts to
be promptly deposited in the Collection Account in accordance with Section 5.13.
If, in the exercise of its servicing obligations with respect to any
Mortgaged Property hereunder, the Servicer deems it is necessary or advisable to
obtain an Environmental Assessment, then the Servicer shall so obtain an
Environmental Assessment, it being understood that all reasonable costs and
expenses incurred by the Servicer in connection with any such Environmental
Assessment (including the cost thereof) shall be deemed to be Servicing Advances
recoverable by the Servicer pursuant to Section 5.13(4). Such Environmental
Assessment shall (a) assess whether (1) such Mortgaged Property is in material
violation of applicable Environmental Laws or (2) after consultation with an
environmental expert, taking the actions necessary to comply with applicable
Environmental Laws is reasonably likely to produce a greater recovery on a net
present value basis than not taking such actions, and (b) identify whether (1)
any circumstances are present at such Mortgaged Property relating to the use,
management or disposal of any hazardous materials for which investigation,
testing, monitoring, containment, clean-up or re mediation could be required
under any federal, state or local law or regulation, or (2) if such
circumstances exist, after consultation with an environmental expert, taking
such actions is reasonably likely to produce a greater recovery on a present
value basis than not taking such actions. (The conditions described in the
immediately preceding clauses (a) and (b) shall be referred to herein as
"Environmental Conditions Precedent to Foreclosure.") If any such Environmental
Assessment so warrants, the Servicer is hereby authorized to and shall perform
such additional environmental testing as it deems necessary and prudent to
establish the
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satisfaction of the foregoing Environmental Conditions Precedent to Foreclosure
or to proceed as set forth below (such additional testing thereafter being
included in the term "Environmental Assessment ").
If an Environmental Assessment deemed necessary or advisable by the
Servicer in accordance with this Section 5.15 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with respect
to any Mortgaged Property, but the Servicer in good faith reasonably believes
that it is in the best economic interest of the Purchaser to proceed against
such Mortgaged Property and, if title thereto is acquired, to take such
remedial, corrective or other action with respect to the unsatisfied condition
or conditions as may be prescribed by applicable law to satisfy such condition
or conditions, then the Servicer shall so notify the Purchaser. If, pursuant to
Section 5.01(3)(c), the Purchaser has notified the Servicer in writing to
proceed against such Mortgaged Property, then the Servicer shall so proceed. The
cost of any remedial, corrective or other action contemplated by the preceding
sentence in respect of any of the Environmental Conditions Precedent to
Foreclosure that is not satisfied shall not be an expense of the Servicer and
the Servicer shall not be required to expend or risk its own funds or otherwise
incur any financial liability in connection with any such action.
If an Environmental Assessment deemed necessary or advisable by the
Servicer in accordance with this Section 5.15 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with respect
to any Mortgaged Property and, in accordance with Section 5.01(3)(c), the
Purchaser elects or is deemed to have elected not to proceed against such
Mortgaged Property, then the Servicer shall, subject to Section 5.01(3)(c), take
such action as it deems to be in the best economic interest of the Purchaser
(other than proceeding against the Mortgaged Property or directly or indirectly
becoming the owner or operator thereof) as determined in accordance with the
servicing standard set forth in Section 5.01 and is hereby authorized at such
time as it deems appropriate to release such Mortgaged Property from the lien of
the related Mortgage.
Prior to the Servicer taking any action with respect to the use,
management or disposal of any hazardous materials on any Mortgaged Property, the
Servicer shall request the approval of the Purchaser in accordance with Section
5.01(3)(c) and, if such action is approved by the Purchaser, (a) keep the
Purchaser apprised of the progress of such action; and (b) take such action in
compliance with all applicable Environmental Laws.
Section 5.16 Investment of Funds in the Collection Account.
The Servicer may direct any depository institution which holds the
Collection Account to invest the funds in the Collection Account in one or more
Permitted Investments bearing interest. All such Permitted Investments shall be
held to maturity, unless payable on demand. In the event amounts on deposit in
the Collection Account are at any time invested in a Permitted Investment
payable on demand, the Servicer shall:
(a) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an
amount equal to the lesser of (1) all amounts then payable
thereunder and (2) the amount required to be withdrawn on such
date; and
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(b) demand payment of all amounts due thereunder promptly upon
determination by the Servicer or notice from the Purchaser
that such Permitted Investment would not constitute a
Permitted Investment in respect of funds thereafter on deposit
in the Collection Account.
All income and gain realized from investment of funds deposited in the
Collection Account shall be for the benefit of the Servicer and shall be subject
to its withdrawal in accordance with Section 5.05. The Servicer shall deposit in
the Collection Account the amount of any loss incurred in respect of any
Permitted Investment immediately upon realization of such loss.
Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Purchaser may elect to take such action, or instruct the
Servicer to take such action, as may be appropriate to enforce such payment or
performance, including the institution and prosecution of appropriate
proceedings, at the expense of the Servicer.
Section 5.17 Compensating Interest.
Not later than the close of business on the Business Day preceding each
Remittance Date, the Servicer shall from its own funds deposit in the Collection
Account an amount equal to the lesser of (i) the aggregate of the interest on
the amount of each Principal Prepayment included in such remittance at the
related Remittance Rate from the date of such Principal Prepayment to the end of
the month in which such Principal Prepayment occurred, to the extent not
collected from payments on or other recovery in respect of the related Mortgage
Loan and (ii) the aggregate of the Servicing Fees in respect of the most
recently ended calendar month."
ARTICLE VI:
REPORTS; REMITTANCES; ADVANCES
Section 6.01 Remittances.
(1) On each Remittance Date, the Servicer shall remit to the
Purchaser (a) all amounts credited to the Collection Account as of the close of
business on the last day of the related Due Period (including (1) the amount of
any Principal Prepayment, together with interest thereon at the related
Remittance Rate to the end of the month in which prepayment of the related
Mortgage Loan occurs to the extent deposited pursuant to Section 5.17, and (2)
all proceeds of any REO Disposition net of amounts payable to the Servicer
pursuant to Section 5.13), net of charges against or withdrawals from the
Collection Account in accordance with Section 5.05, which charges against or
withdrawals from the Collection Account the Servicer shall make solely on such
Remittance Date, plus (b) all Monthly Payments that were delinquent on the last
day of the related Due Period but received prior to the close of business on the
related Determination Date, plus (c) all Monthly Advances, if any, which the
Servicer is obligated to remit pursuant to Section 6.03; provided that the
Servicer shall not be required to remit, until the next following Remittance
Date, any amounts attributable to Monthly Payments collected but due on a Due
Date or Dates subsequent to the related Due Period.
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(2) All remittances made to the Purchaser on each Remittance Date
will be made to the Purchaser by wire transfer of immediately available funds
accordingly to the instructions that will be provided by Purchaser to the
Servicer.
(3) With respect to any remittance received by the Purchaser after
the Business Day on which such payment was due, the Servicer shall pay to the
Purchaser interest on any such late payment at an annual rate equal to One-month
LIBOR (as published in the Wall Street Journal) plus 200 basis points, but in no
event greater than the maximum amount permitted by applicable law. Such interest
shall be paid by the Servicer to the Purchaser on the date such late payment is
made and shall cover the period commencing with the Business Day on which such
payment was due and ending with the Business Day on which such payment is made,
both inclusive. Such interest shall be remitted along with such late payment.
Neither the payment by the Servicer nor the acceptance by the Purchaser of any
such interest shall be deemed an extension of time for payment or a waiver by
the Purchaser of any Event of Default.
Section 6.02 Reporting.
On or before the 5th calendar day (or, if such day is not a Business
Day, on the immediately succeeding Business Day) of each month during the term
hereof, the Servicer shall deliver to the Purchaser monthly accounting reports
in the form of Exhibits 6.02(a) through 6.02(g) attached hereto with respect to
the most recently ended Monthly Period. Such monthly accounting reports shall
include information as to the aggregate Unpaid Principal Balance of all Mortgage
Loans, the scheduled amortization of all Mortgage Loans, any delinquencies and
the amount of any Principal Prepayments as of the most recently ended Record
Date.
The Servicer shall provide the Purchaser with such information
concerning the Mortgage Loans as is necessary for the Purchaser to prepare its
federal income tax return as the Purchaser may reasonably request from time to
time.
Section 6.03 Monthly Advances by the Servicer.
(1) Not later than the close of business on the Business Day
immediately preceding each Remittance Date, the Servicer shall deposit in the
Collection Account an amount equal to all Monthly Payments not previously
advanced by the Servicer (with interest adjusted to the Remittance Rate) that
were due on a Mortgage Loan and delinquent at the close of business on the
related Determination Date. The Servicer may reduce the total amount to be
deposited in the Collection Account as required by the foregoing sentence by the
amount of funds in the Collection Account which represent Prepaid Monthly
Payments.
(2) The Servicer's obligations to make Monthly Advances as to any
Mortgage Loan will continue through the last Monthly Payment due prior to the
payment in full of the Mortgage Loan, or through the Remittance Date prior to
the Remittance Date for the remittance of all Liquidation Proceeds and other
payments or recoveries (including Insurance Proceeds, Condemnation Proceeds and
REO Disposition Proceeds) with respect to the Mortgage Loan; provided that such
obligation shall cease if the Servicer furnishes to the Purchaser an Officers'
Certificate evidencing the determination by the Servicer in accordance with
Section 6.04 that an advance with respect to such Mortgage Loan would constitute
a Non-recoverable Advance.
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Section 6.04 Non-recoverable Advances.
The determination by the Servicer that it has made a Non-recoverable
Advance or that any Monthly Advance or Servicing Advance, if made, would
constitute a Non-recoverable Advance shall be evidenced by an Officers'
Certificate delivered to the Purchaser detailing the reasons for such
determination.
Section 6.05 Itemization of Servicing Advances.
The Servicer shall provide the Purchaser with an itemization of all
Servicing Advances incurred or made by the Servicer hereunder as the Purchaser
may from time to time reasonably request.
Section 6.06 Officer's Certificate.
The Seller shall deliver to the Purchaser an Officer's Certificate in
the form attached hereto as Exhibit 9 on the Initial Funding Date and upon
Purchaser's reasonable request thereafter.
ARTICLE VII:
GENERAL SERVICING PROCEDURE
Section 7.01 Enforcement of Due-on-Sale Clauses, Assumption Agreements.
(1) The Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of the Mortgaged Property
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under any " due-on-sale" clause applicable thereto; provided that the Servicer
shall not exercise any such rights if prohibited by law from doing so or if the
exercise of such rights would impair or threaten to impair any recovery under
the related Primary Insurance Policy, if any.
(2) If the Servicer is prohibited from enforcing such
"due-on-sale" clause, then the Servicer will enter into an assumption agreement
with the Person to whom the Mortgaged Property has been conveyed or is proposed
to be conveyed, pursuant to which such Person becomes liable under the Mortgage
Note and, to the extent permitted by applicable state law, the Mortgagor remains
liable thereon. (For purposes of this Section 7.01, the term "assumption" is
deemed to also include a sale of the Mortgaged Property subject to the Mortgage
that is not accompanied by an assumption or substitution of liability
agreement.) If any Mortgage Loan is to be assumed, then the Servicer shall
inquire into the creditworthiness of the proposed transferee and shall use the
same underwriting criteria for approving the credit of the proposed transferee
that are used with respect to underwriting mortgage loans of the same type as
the Mortgage Loans. Where an assumption is allowed, the Servicer, with the prior
written consent of the primary mortgage insurer, if any, and subject to the
conditions of Section 7.01(3), shall, and is hereby authorized to, enter into a
substitution of liability agreement with the Person to whom the Mortgaged
Property is proposed to be conveyed pursuant to which the original mortgagor is
released from liability and such Person is substituted as mortgagor and becomes
liable under the related Mortgage Note. Any such substitution of liability
agreement shall be in lieu of an assumption agreement. In no event shall the
Note Rate, the amount of the Monthly Payment or
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the final maturity date be changed. The Servicer shall notify the Purchaser that
any such substitution of liability or assumption agreement has been completed by
forwarding to the Purchaser the original of any such substitution of liability
or assumption agreement, which document shall be added to the related
Purchaser's Mortgage File and shall, for all purposes, be considered a part of
such Purchaser's Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. Any fee collected by the Servicer for
entering into an assumption or substitution of liability agreement shall be
retained by the Servicer as additional compensation for servicing the Mortgage
Loans.
(3) If the credit of the proposed transferee does not meet such
underwriting criteria, then the Servicer shall, to the extent permitted by the
Mortgage or the Mortgage Note and by applicable law, accelerate the maturity of
the Mortgage Loan.
Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, the Servicer will
immediately notify the Purchaser by a certification of a Servicing Officer,
which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to
be deposited in the Collection Account pursuant to Section 5.04 have been or
will be so deposited and shall request delivery to it of the Purchaser's
Mortgage File held by the Purchaser. Upon receipt of such certification and
request, the Purchaser shall promptly release or cause to be released the
related mortgage documents to the Servicer and the Servicer shall promptly
prepare and process any satisfaction or release. No expense incurred in
connection with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the Collection Account.
If the Servicer satisfies or releases a Mortgage without having
obtained payment in full of the indebtedness secured by the Mortgage, or should
it otherwise take such action which results in a reduction of the coverage under
the Primary Insurance Policy, if any, then the Servicer shall promptly give
written notice thereof to the Purchaser, and, within 10 Business Days following
written demand therefor from the Purchaser to the Servicer, the Servicer shall
repurchase the related Mortgage Loan by paying to the Purchaser the Repurchase
Price therefor by wire transfer of immediately available funds directly to the
Purchaser's Account.
Section 7.03 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall be
entitled to retain from interest payments on the Mortgage Loans the amounts
provided for as the Servicing Fee. The Servicing Fee in respect of a Mortgage
Loan for a particular month shall become payable only upon the receipt by the
Servicer from the Mortgagor of the full Monthly Payment in respect of such
Mortgage Loan. Additional servicing compensation in the form of assumption fees,
as provided in Section 7.01, late payment charges and other servicer
compensation for modifications, short sales, and other shall be retained by the
Servicer to the extent not required to be deposited in the Collection Account.
The Servicer shall be required to pay all expenses incurred by it in connection
with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided for herein.
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Section 7.04 Annual Statement as to Compliance.
The Servicer will deliver to the Purchaser on or before March 31 of
each year, beginning with March 31, 2002, an Officers' Certificate stating that
(i) a review of the activities of the Servicer during the preceding calendar
year and of performance under this Agreement has been made under such officers'
supervision, (ii) the Servicer has fully complied with the provisions of this
Agreement and (iii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all of its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof.
Section 7.05 Annual Independent Certified Public Accountants' Servicing
Report.
On or before April 15 of each year beginning April 15, 2002, the
Servicer at its expense shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Purchaser to the effect that such firm has examined
certain documents and records relating to the servicing of mortgage loans by the
Servicer generally that include a sampling of the Mortgage Loans, the provisions
of Article VI have been complied with and, on the basis of such an examination
conducted substantially in accordance with the Uniform Single Attestation
Program for Mortgage Bankers, such servicing has been conducted in compliance
with this Agreement, except for (i) such exceptions as such firm shall believe
to be immaterial, and (ii) such other exceptions as shall be set forth in such
statement.
Section 7.06 Purchaser's Right to Examine Servicer Records.
The Purchaser shall have the right to examine and audit, during
business hours or at such other times as are reasonable under applicable
circumstances, upon ten days advance notice any and all of (i) the credit and
other loan files relating to the Mortgage Loans or the Mortgagors, (ii) any and
all books, records, documentation or other information of the Servicer (whether
held by the Servicer or by another) relating to the servicing of the Mortgage
Loans and (iii) any and all books, records, documentation or other information
of the Servicer (whether held by the Servicer or by another) that are relevant
to the performance or observance by the Servicer of the terms, covenants or
conditions of this Agreement. The Servicer shall be obligated to make the
foregoing information available to the Purchaser at the site where such
information is stored; provided that the Purchaser shall be required to pay all
reasonable costs and expenses incurred by the Servicer in making such
information available.
ARTICLE VIII:
REPORTS TO BE PREPARED BY THE SERVICER
Section 8.01 The Servicer's Reporting Requirements.
Electronic Format. If requested by the Purchaser, the Servicer shall
supply any and all information regarding the Mortgage Loans and the REO
Properties, including all reports required to be delivered pursuant to Section
5.03, Section 6.02 and this Section 8.01, to the Purchaser in electronic format
reasonably acceptable to Purchaser, unless otherwise limited by the servicing
system utilized by the Servicer.
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Additional Reports; Further Assurances. On or before the 3rd Business
Day preceding each Determination Date, the Servicer shall deliver to the
Purchaser (i) a report, acceptable to the Purchaser, describing in reasonable
detail all Mortgage Loans that are 90 days or more delinquent and the Servicer's
activities in connection with such delinquencies and (ii) a report
(substantially in the form of Exhibit 8.01 attached hereto) with respect to
delinquent Mortgage Loans. Utilizing resources reasonably available to the
Servicer without incurring any cost except the Servicer's overhead and
employees' salaries, the Servicer shall furnish to the Purchaser during the term
of this Agreement such periodic, special or other reports, information or
documentation, whether or not provided for herein, as shall be reasonably
requested by the Purchaser with respect to Mortgage Loans or REO Properties
(provided the Purchaser shall have given the Servicer reasonable notice and
opportunity to prepare such reports, information or documentation), including
any reports, information or documentation reasonably required to comply with any
regulations of any governmental agency or body having jurisdiction over the
Purchaser, all such reports or information to be as provided by and in
accordance with such applicable instructions and directions as the Purchaser may
reasonably request. If any of such reports are not customarily prepared by the
Servicer or require that the Servicer program data processing systems to create
the reports, then the Purchaser shall pay to the Servicer a fee mutually agreed
to by the Purchaser and the Servicer taking into account the Servicer's actual
time and cost in preparing such reports. The Servicer agrees to execute and
deliver all such instruments and take all such action as the Purchaser, from
time to time, may reasonably request in order to effectuate the purposes and to
carry out the terms of this Agreement.
Section 8.02 Financial Statements.
The Servicer understands that, in connection with marketing the
Mortgage Loans, the Purchaser may make available to any prospective purchaser of
the Mortgage Loans the Servicer's audited financial statements for its fiscal
year 1999 and its audited financial statements for fiscal year 2000, together
with any additional statements provided pursuant to the next sentence. During
the term hereof, the Servicer will deliver to the Purchaser audited financial
statements for each of its fiscal years following the Funding Date and all other
financial statements prepared following the Funding Date to the extent any such
statements are available upon request to the public at large.
The Servicer also agrees to make available upon reasonable notice and
during normal business hours to any prospective purchasers of the Mortgage Loans
a knowledgeable financial or accounting officer for the purpose of answering
questions respecting recent developments affecting the Servicer or the financial
statements of the Servicer which may affect, in any material respect, the
Servicer's ability to comply with its obligations under this Agreement, and to
permit any prospective purchasers upon reasonable notice and during normal
business hours to inspect the Servicer's servicing facilities for the purpose of
satisfying such prospective purchasers that the Servicer has the ability to
service the Mortgage Loans in accordance with this Agreement.
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ARTICLE IX:
THE SELLERS
Section 9.01 Indemnification; Third Party Claims.
Each Seller shall indemnify and hold harmless the Purchaser, its
directors, officers, agents, employees, and assignees (each, an "Indemnified
Party") from and against any costs, damages, expenses (including reasonable
attorneys' fees and costs, irrespective of whether or not incurred in connection
with the defense of any actual or threatened action, proceeding, or claim),
fines, forfeitures, injuries, liabilities or losses ("Losses") suffered or
sustained in any way by any such Person, no matter how or when arising
(including Losses incurred or sustained in connection with any judgment, award,
or settlement), in connection with or relating to (i) a breach by such Seller of
any of its representations and warranties contained in Article III or (ii) a
breach by such Seller of any of its covenants and other obligations contained
herein including any failure to service the Mortgage Loans in compliance with
the terms hereof and in accordance with the standard of care in Section 9.03.
The applicable Seller shall immediately (i) notify the Purchaser if a claim is
made by a third party with respect to this Agreement, any Mortgage Loan and/or
any REO Property (ii) assume (with the prior written consent of the Purchaser)
the defense of any such claim and pay all expenses in connection therewith,
including attorneys' fees, and (iii) promptly pay, discharge and satisfy any
judgment, award, or decree that may be entered against it or the Purchaser in
respect of such claim. Nothing contained herein shall prohibit the Purchaser, at
its expense, from retaining its own counsel to assist in any such proceedings or
to observe such proceedings; provided that neither Seller shall be obligated to
pay or comply with any settlement to which it has not consented. The Servicer
shall be reimbursed from amounts on deposit in the Collection Account for all
amounts advanced by it pursuant to the second preceding sentence except when the
claim in any way relates to the Servicer's indemnification pursuant to this
Section 9.01.
Section 9.02 Merger or Consolidation of the Seller.
Each Seller will keep in full effect its existence, rights and
franchises as a corporation or a Delaware business trust, as applicable, under
the laws of the state of its organization and will obtain and preserve its
qualification to do business as a foreign entity in each jurisdiction in which
such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform its
duties under this Agreement.
Any Person into which a Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation (including by
means of the sale of all or substantially all of such Seller's assets to such
Person) to which the Seller shall be a party, or any Person succeeding to the
business of the Seller, shall be the successor of the Seller hereunder, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
that, unless otherwise consented to by the Purchaser, the successor or surviving
Person, in the case of a merger or consolidation, etc. of the Servicer, shall be
an institution qualified to service mortgage loans on behalf of FNMA and FHLMC
in accordance with the requirements of Section 3.02(1), shall not cause a rating
on any security backed by a Mortgage Loan to be downgraded and shall satisfy the
requirements of Section 12.01 with respect to the qualifications of a successor
to such Seller.
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Section 9.03 Limitation on Liability of the Sellers and Others.
Neither the Sellers nor any of the officers, employees or agents of the
Sellers shall be under any liability to the Purchaser for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement or pursuant to the express written instructions of the Purchaser, or
for errors in judgment made in good faith; provided that this provision shall
not protect the Sellers or any such Person against any breach of warranties or
representations made herein, or failure to perform its obligations in compliance
with any standard of care set forth in this Agreement, or any liability which
would otherwise be imposed by reasons of willful misfeasance, bad faith, gross
negligence or any breach in the performance of the obligations and duties
hereunder. The Sellers and any officer, employee or agent of the Sellers may
rely in good faith on any document of any kind reasonably believed by the
Sellers or such Person to be genuine and prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
The Sellers shall not be under any obligation to appear in, prosecute
or defend any legal action that is not incidental to their duties hereunder and
which in their opinion may involve them in any expense or liability; provided
that the Sellers may in their discretion undertake any such action that it may
deem necessary or desirable in respect of this Agreement and the rights and
duties of the parties hereto. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities for which the Sellers shall be entitled to be reimbursed therefor
out of the Collection Account. This indemnity shall survive the termination of
this Agreement.
Section 9.04 Servicer Not to Resign.
With respect to the retention by Cendant Mortgage of the servicing of
the Mortgage Loans and the REO Properties hereunder, Cendant Mortgage
acknowledges that the Purchaser has acted in reliance upon Cendant Mortgage's
Independent status, the adequacy of its servicing facilities, plan, personnel,
records and procedures, its integrity, reputation and financial standing and the
continuance thereof. Consequently, Cendant Mortgage shall not assign the
servicing rights retained by it hereunder to any third party nor resign from the
obligations and duties hereby imposed on it except (i) with the approval of the
Purchaser, such approval not to be unreasonably withheld, or (ii) 3 Business
Days following any determination that its duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by Cendant
Mortgage. Any determination permitting the transfer of the servicing rights or
the resignation of Cendant Mortgage under Subsection (ii) hereof shall be
evidenced by an opinion of counsel to such effect delivered to the Purchaser,
which opinion of counsel shall be in form and substance reasonably acceptable to
the Purchaser.
ARTICLE X:
DEFAULT
Section 10.01 Events of Default.
In case one or more of the following events shall occur and be
continuing:
(1) any failure by the Servicer to remit to the Purchaser any
payment required to be made under the terms of this Agreement
which continues unremedied for a period of 3 Business Days
unless such failure to remit is due to a cause beyond the
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Servicer's control, including an act of God, act of civil,
military or governmental authority, fire, epidemic, flood,
blizzard, earthquake, riot, war, or sabotage, provided that
the Servicer gives the Purchaser notice of such cause promptly
and uses its reasonable efforts to correct such failure to
remit and does so remit within 2 Business Days following the
end of the duration of the cause of such failure to remit;
(2) any failure on the part of a Seller/Servicer duly to observe
or perform in any material respect any of the covenants or
agreements on the part of such Seller/Servicer set forth in
this Agreement which continues unremedied for a period of 30
days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to
the applicable Seller/Servicer by the Purchaser; provided that
such 30-day period shall not begin with respect to any failure
to cure, repurchase or substitute in accordance with Sections
2.04 and/or 3.04 until the expiration of the cure periods
provided for in Sections 2.04 and/or 3.04, as applicable;
(3) any filing of an Insolvency Proceeding by or on behalf of a
Seller/Servicer, any consent by or on behalf of a
Seller/Servicer to the filing of an Insolvency Proceeding
against a Seller/Servicer, or any admission by or on behalf of
a Seller/Servicer of its inability to pay its debts generally
as the same become due;
(4) any filing of an Insolvency Proceeding against a
Seller/Servicer that remains undismissed or unstayed for a
period of 60 days after the filing thereof;
(5) any issuance of any attachment or execution against, or any
appointment of a conservator, receiver or liquidator with
respect to, all or substantially all of the assets of a
Seller/Servicer;
(6) any failure or inability of Cendant Mortgage to be eligible to
service Mortgage Loans for FNMA or FHLMC;
(7) any sale, transfer, assignment, or other disposition by a
Seller/Servicer of all or substantially all of its property or
assets to a Person who does not meet the qualifications
enumerated or incorporated by reference into Section 9.02, any
assignment by a Seller/Servicer of this Agreement or any of a
Seller's/Servicer's rights or obligations hereunder except in
accordance with Section 9.04, or any action taken or omitted
to be taken by a Seller/Servicer in contemplation or in
furtherance of any of the foregoing, without the consent of
the Purchaser; or
(8) any failure by the Seller to be in compliance with applicable
"doing business" or licensing laws of any jurisdiction where
Mortgaged Property is located;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Purchaser, by notice in writing to the Sellers may, in
addition to whatever rights the Purchaser may have at law or in equity to
damages, including injunctive relief and specific performance, terminate all the
rights and obligations of the Sellers under this Agreement and in and to the
Mortgage Loans and the proceeds thereof subject to Section 12.01, without the
Purchaser's incurring any penalty or fee of any kind whatsoever in connection
therewith; provided that, upon the occurrence of an Event of Default under
Subsection (3), (4) or (5) of this
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Section 10.01, this Agreement and all authority and power of the Sellers
hereunder (whether with respect to the Mortgage Loans, the REO Properties or
otherwise) shall automatically cease. On or after the receipt by the Sellers of
such written notice, all authority and power of the Sellers under this Agreement
(whether with respect to the Mortgage Loans or otherwise) shall cease.
Notwithstanding the occurrence of an Event of Default, the Sellers or the
Servicer, as applicable, shall be entitled to all amounts due to such party and
remaining unpaid on such date of termination.
ARTICLE XI:
TERMINATION
Section 11.01 Term and Termination.
(1) The servicing obligations of the Servicer under this Agreement
may be terminated as provided in Section 10.01 hereof.
(2) In any case other than as provided under Subsection (1)
hereof, the respective obligations and responsibilities of the Sellers hereunder
shall terminate upon: (a) the later of the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan or the
disposition of all REO Property and the remittance of all funds due hereunder;
or (b) the mutual written consent of the Sellers and the Purchaser.
(3) Upon any termination of this Agreement or the servicing
obligations of the Servicer hereunder, then the Servicer shall prepare, execute
and deliver all agreements, documents and instruments, including all Servicer
Mortgage Files, and do or accomplish all other acts or things necessary or
appropriate to effect such termination, all at the Servicer's sole expense. In
any such event, the Servicer agrees to cooperate with the Purchaser in effecting
the termination of the Servicer's servicing responsibilities hereunder,
including the transfer to the Purchaser or its designee for administration by it
of all cash amounts which shall at the time be contained in, or credited by the
Servicer to, the Collection Account and/or the Escrow Account or thereafter
received with respect to any Mortgage Loan or REO Property.
Section 11.02 Survival.
Notwithstanding anything to the contrary contained herein, the
representations and warranties of the parties contained herein and in any
certificate or other instrument delivered pursuant hereto, as well as the other
covenants hereof (including those set forth in Section 9.01) that, by their
terms, require performance after the termination by this Agreement, shall
survive the delivery and payment for the Mortgage Loans on each Funding Date as
well as the termination of this Agreement and shall inure to the benefit of the
parties, their successors and assigns. Sellers further agree that the
representations, warranties and covenants made by Sellers herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by Purchaser notwithstanding any investigation heretofore made by
Purchaser or on Purchaser's behalf.
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ARTICLE XII:
GENERAL PROVISIONS
Section 12.01 Successor to the Servicer.
Upon the termination of the Servicer's servicing responsibilities and
duties under this Agreement pursuant to Section 9.04, 10.01, or 11.01, the
Purchaser shall (i) succeed to and assume all of the Servicer's
responsibilities, rights, duties and obligations under this Agreement or (ii)
appoint a successor servicer which shall succeed to all rights and assume all of
the responsibilities, duties and liabilities of the Servicer under this
Agreement prior to the termination of the Servicer's responsibilities, duties
and liabilities under this Agreement. If the Servicer's duties, responsibilities
and liabilities under this Agreement should be terminated pursuant to the
aforementioned sections, then the Servicer shall continue to discharge such
duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof (if applicable)
all on the terms and conditions contained herein and shall take no action
whatsoever that might impair or prejudice the rights or financial condition of
its successor. The termination of the Servicer's servicing responsibilities
pursuant to any of the aforementioned Sections shall not, among other things,
relieve the Servicer of its obligations pursuant to Section 2.04 and/or 7.02,
the representations and warranties or other obligations set forth in Sections
2.04, 3.01, 3.02 and 3.03 and the remedies available to the Purchaser under the
various provisions of this Agreement. In addition, such termination shall not
affect any claims that the Purchaser may have against the Servicer arising prior
to any such termination.
Section 12.02 Governing Law.
This Agreement is to be governed by, and construed in accordance with
the internal laws of the State of New York without giving effect to principals
of conflicts of laws. The obligations, rights, and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 12.03 Notices.
Any notices or other communications permitted or required hereunder
shall be in writing and shall be deemed conclusively to have been given if
personally delivered, sent by courier with delivery against signature therefor,
mailed by registered mail, postage prepaid, and return receipt requested or
transmitted by telex, telegraph or telecopier and confirmed by a similar writing
mailed or sent by courier as provided above, to (i) in the case of the
Purchaser, RWT Holdings, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, fax number (▇▇▇) ▇▇▇-▇▇▇▇, or
such other address as may hereafter be furnished to the Sellers in writing by
the Purchaser, (ii) in the case of the Cendant Mortgage, Cendant Mortgage
Corporation, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Vice President, Secondary Marketing, fax number (__) ___-____, (iii) in the case
of the Trust, c/o Cendant Mortgage Corporation, as Administrator, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President,
Secondary Marketing, fax number (___) ___-____, or such other address as may
hereafter be furnished to the Purchaser and the Guarantor in writing by the
applicable Seller, and (and (iv) in the case of the Guarantor, Redwood Trust,
Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
58
Attention ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, fax number (▇▇▇) ▇▇▇-▇▇▇▇), or such other address as
may hereafter be furnished to the Sellers in writing by the Guarantor.
Section 12.04 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, the invalidity
of any such covenant, agreement, provision or term of this Agreement shall in no
way affect the validity or enforceability of the other provisions of this
Agreement.
Section 12.05 Schedules and Exhibits.
The schedules and exhibits that are attached to this Agreement are
hereby incorporated herein and made a part hereof by this reference.
Section 12.06 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as
the singular, and the use of any gender herein shall be deemed
to include the other gender;
(2) any reference in this Agreement to this Agreement or any other
agreement, document, or instrument shall be a reference to
this Agreement or any other such agreement, document, or
instrument as the same has been amended, modified, or
supplemented in accordance with the terms hereof and thereof
(as applicable);
(3) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally
accepted accounting principles;
(4) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs, " and other subdivisions without reference to a
document are to designated articles, sections, subsections,
paragraphs and other subdivisions of this Agreement, unless
the context shall otherwise require;
(5) a reference to a subsection without further reference to a
section is a reference to such subsection as contained in the
same section in which the reference appears, and this rule
shall also apply to Paragraphs and other subdivisions;
(6) a reference to a "day" shall be a reference to a calendar day;
(7) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to
any particular provision; and
(8) the terms "include" and "including" shall mean without
limitation by reason of enumeration.
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Section 12.07 Waivers and Amendments, Noncontractual Remedies;
Preservation of Remedies.
This Agreement may be amended, superseded, canceled, renewed or
extended and the terms hereof may be waived, only by a written instrument signed
by authorized representatives of the parties or, in the case of a waiver, by an
authorized representative of the party waiving compliance. No such written
instrument shall be effective unless it expressly recites that it is intended to
amend, supersede, cancel, renew or extend this Agreement or to waive compliance
with one or more of the terms hereof, as the case may be. No delay on the part
of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party of any such
right, power or privilege, or any single or partial exercise of any such right,
power or privilege, preclude any further exercise thereof or the exercise of any
other such right, power or privilege. The rights and remedies herein provided
are cumulative and are not exclusive of any rights or remedies that any party
may otherwise have at law or in equity.
Section 12.08 Captions.
All section titles or captions contained in this Agreement or in any
schedule or exhibit annexed hereto or referred to herein, and the table of
contents to this Agreement, are for convenience only, shall not be deemed a part
of this Agreement and shall not affect the meaning or interpretation of this
Agreement.
Section 12.09 Counterparts; Effectiveness.
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
This Agreement shall become effective as of the date first set forth herein upon
the due execution and delivery of this Agreement by each of the parties hereto.
Section 12.10 Entire Agreement; Amendment.
This Agreement (including the schedules and exhibits annexed hereto or
referred to herein), together with the Cendant Guide and each Purchase Price and
Terms Letter, contains the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and supersedes all prior
agreements, written or oral, with respect thereto. No amendment, modification or
alteration of the terms or provisions of this Agreement shall be binding unless
the same shall be in writing and duly executed by the authorized representatives
of the parties hereto.
Section 12.11 Further Assurances.
Each party hereto shall take such additional action as may be
reasonably necessary to effectuate this Agreement and the transactions
contemplated hereby. The Sellers will promptly and duly execute and deliver to
the Purchaser such documents and assurances and take such further action as the
Purchaser may from time to time reasonably request in order to carry out more
effectively the intent and purpose of this Agreement and to establish and
protect the rights and remedies created or intended to be created in favor of
the Purchaser.
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Section 12.12 Intention of the Seller.
Each Seller intends that the conveyance of such Seller's right, title
and interest in and to the Mortgage Loans to the Purchaser shall constitute a
sale and not a pledge of security for a loan. If such conveyance is deemed to be
a pledge of security for a loan, however, the applicable Seller intends that the
rights and obligations of the parties to such loan shall be established pursuant
to the terms of this Agreement. Each Seller also intends and agrees that, in
such event, (i) the applicable Seller shall be deemed to have granted to the
Purchaser and its assigns a first priority security interest in such Seller's
entire right, title and interest in and to the Mortgage Loans, all principal and
interest received or receivable with respect to the Mortgage Loans, all amounts
held from time to time in the accounts mentioned pursuant to this Agreement and
all reinvestment earnings on such amounts, together with all of the applicable
Seller's right, title and interest in and to the proceeds of any title, hazard
or other insurance policies related to such Mortgage Loans and (ii) this
Agreement shall constitute a security agreement under applicable law. All rights
and remedies of the Purchaser under this Agreement are distinct from, and
cumulative with, any other rights or remedies under this Agreement or afforded
by law or equity and all such rights and remedies may be exercised concurrently,
independently or successively.
Section 12.13 Guaranty of Purchaser's Obligations
Guarantor hereby agrees to cause RWT Holdings, Inc. to perform all of
its duties and obligations as the Purchaser hereunder, guaranties the timely
performance of such duties and obligations by RWT Holdings, Inc. and agrees to
be jointly and severally liable to the Sellers for all such duties and
obligations of RWT Holdings, Inc.
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IN WITNESS WHEREOF, the Sellers, the Purchaser and the Guarantor have
caused their names to be signed hereto by their respective officers as of the
date first written above.
RWT HOLDINGS, INC.
By::_________________________________________
Name:
Title:
CENDANT MORTGAGE CORPORATION
By: _________________________________________
Name:
Title:
▇▇▇▇▇▇'▇ GATE RESIDENTIAL
MORTGAGE TRUST (formerly known as
CENDANT RESIDENTIAL MORTGAGE
TRUST)
By: _________________________________________
Name:
Title:
REDWOOD TRUST, INC.
By: _________________________________________
Name:
Title:
EXHIBIT B-1
CONTENTS OF PURCHASER'S MORTGAGE FILE
With respect to each Mortgage Loan, the Purchaser's Mortgage File shall
include each of the following items, which shall be available for inspection by
the Purchaser, and which shall be retained by the applicable Seller or delivered
to the Purchaser pursuant to the provisions of the Sellers' Warranties and
Servicing Agreement.
1. The original Mortgage Note bearing all intervening
endorsements, endorsed, at the direction of the Purchaser
either (2) in blank and signed in the name of the applicable
Seller by an authorized officer. To the extent that there is
no space on the face of the Mortgage Notes for endorsements,
the endorsement may be contained on an allonge, if state law
so allows and the Purchaser is so advised by the Seller that
state law so allows. If the Mortgage Loan was acquired by the
Seller in a merger, the endorsement must be by "[Seller],
successor by merger to [name of predecessor]." If the Mortgage
Loan was acquired or originated by the Seller while doing
business under another name, the endorsement must be by
"[Seller], formerly known as [previous name];"
2. To the extent applicable, the original of each power of
attorney, surety agreement or guaranty agreement with respect
to such Mortgage Loan;
3. The original executed recorded Mortgage (together with the
standard adjustable note mortgage rider, and convertible note
rider, if applicable, if the Mortgage Loan is an ARM Loan),
with evidence of recording thereon, or, if the original
executed Mortgage has not yet been returned from the recording
office, a copy of the original executed Mortgage certified by
the applicable Seller, title insurance company, escrow agent
or closing attorney to be a true copy of the original of the
Mortgage which has been delivered for recording in the
appropriate recording office of the jurisdiction in which the
Mortgaged Property is located. The standard FNMA/FHLMC
Condominium Rider or PUD Rider must be attached to the
Mortgage if the Mortgaged Property is a condominium or is
located in a PUD.
4. The original Assignment of Mortgage for each Mortgage Loan, in
form and substance acceptable for recording. The Mortgage
shall be assigned, at the direction of the Purchaser either
(2) with assignee's name left blank. The Assignment of
Mortgage must be duly recorded only on the direction of the
Purchaser. If the Mortgage Loan was acquired by the Seller in
a merger, the Assignment of Mortgage must be made by
"[Seller], successor by merger to [name of predecessor]." If
the Mortgage Loan was acquired or originated by the Seller
while doing business under another name, the Assignment of
Mortgage must be by "[Seller], formerly known as [previous
name]."
5. The original policy of title insurance (or a preliminary title
report, binder or commitment if the original title insurance
policy has not been received from the insurance company).
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6. Originals of any executed intervening assignments of the
Mortgage, with evidence of recording thereon or, if the
original intervening assignment has not yet been returned from
the recording office, a copy of such assignment certified by
the Seller to be a true copy of the original of the assignment
which has been sent for recording in the appropriate
jurisdiction in which the Mortgaged Property is located.
7. The original Primary Insurance Policy or the electronic
certificate number of such policy and the identity of the
named mortgagee.
8. Originals of all assumption, modification and substitution
agreements, if any, or, if the originals of any such
assumption, modification and substitution agreements have not
yet been returned from the recording office, a copy of such
instruments certified by the applicable Seller to be a true
copy of the original of such instruments which have been sent
for recording in the appropriate jurisdictions in which the
Mortgaged Properties are located.
9. Certified copy of the pledge agreement as executed in
connection with loans with additional collateral.
The following items should be included in Schedule B-1 with respect to
any Cooperative Loan:
(9) (A) the original Mortgage Note, endorsed (on the Mortgage Note
or an allonge attached thereto) "Pay to the order of _____________, without
recourse" and signed by facsimile signature in the name of such Seller by an
authorized officer, with all intervening endorsements showing a complete, valid
and proper chain of title from the originator of such Mortgage Loan to such
Seller;
(B) or a certified copy of the Mortgage Note (endorsed as
provided above) together with a lost note affidavit providing indemnification to
the holder thereof for any losses incurred due to the fact that the original
Mortgage Note is missing;
(10) the original Acceptance of Assignment and Assumption of Lease
Agreement for each Mortgage Loan, from such Seller signed by original or by
facsimile signature to __________________, which assignment shall be in form and
substance acceptable for recording (except for the recording information);
(11) the original Stock Certificate and related Stock Power, in
blank, executed by the Mortgagor with such signature guaranteed and original
Stock Power, in blank executed by the Seller;
(12) the original Proprietary Lease and the Assignment of
Proprietary Lease executed by the Mortgagor in blank or if the Proprietary Lease
has been assigned by the Mortgagor to the Seller, then the Seller must execute
an assignment of the Assignment of Proprietary Lease in blank;
(13) the original Recognition Agreement and the original Assignment
of Recognition Agreement;
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(14) the recorded state and county Financing Statements and
Financing Statement Changes;
(15) an Estoppel Letter and/or Consent;
(16) the Cooperative Lien Search;
(17) the guaranty of the Mortgage Note and Cooperative Loan, if
any; and
(18) the original of any security agreement or similar document
executed in connection with the Cooperative Loan.
(11) Certified copy of the pledge agreement as executed in
connection with loans with additional collateral.
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EXHIBIT 2.05
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
THIS ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT (this
"Assignment"), dated of [_______], 200[__], is entered into among
[_________________], a ___________________ (the "Assignee"), RWT Holdings, Inc.
(the "Assignor"), [Cendant Mortgage Corporation] [▇▇▇▇▇▇'▇ Gate Residential
Mortgage Trust] the "Seller "), with Cendant Mortgage Corporation, as the
servicer (the "Servicer").
RECITALS
WHEREAS the Assignor, the Seller and [Cendant Mortgage Corporation]
[▇▇▇▇▇▇'▇ Gate Residential Mortgage Trust], the Servicer and Redwood Trust,
Inc., as Guarantor, have entered into a certain Mortgage Loan Flow Purchase,
Sale and Servicing Agreement, dated as of August 1, 2002 (as amended or modified
to the date hereof, the "Agreement"), pursuant to which the Assignor has
acquired certain Mortgage Loans pursuant to the terms of the Agreement and
Servicer has agreed to service such Mortgage Loans; and
WHEREAS the Assignee has agreed, on the terms and conditions contained
herein, to purchase from the Assignor [certain] [all] of the Mortgage Loans (the
"Specified Mortgage Loans") which are subject to the provisions of the Agreement
and are listed on the mortgage loan schedule attached as Exhibit I hereto (the
"Specified Mortgage Loan Schedule");
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged), the parties agree as follows:
1. Assignment and Assumption
(a) On and of the date hereof, the Assignor hereby sells,
assigns and transfers to the Assignee all of its right, title and interest in
the Specified Mortgage Loans and all rights related thereto as provided under
the Agreement to the extent relating to the Specified Mortgage Loans, the
Assignee hereby accepts such assignment from the Assignor, and the Seller hereby
acknowledges such assignment and assumption.
(b) On and as of the date hereof, the Assignor represents
and warrants to the Assignee that the Assignor has not taken any action that
would serve to impair or encumber the Assignee's ownership interests in the
Specified Mortgage Loans since the date of the Assignor's acquisition of the
Specified Mortgage Loans.
2. Recognition of Purchaser
From and after the date hereof, both the Assignee and the Seller shall
note the transfer of the Specified Mortgage Loans to the Assignee in their
respective books and records and shall recognize the Assignee as the owner of
the Specified Mortgage Loans, and Servicer shall service the Specified Mortgage
Loans for the benefit of the Assignee pursuant to the Agreement, the terms of
which are incorporated herein by reference. It is the intention of the Seller,
the Servicer,
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the Assignee and the Assignor that the Assignment shall be binding upon and
inure to the benefit of the Assignee and the Assignor and their successors and
assigns.
3. Representations and Warranties
(a) The Assignee represents and warrants that it is a
sophisticated investor able to evaluate the risks and merits of the transactions
contemplated hereby, and that it has not relied in connection therewith upon any
statements or representations of the Seller or the Assignor other than those
contained in the Agreement or this Assignment.
(b) Each of the parties hereto represents and warrants
that it is duly and legally authorized to enter into this Assignment.
(c) Each of the parties hereto represents and warrants
that this Assignment has been duly authorized, executed and delivered by it and
(assuming due authorization, execution and delivery thereof by each of the other
parties hereto) constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
4. Continuing Effect
Except as contemplated hereby, the Agreement shall remain in full force
and effect in accordance with its terms.
5. Governing Law
This Assignment and the rights and obligations hereunder shall be
governed by and construed in accordance with the internal laws of the State of
New York.
6. Notices
Any notices or other communications permitted or required under the
Agreement to be made to the Assignee shall be made in accordance with the terms
of the Agreement and shall be sent to the Assignee as follows:
[_____________________], or to such other address as may hereafter be furnished
by the Assignee to the parties in accordance with the provisions of the
Agreement.
7. Counterparts
This Agreement may be executed in counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same instrument.
8. Definitions
Any capitalized term used but not defined in this Agreement has the
same meaning as in the Agreement.
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EXHIBIT 10
FORM OF WARRANTY ▇▇▇▇ OF SALE
On this _______ day of ________, 200__, [Cendant Mortgage Corporation]
[▇▇▇▇▇▇'▇ Gate Residential Mortgage Trust] ("Seller") as the Seller under that
certain Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as of
August 1, 2002 (the "Agreement") does hereby sell, transfer, assign, set over
and convey to [______________] as Purchaser under the Agreement, without
recourse, but subject to the terms of the Agreement, all rights, title and
interest of the Seller in and to the Mortgage Loans listed on the Mortgage Loan
Schedule attached hereto, together with the related Mortgage Files and all
rights and obligations arising under the documents contained therein. Pursuant
to Section 2.01 of the Agreement, the Seller has delivered to the Purchaser or
its custodian the Legal Documents for each Mortgage Loan to be purchased as set
forth in the Agreement. The contents of each related Servicer's Mortgage File
required to be retained by Cendant Mortgage Corporation ("Cendant") to service
the Mortgage Loans pursuant to the Agreement and thus not delivered to the
Purchaser are and shall be held in trust by Cendant for the benefit of the
Purchaser as the owner thereof. Cendant's possession of any portion of each such
Servicer's Mortgage File is at the will of the Purchaser for the sole purpose of
facilitating servicing of the related Mortgage Loan pursuant to the Agreement,
and such retention and possession by Cendant shall be in a custodial capacity
only. The ownership of each Mortgage Note, Mortgage, and the contents of the
Mortgage File and Servicer's Mortgage File is vested in the Purchaser and the
ownership of all records and documents with respect to the related Mortgage Loan
prepared by or which come into the possession of Cendant shall immediately vest
in the Purchaser and shall be retained and maintained, in trust, by Cendant at
the will of the Purchaser in such custodial capacity only.
The Seller confirms to the Purchaser that the representations and
warranties set forth in Sections 3.01, [3.02] and 3.03 of the Agreement are true
and correct as of the date hereof, and that all statements made in the Sellers'
Officer's Certificate and all attachments thereto remain complete, true and
correct in all respects as of the date hereof.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement.
[CENDANT MORTGAGE CORPORATION]
[▇▇▇▇▇▇'▇ GATE RESIDENTIAL MORTGAGE TRUST]
(Seller)
By:
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
the day and year first above written.
ASSIGNOR:
REDWOOD TRUST, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
SELLER:
[CENDANT MORTGAGE CORPORATION]
[▇▇▇▇▇▇'▇ GATE RESIDENTIAL MORTGAGE TRUST]
By: ____________________________________
Name: __________________________________
Title: _________________________________
ASSIGNEE:
By: ____________________________________
Name: __________________________________
Title: _________________________________
SERVICER:
CENDANT MORTGAGE CORPORATION
By: ____________________________________
Name: __________________________________
Title: _________________________________
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