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MORTGAGEIT, INC.
OWNER
AND
GMAC MORTGAGE CORPORATION
SUBSERVICER
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INTERIM HELOC LOAN SERVICING AGREEMENT
DATED AS OF JANUARY 21, 2005
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS.........................................................1
ARTICLE II. ADMINISTRATION AND SERVICING.......................................6
Section 2.01 Responsibility and Authority..................................6
Section 2.02 General Servicing.............................................6
Section 2.03 Servicing Changes.............................................7
Section 2.04 Line Access...................................................8
Section 2.05 Subservicer Records; Subservicer Access.......................8
Section 2.06 Borrower Statements...........................................8
Section 2.07 Fidelity Bond Insurance.......................................8
Section 2.08 Collection Activities.........................................9
Section 2.09 Casualty Loss, Condemnation and Insurance.....................9
Section 2.10 Security Protection Expenses..................................9
Section 2.11 Communications with Borrower.................................10
Section 2.12 Freezing of Loan Advances....................................10
Section 2.13 Satisfaction Requests........................................10
Section 2.14 Subordination Requests; Partial Release Requests.............10
Section 2.15 Credit Line Increase Requests................................10
Section 2.16 Program Forms................................................10
Section 2.17 Borrower Transfers of Mortgaged Property.....................10
Section 2.18 Subservicer Personnel........................................10
Section 2.19 Cooperation of Subservicer with a Reconsitution..............11
Section 2.20 Annual Statement as to Compliance............................13
Section 2.21 Annual Independent Certified Public
Accountants' Servicing Report................................13
ARTICLE III. SERVICING COMPENSATION AND REIMBURSEMENT OF EXPENSES.............13
Section 3.01 Servicing Compensation.......................................13
Section 3.02 Payment of Servicing Compensation............................14
Section 3.03 Expenses.....................................................14
Section 3.04 Reimbursement of Expenses....................................14
ARTICLE IV. FUNDING OF LOANS; REMITTANCES.....................................14
Section 4.01 Loan Funding.................................................14
Section 4.02 Accounting...................................................15
Section 4.03 Reimttances and Reimbursement of Borrower Advances...........15
ARTICLE V. REPORTS............................................................15
Section 5.01 Reports to Owner.............................................15
ARTICLE VI. SERVICING DOUCMENTS AND FILES.....................................15
Section 6.01 Maintenance of Servicing Files...............................15
Section 6.02 Submission of Loan Data Report and Other Loan Documents......15
ARTICLE VII. INDEMNIFICATION AND ASSIGNMENT...................................16
Section 7.01 Indemnification..............................................16
Section 7.02 Limitation on Liability of Subservicer and Others............18
Section 7.03 Limitation on Assignment and Resignation by Subservicer......18
Section 7.04 Operation of Indemnities.....................................19
Section 7.05 Assignment by Owner..........................................19
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Section 7.06 Merger or Consolidation of the Subservicer...................20
Section 7.07 Payments.....................................................20
Section 7.08 Non-Exclusive Right to Service Loans.........................20
Section 7.09 Representations and Warranties of Subservicer................20
Section 7.10 Representations and Warranties of Owner......................21
ARTICLE VIII. DEFAULT.........................................................22
Section 8.01 Default by Servicer..........................................22
Section 8.02 Default by Owner.............................................24
ARTICLE IX. TERM AND VOLUNTARY TERMINATION....................................25
Section 9.01 Term.........................................................25
Section 9.02 Termination for Cause........................................25
Section 9.03 Voluntary Termination........................................26
Section 9.04 Transfer of Files............................................26
Section 9.05 Transfer of Servicing........................................27
ARTICLE X. MISCELLANEOUS......................................................27
Section 10.01 Notices......................................................27
Section 10.02 Waivers......................................................28
Section 10.03 Entire Agreement; Amendments.................................28
Section 10.04 Execution; Binding Effect....................................28
Section 10.05 Confidentiality of Information...............................28
Section 10.06 Headings.....................................................30
Section 10.07 Applicable Law...............................................30
Section 10.08 Relationship of Parties......................................30
Section 10.09 Severability of Provisions...................................30
Section 10.10 Exhibits.....................................................30
Section 10.11 Waiver of Trial by Jury......................................30
Section 10.12 Limitation of Damages........................................30
EXHIBITS
EXHIBIT A SUBSERVICER FEE SCHEDULE
EXHIBIT B REPORTS AND TIMING OF DELIVER
EXHIBIT C EXPENSE STATEMENT
EXHIBIT D HOME EQUITY LINE SERVICING PROCEDURES
EXHIBIT E ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT F BORROWER AGREEMENTS
EXHIBIT G FORM OF OPIONION OF COUNSEL FOR RECONSTITUTION
EXHIBIT H SUBSERVICER INFORMATION
EXHIBIT I TRANSFER INSTRUCTIONS
EXHIBIT J LIMITED POWER OF ATTORNEY
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HELOC INTERIM SUBSUBSERVICING AGREEMENT
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THIS HELOC INTERIM SUBSERVICING AGREEMENT (the "Agreement") is made as of
this 21st day of January, 2005, by and between GMAC Mortgage Corporation, a
Pennsylvania corporation, with offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
(Subservicer) and MortgageIT, Inc., a New York corporation, with offices at ▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (Owner).
W I T N E S S E T H
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WHEREAS, Owner intends to purchase and/or originate home equity lines of
credit from time to time; and
WHEREAS, Owner intends to eventually sell such home equity lines of credit
servicing released; and
WHEREAS, the home equity lines of credit sold to or originated by Owner
will be serviced by a servicer designated by Owner until such time as Owner
sells or otherwise to transfers the servicing of such home equity lines of
credit; and
WHEREAS, Owner has selected Subservicer to be the servicer with respect to
certain of those home equity lines of credit as are from time to time designated
by Owner.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned hereby agree as follows:
ARTICLE I. DEFINITIONS
DEFINITIONS. Whenever used in this Agreement, the following
capitalized terms, whether in the singular or plural, shall have the following
meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan or REO
Property those mortgage servicing practices of mortgage lending institutions
which service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located, exercising the
same care in performing those practices that the Subservicer customarily employs
and exercises in servicing and administering mortgage loans for its own account
(including, compliance with all applicable federal, state and local laws).
Affiliate: With respect to any Person, any other Person that, directly
or indirectly, between one or more intermediaries, controls or is controlled by,
or under common control with, such Person.
Agreement: This HELOC Interim Subservicing Agreement and Exhibits
hereto and incorporated herein, as the same may be amended, modified or
supplemented from time to time pursuant to the applicable provisions hereof.
Annual Fee: The annual fee to be charged to a Borrower for a Loan as
required by Loan Documents.
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Bank Funding Report: The term "Bank Funding Report" shall have the
meaning ascribed to it in Section 4.02.
Banking Day: Any day other than a Saturday, Sunday, any other day on
which Subservicer's or Owner's offices are officially closed, or national banks
are authorized or obligated to remain closed.
Bankruptcy Fee: With respect to each Loan regarding which the Borrower
becomes a debtor under a bankruptcy proceeding initiated under Chapter 7, 11 or
13 of the federal Bankruptcy Code during the period in which Subservicer is
subservicing such Loan hereunder, the applicable one time fee Subservicer shall
be entitled to receive pursuant to Section 3.01(a), as set forth on Exhibit A.
Base Fee: The applicable amount designated on Exhibit A as the Base
Fee.
Borrower: An individual or entity obligated on a Loan.
Borrower Agreement: With respect to each Loan, the agreement between
the Borrower and the originator of the Loan setting forth the terms of that Loan
and any amendment or modification thereof. Samples of the Borrower Agreements
containing the terms of the Loans subject to this Agreement are attached hereto
as Exhibit F.
Borrower Check: A check intended to be used by a Borrower as a means
for drawing down funds on a Loan.
Borrower Statement: A periodic account statement to be provided to a
Borrower in accordance with the Borrower Agreement containing such information
concerning the Loan as is provided to a Borrower pursuant to Accepted Servicing
Practices.
Borrowing Limit: The maximum amount in U.S. Dollars that may be
borrowed under a Loan.
Collection Fee: The applicable amount designated on Exhibit A as the
Collection Fee.
Commencement Date: January 21, 2005.
Credit Line Increase: An increase in the Borrowing Limit with respect
to a Loan.
Credit Line Increase Application: A Program Form which is designed for
use in applying for a Credit Line Increase.
Credit Line Increase Request: A written request received from a
Borrower for a Credit Line Increase.
Deboarding Fee: The applicable amount designated on Exhibit A as the
Deboarding Fee.
Expenses: The term "Expenses" shall have the meaning ascribed to it in
Section 3.03.
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Expense Statement: The term "Expense Statement" shall have the meaning
ascribed to it in Section 3.04.
Event of Default: The term "Event of Default" shall have the meaning
ascribed to it in Article VIII.
▇▇▇▇▇▇ ▇▇▇: ▇▇▇▇▇▇ ▇▇▇, or any successor thereto.
▇▇▇▇▇▇ Mae Guide: The ▇▇▇▇▇▇ ▇▇▇ Selling Guide and the ▇▇▇▇▇▇ Mae
Servicing Guide and all amendments or additions thereto.
Flood Insurance Policy: A flood insurance policy insuring a Mortgaged
Property.
Foreclosure Fees: With respect to each Loan which Subservicer
initiates a foreclosure proceeding hereunder (which shall not include merely
sending a notice of intent to foreclose without actually initiating a
foreclosure proceeding), the applicable one time fee Subservicer shall be
entitled to receive pursuant to Section 3.01(a), as set forth on Exhibit A.
▇▇▇▇▇▇▇ Mac: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
▇▇▇▇▇▇▇ Mac Guide: The ▇▇▇▇▇▇▇ Mac Selling Guide and the ▇▇▇▇▇▇▇ Mac
Servicing Guide and all amendments or additions thereto.
Hazard Insurance Policy: A casualty insurance policy insuring a
Mortgaged Property.
Home Equity Line Servicing Procedures: The Home Equity Line Servicing
Procedures attached hereto as Exhibit D, as may be amended, supplemented or
otherwise modified from time to time in accordance with the terms of this
Agreement.
Late Fees: With respect to any Loan, all late fees that the Borrower
is obligated to pay under the Borrower Agreement on account of delinquent
payments thereunder.
Line Charge Authorization: A Program Form upon which a Borrower
authorizes a charge or charges against a Loan.
Loan: Any revolving line of credit, secured by a lien on a one to four
family residential real property, purchased by Owner and serviced by Subservicer
pursuant to this Agreement, whether or not said line of credit has a Loan
Balance.
Loan Balance: Any amount outstanding under a Loan including, without
limitation, principal, interest, late charges and/or an Annual Fee.
Loan Closing: The execution and delivery of a Borrower Agreement,
Mortgage and related documents.
Loan Data Report: With respect to each Loan, a Program Form prepared
by Owner and transmitted to Subservicer pursuant to Section 2.02 to enable
Subservicer to set up the Loan on the Subservicer Computer System.
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Mortgage: The mortgage, deed of trust or other security instrument
which creates a lien on a Mortgaged Property to secure the repayment of a Loan.
Mortgage Release: A document evidencing full release of a Mortgage.
Mortgaged Property: The one to four family residential real property,
including land and the improvements thereon, which is subject to the lien of a
Mortgage.
Owner: MortgageIT, Inc., a New York corporation.
Partial Mortgage Release: A document evidencing release of a Mortgage
with respect to a portion of the Mortgaged Property.
Partial Mortgage Release Request: A written request received by
Subservicer from a Borrower for a Partial Mortgage Release.
Person: Any individual, partnership, corporation, trust, association,
joint venture, joint stock company, non-incorporated organization, government or
any department or agency thereof, or any other entity.
Privacy Requirements: Means the obligations imposed by (i) Title V of
the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, 15 U.S.C. ss. 6801 et seq.; (ii) the applicable
federal regulations implementing such act and codified at 12 CFR Parts 40, 216,
332, 573, and/or 16 CFR Part 313; (iii) Interagency Guidelines Establishing
Standards For Safeguarding Borrower Information published in final form on
February 1, 2001 (such final guidelines and/or rules the "Interagency
Guidelines") to establish and maintain an information Security Program; and (iv)
other applicable federal, state and local laws, rules, regulations, and orders
relating to the privacy and security of Customer Information, including the
federal Fair Credit Reporting Act, 15 U.S.C. ss. 1681 et seq., and similar state
laws.
Private Label: The practice, to the extent permitted by law as
interpreted by Subservicer in its reasonable discretion, of communicating with
the Borrower in the name of Owner.
Program Form: Any form of worksheet, checklist, summary, log,
transmittal, request, order, report or other written form and any written
document, instrument, statement, notice, request, authorization or
communication, including, without limitation, customer billing forms and
customer correspondence, utilized in connection with the Servicing Activities
and all other aspects of the Loans; provided, however, that the Borrower
Agreement shall not constitute a Program Form.
Reconstitution: Any sale of a Loan and/or the related servicing
rights, whether in whole loan or pass-through format, prior to the termination
of this Agreement.
Remittance Date: Every Banking Day of each calendar month.
Resolution Fee: The applicable amount designated on Exhibit A as the
Resolution Fee.
Satisfaction Request: A written request received by Subservicer from a
Borrower for a Mortgage Release.
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Security Protection Expenses: All customary, reasonable and necessary
out-of-pocket costs and expenses incurred in connection with the preservation or
protection of a Mortgaged Property and not of a type that would generally be
considered overhead, including (i) Hazard Insurance Policy premiums, (ii) real
estate taxes and property repair, replacement, protection and preservation
expenses, (iii) expenses to cure or prevent any default with respect to a Senior
Loan, and (iv) similar expenses to preserve or protect the security value of a
Mortgage.
Senior Loan: A mortgage loan secured by a lien on a Mortgaged Property
superior to the lien of a Mortgage.
Servicing Activities: Those servicing, administrative and related
functions in connection with the Loans as are delegated to Subservicer pursuant
to this Agreement.
Servicing Change: The term "Servicing Change" shall have the meaning
ascribed to it in Section 2.03.
Servicing Change Proposal: The term "Servicing Change Proposal" shall
have the meaning ascribed to it in Section 2.03.
Servicing Compensation: The term "Servicing Compensation" shall have
the meaning ascribed to it in Section 3.01(a).
Servicing Compensation Statement: The term "Servicing Compensation
Statement" shall have the meaning ascribed to it in Section 3.02.
Servicing File: With respect to each Loan, the file, diskette or other
storage device containing the Loan Data Report and all other information that
Subservicer is required to maintain with respect to that Loan pursuant to
Section 6.01.
Servicer Transfer Date: The date Subservicer assumes its obligations
for Loans pursuant to this Agreement.
Set Up Fee: With respect to each Loan and subject to the provisions of
Section 3.01(b), the amount Subservicer shall be entitled to receive pursuant to
Section 3.01(a) for setting up the Loan on the Subservicer Computer System, as
set forth on Exhibit A.
Stated Rate: As of any date, the lesser of (i) the "prime rate"
published by The Wall Street Journal for such date, or if such date is a date on
which The Wall Street Journal is not published, the "prime rate" published in
the most recent edition of The Wall Street Journal, and (ii) the highest rate of
interest permitted by applicable law. If The Wall Street Journal ceases to
publish a "prime rate", the "prime rate" referred to in clause (i) shall be the
"prime rate" published by The New York Times.
Stated Termination Date: The term "Stated Termination Date" shall have
the meaning ascribed to it in Section 9.01.
Subordination Fee: The applicable amount designated on Exhibit A as
the Subordination Fee.
Subordination Request: Any request received by Subservicer from a
Borrower for subordination of a Mortgage.
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Subservicer: GMAC Mortgage Corporation, a Pennsylvania corporation.
Subservicer Computer System: The computer system, comprising both
computer hardware and software, utilized by Subservicer in connection with the
services performed by Subservicer hereunder whether or not such computer system
is owned by Subservicer.
Termination Fee: The applicable amount designated on Exhibit A as the
Termination Fee.
Termination Without Cause: The term "Termination Without Cause" shall
mean termination by the Owner other than a termination described in Section
8.01; "Termination Without Cause" shall also mean termination by the Subservicer
other than a termination described in Section 8.02.
Transfer Instructions: The Subservicer's standard transfer
instructions, attached hereto as Exhibit I.
ARTICLE II. ADMINISTRATION AND SERVICING
SECTION 2.01 RESPONSIBILITY AND AUTHORITY.
Owner or, as appropriate, its successors or assigns, shall be in all
respects the owner of the Loans and the servicing rights with respect thereto,
and shall bear all credit risks associated with the Loans. Subservicer
acknowledges and agrees that all collections Subservicer receives on the Loans
shall be for the account of Owner and its successors and assigns. Subservicer
shall be responsible for the performance of the Servicing Activities in
accordance with this Agreement and Accepted Servicing Practices. The Owner
shall, at the request of Subservicer, deliver powers-of-attorney substantially
similar to the attached hereto as Exhibit J, to the Subservicer sufficient to
allow the Subservicer as servicer to execute all documentation requiring
execution on behalf of Owner with respect to the servicing of the Loans,
including satisfactions, partial releases, modifications and foreclosure
documentation or, in the alternative, shall as promptly as reasonably feasible,
execute and return such documentation to the Subservicer.
The Subservicer may carry out such Servicing Activities through the
appointment of any agent, subagent or subcontractor which Subservicer deems
suitable to perform any of such activities. However, no such appointment shall
relieve Subservicer of any of the responsibility for all servicing and
administrative obligations that it undertakes pursuant to this Agreement. Any
agreement entered into in connection with such appointment shall be deemed to be
between the Subservicer and the agent, subagent or subcontractor, as applicable,
alone and the Owner shall not have any obligations, duties or liabilities with
respect to such agent, subagent or subcontractor including any obligation, duty
or liability of the Owner to pay such agent's, subagent's or subcontractor's
fees and expenses. A Person or Persons so appointed by Subservicer may be
removed by Subservicer without the consent of Owner. Subservicer shall have full
power and authority, acting alone or through any such appointed Person, to do
any and all things in connection with such Servicing Activities which it deems
necessary or desirable in a manner consistent with this Agreement.
SECTION 2.02 GENERAL SERVICING.
In connection with each Loan and subject to the provisions of Section 6.02,
Subservicer shall accept from Owner the Loan Data Reports. Subservicer shall
assume servicing
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responsibilities hereunder with respect to each Loan for which a Loan Data
Report is delivered to it immediately upon receipt of that Loan Data Report from
Owner. During the period following the closing of the Loan but prior to receipt
by Subservicer of the Loan Data Report from Owner, any requests received by
Subservicer for advances or account-specific information will be referred back
to the Owner.
In performing the Servicing Activities, Subservicer shall be entitled to
rely upon information contained in the Loan Data Report unless otherwise
notified by Owner. Subservicer shall service the Loans in accordance with this
Agreement, including the Home Equity Line Servicing Procedures, Accepted
Servicing Practices, except as specifically modified by any Servicing Changes.
The Subservicer shall service and administer the Loans through the exercise of
the same care that it customarily employs for its own account. Servicing
Activities shall include all operational servicing functions with respect to the
Loans and Subservicer shall be responsible for assuring that all Servicing
Activities are carried out in full compliance with all applicable laws. Without
limiting the generality of the foregoing, commencing on the date that it
receives the Loan Data Report in accordance with Section 6.02 with respect to
any Loan, Subservicer shall be responsible for ensuring compliance with the
periodic statement and disclosure requirements of Regulation Z promulgated by
the Board of Governors of the Federal Reserve System; provided, further, that
anything herein to the contrary notwithstanding, Subservicer shall be
responsible for complying with the periodic statement and disclosure
requirements of Regulation Z only upon receiving within the time period
specified in Section 6.02 that portion of the information on a Loan Data Report
that is necessary for preparing such statements and disclosures.
SECTION 2.03 SERVICING CHANGES.
If, following the date of this Agreement, Owner shall propose to (i) amend,
supplement, discontinue or introduce any Program Form; (ii) amend or supplement
the Servicing Activities; and/or (iii) otherwise alter any aspect of the
Servicing Activities (any such amendment, supplement, discontinuation,
introduction or other alteration being herein referred to as a "Servicing
Change"), Owner shall give Subservicer written notice of each such proposed
Servicing Change accompanied, as applicable, by (a) a specimen of each Program
Form proposed to be amended, supplemented or introduced, in the form in which it
is proposed to be amended, supplemented or introduced; and/or (b) a written
description of each proposed amendment, supplement or other alteration to the
Servicing Activities, which description shall in each case be sufficiently
clear, comprehensive and detailed to provide a reasonable basis for the training
of individuals who would be required to follow the procedures described thereby
(such written notice, as accompanied by the items described in clauses (a) and
(b), is referred to herein as a "Servicing Change Proposal").
Within twenty (20) Banking Days following Subservicer's receipt of a
Servicing Change Proposal, Subservicer shall either (i) accept such Servicing
Change Proposal, in which case the Servicing Change shall become effective on
the date that Subservicer, in its reasonable discretion, is able to implement
the Servicing Change, or (ii) deliver a written notice to Owner stating that (a)
the performance of services hereunder by Subservicer in accordance with such
proposed Servicing Change would result in an increase in the cost to and burden
upon Subservicer of performing services hereunder; and/or (b) such proposed
Servicing Change cannot be practicably implemented. Any such notice shall
contain a description of the increased cost or burden or, as appropriate, the
reason for such impracticality. In the event Subservicer timely delivers to
Owner any such notice in response to a Servicing Change Proposal, such proposed
Servicing Change shall not become effective unless and until agreed upon in
writing by both parties.
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SECTION 2.04 LINE ACCESS.
The parties agree that the Borrowers have not been provided Borrower Checks
by the Owner, originator or any prior servicer and Borrowers will not be
provided Borrower Checks by Subservicer. Borrower will be able to access
available funds by calling the Subservicer, via a toll free number. Each such
Borrower will be sent a wire request form and given instructions on where the
wire request is to be sent once completed. The Subservicer will review the form
and verify funds availability and funds will be wire transferred to the account
designated by each Borrower requesting such funds.
SECTION 2.05 SUBSERVICER RECORDS; SUBSERVICER ACCESS.
Subservicer shall maintain such records in connection with the Loans as are
required to be kept under the Home Equity Line Servicing Procedures and shall
appropriately identify in the Subservicer's computer system the ownership of the
Loans by Owner. During the term of this Agreement, Subservicer shall give
Owner's authorized representatives reasonable access upon reasonable notice to
all documents, files, books, records, accounts, offices and other facilities of
Subservicer related to the Loans and the servicing thereof, and, consistent with
Accepted Servicing Practices, and permit Owner to make such inspections thereof
as Owner may reasonably request during normal business hours. Any costs incurred
by Subservicer to accommodate such access will be reimbursed by Owner in
accordance with Section 3.04.
SECTION 2.06 BORROWER STATEMENTS.
Subservicer shall prepare and mail periodic Borrower Statements to
Borrowers in accordance with the terms of the Borrower Agreement in a manner
consistent with the Home Equity Line Servicing Procedures. Borrower Statements
shall indicate that payments due under the Loans should be mailed to
Subservicer.
SECTION 2.07 FIDELITY BOND INSURANCE.
The Subservicer shall maintain, at its own expense, a blanket fidelity bond
and an errors and omissions insurance policy, with broad coverage on all
officers, employees and other persons acting in any capacity with regard to the
Loans and who handle funds, money, documents and papers relating to the Loans.
The fidelity bond and errors and omissions insurance shall be in the form of the
Mortgage Banker's Blanket Bond and shall protect and insure the Subservicer
against losses, including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such persons. No provision of this Section 2.07
requiring the fidelity bond and errors and omissions insurance shall diminish or
relieve the Subservicer from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such fidelity bond and insurance
policy shall be at least equal to the corresponding amounts acceptable to ▇▇▇▇▇▇
▇▇▇ in the ▇▇▇▇▇▇ Mae Guide or by ▇▇▇▇▇▇▇ Mac in the ▇▇▇▇▇▇▇ Mac Guide. The
Subservicer will pass on any monies to Owner that are collected from such
fidelity bond described above and collected subject to the Mortgage Loans of
this Agreement. The Subservicer shall, upon request of Owner, deliver to the
Owner a certificate from the surety and the insurer as to the existence of the
fidelity bond and errors and omissions insurance policy and shall obtain a
statement from the surety and the insurer that such fidelity bond or insurance
policy shall in no event be terminated or materially modified without thirty
days prior written notice to the Owner. The Subservicer shall notify the Owner
within five Business Days of receipt of notice that such fidelity bond or
insurance policy will be, or has been, materially modified or terminated. To the
extent Subservicer receives payments under such fidelity bond or errors and
omissions policy, which
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payments relate to any Mortgage Loan subject to this Agreement, Subservicer
shall remit such payments to Owner to the extent necessary to prevent Owner from
sustaining any loss in connection with any such Mortgage Loan.
SECTION 2.08 COLLECTION ACTIVITIES.
Subservicer shall proceed with reasonable diligence and in accordance with
the Home Equity Line Servicing Procedures, Accepted Servicing Practices to
collect all outstanding payments when the same are due and payable and shall
follow such collection procedures as it follows with respect to Loans comparable
to the Loans held for its own account. Notwithstanding the foregoing,
Subservicer shall not agree to any delinquent payment arrangement that would
change the terms of any Borrower Agreement without prior approval from Owner and
shall not (i) send any notice of acceleration to a Borrower; or (ii) institute
any foreclosure or other legal proceeding; unless it determines that any such
acceleration, foreclosure or other legal proceedings are in its judgment
appropriate with respect to any Loan and in the best interest of the Owner.
SECTION 2.09 CASUALTY LOSS, CONDEMNATION AND INSURANCE.
Subservicer shall handle casualty or flood loss or condemnation proceedings
in a manner consistent with the Home Equity Line Servicing Procedures. Owner
shall provide Subservicer with fully transferable, life-of-loan flood service
contracts with a vendor acceptable to Subservicer. Any cost to obtain a flood
contract, whether due to the absence of such contract or because an existing
contract is not from a vendor acceptable to Subservicer, shall be paid by Owner.
Any cost to transfer an existing contract that is acceptable to Subservicer
shall be paid by Owner. Subservicer shall monitor each Loan with respect to
which there is a Flood Insurance Policy in place and follow the Home Equity Line
Servicing Procedures in connection therewith. In addition, Subservicer shall be
responsible for force placing flood insurance in accordance with the Home Equity
Line Servicing Procedures. Nothing contained herein shall create a duty on the
part of Subservicer to conduct any inquiry or investigation to determine the
existence of any casualty or flood loss or condemnation proceeding and
Subservicer shall have no such duties; provided that in the event of any insured
flood damage to a Mortgaged Property, if Subservicer receives a notice of loss
from the insurer under the related Flood Insurance Policy, Subservicer shall
notify Owner thereof and follow the Home Equity Line Servicing Procedures in
connection with filing the claim under the Flood Insurance Policy. Except as
specifically set forth above in this Section 2.09, Subservicer shall have no
responsibility in connection with any casualty loss or condemnation of the
Mortgaged Properties and Subservicer shall have no responsibility in connection
with any insurance relating to the Mortgaged Properties or the Loans. Without
limiting the generality of the foregoing, Subservicer shall not be responsible
for: (i) maintenance of any insurance in connection with any Loan or Mortgaged
Property (including, without limitation, any Hazard Insurance Policy) except as
otherwise set forth above with respect to any Flood Insurance Policy; (ii)
filing or pursuing any claims under any Hazard Insurance Policy maintained in
connection with any Loan; or (iii) filing or pursuing any claims in connection
with any total or partial condemnation of any Mortgaged Property.
SECTION 2.10 SECURITY PROTECTION EXPENSES.
For advances in excess of $50,000.00 (fifty thousand dollars) Subservicer
shall obtain Owner's consent prior to making such an advance. Owner shall
reimburse Subservicer for such Security Protection Expenses in accordance with
the provisions of Section 3.04.
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SECTION 2.11 COMMUNICATIONS WITH BORROWER.
Subservicer shall be permitted to communicate with Borrowers as necessary
in connection with performance of its obligations under this Agreement provided
that all such communications, including Borrower Statements, shall be Private
Label. Subservicer shall not send any statement inserts to Borrowers without
having obtained Owner's prior approval of each such insert. Subservicer agrees
upon the reasonable request of Owner to insert with the monthly Borrower
Statements any inserts developed by Subservicer for distribution to all of its
home equity line customers or any reasonable inserts developed by Owner and
supplied to Subservicer; provided, however, that Owner shall be responsible for
all costs associated with the development and production of any such inserts
developed by Owner and any increased costs of mailing due to increased postage
or envelope size due to such inserts and all such costs will be reimbursed to
Subservicer pursuant to Section 3.04.
SECTION 2.12 FREEZING OF LOAN ADVANCES.
Subservicer shall follow the Home Equity Line Servicing Procedures with
respect to freezing of loan advances.
SECTION 2.13 SATISFACTION REQUESTS.
Subservicer shall follow the Home Equity Line Servicing Procedures in
relation to Satisfaction Requests or pay-off requests.
SECTION 2.14 SUBORDINATION REQUESTS; PARTIAL RELEASE REQUESTS.
Subservicer shall follow the Home Equity Line Servicing Procedures in
responding to Subordination Requests and Partial Mortgage Release Requests.
SECTION 2.15 CREDIT LINE INCREASE REQUESTS.
Subservicer shall follow the Home Equity Line Procedures for processing
Credit Line Increase Requests and Subservicer shall be entitled to the Credit
Line Increase Fee specified in Exhibit A (the "Credit Line Increase Fee").
SECTION 2.16 PROGRAM FORMS.
Subservicer may use any Program Form it deems appropriate for carrying out
its obligations hereunder.
SECTION 2.17 BORROWER TRANSFERS OF MORTGAGED PROPERTIES.
In any case in which Subservicer gains knowledge that a Mortgaged Property
or any interest therein has been or is about to be conveyed by a Borrower,
Subservicer shall notify Owner promptly if conveyance is in violation of
applicable law.
SECTION 2.18 SUBSERVICER PERSONNEL.
Subservicer's employees performing Servicing Activities shall be employees
of Subservicer for all purposes hereunder and under applicable law, and
Subservicer shall be solely responsible for the hiring, classification,
compensation (including fringe benefits), supervision,
10
safety, training, transfer, promotion and discharge of such employees. In
addition, Subservicer shall pay all workers' compensation premiums, and shall
make all payroll withholdings and deductions required by applicable law in
respect of such employees, and shall be solely responsible for any and all fines
or penalties imposed by reason of any failure to make such payroll withholdings
or deductions, or to make any payment in respect thereof.
SECTION 2.19 COOPERATION OF SUBSERVICER WITH A RECONSTITUTION.
The Subservicer and the Owner agree that with respect to some or all of the
Loans, the Owner may effect a Reconstitution. The Subservicer and the Owner
acknowledge and agree that the Subservicer is not obligated hereunder to act as
servicer in any Reconstitution and the Owner is not obligated hereunder to offer
the Subservicer the opportunity to act as servicer in any Reconstitution.
The Subservicer shall reasonably cooperate with the Owner in connection
with any Reconstitution contemplated by the Owner pursuant to this Section 2.19,
provided, however, that under no circumstances and in no event shall such
cooperation include any act of the Subservicer or any event affecting the
Subservicer which would materially increase the Subservicer's liabilities or
obligations beyond those liabilities and obligations contained in this Agreement
(except as otherwise set forth herein).
In connection with any Reconstitution in which the Owner and the
Subservicer have agreed that the Subservicer shall act as the servicer in the
Reconstitution, the Owner shall deliver any agreement (the "Reconstitution
Agreement") or other document related to the Reconstitution to the Subservicer
at least 10 Banking Days prior to such Reconstitution; the Subservicer's refusal
to cooperate with Owner based on late delivery of such documents shall result in
no liability to the Subservicer. Such Reconstitution Agreement may, in the
Owner's discretion, contain contractual provisions not set forth in this
Agreement, including, but not limited to, (i) customary certificate payment
delays, (ii) servicer advance requirements for the advancing of delinquent
scheduled payments of principal and/or interest through liquidation (unless
deemed non-recoverable), (iii) servicer obligations to pay compensating interest
for interest shortfalls resulting from voluntary Borrower prepayments (to the
extent of the monthly servicing fee payable to the servicer), (iv)
representations and warranties (dated as of the date of such Reconstitution) of
the Subservicer conforming in all material respects to the representations and
warranties in this Agreement, and (v) such provisions with regard to servicing
responsibilities, investor reporting, segregation and deposit of principal and
interest payments, custody of the Loans, and other provisions that conform to
secondary market standards for mortgage-backed securities backed by mortgage
loans similar to the Loans or as may be reasonably required by one or more
Rating Agencies. The Subservicer shall promptly review such Reconstitution
Agreement and/or related documents and, provided that such Reconstitution
Agreement contains servicing provisions substantially similar to those herein or
otherwise acceptable to the Subservicer in its sole discretion, shall execute
such Reconstitution Agreement and/or related documents. The Subservicer's
refusal to execute any Reconstitution Agreement or related documents may be
based on any provision which materially (a) increases the liability of the
Subservicer and/or (b) affects Subservicer's profitability from that
contemplated in this Agreement. The Owner hereby agrees to reimburse the
Subservicer pursuant to Section 3.04 for reasonable expenses incurred by the
Subservicer that relate to reviewing and commenting on the and related documents
in the amount not to exceed (i) $2,500 if Subservicer uses internal counsel or
(ii) $10,000 if Subservicer uses external counsel. Any cooperation from the
Subservicer in connection with any Reconstitution contemplated by this Section
shall include delivery of a legal opinion relating to
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the Subservicer substantially similar to that attached hereto as Exhibit G, the
furnishing of information for use in an offering document, conforming to market
standards for transactions of this type, relating to the Subservicer and its
servicing practices and portfolio substantially similar to that attached hereto
as Exhibit H, with applicable foreclosure, loss and delinquency experience
information and appropriate audit letters, of reputable, certified public
accountants (collectively, the "Subservicer Information"), to the extent such
information is based on loans similar in characteristics to the loans in the
applicable Reconstitution and such letters are ready available to the
Subservicer. The Subservicer shall indemnify the Owner, each Affiliate of the
Owner participating in any such Reconstitution and each Affiliate, and their
respective officers and directors, and hold each of them harmless from and
against any and all losses, claims, expenses, damages or liabilities to which
each of them may become subject, under the Securities Act of 1933 Act, as
amended (the "1933 Act") or otherwise, including, without limitation, with
respect to disputes between the parties, insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement of any material fact contained in any
offering document prepared in connection with any Reconstitution, or the
omission to state in the offering document a material fact necessary in order to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or omission was contained in or
omitted from the Subservicer Information. The Owner shall indemnify the
Subservicer and each Affiliate and hold each of them harmless from and against
any losses, damages, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments, and any other costs, fees and expenses
that each of them may sustain in any way related to any information provided by
the Owner in any offering document prepared in connection with any
Reconstitution.
If requested by the Owner in connection with any Reconstitution, the
Subservicer and the Owner shall execute a letter agreement setting forth the
indemnification obligations set forth in this Section 2.19. In the event that
the Subservicer is not the master servicer, servicer or subservicer with respect
to a Reconstitution, any and all reasonable costs, fees and expenses incurred by
Subservicer in connection with such Reconstitution shall be reimbursed by Owner.
Any execution of a subservicing agreement or pooling and servicing agreement by
the Subservicer shall be conditioned on the Subservicer receiving the
Securitization Servicing Fee, as listed on Exhibit A, or such other servicing
fee acceptable to Subservicer. Notwithstanding any provision to the contrary in
this Agreement, in the event that the Subservicer is the master servicer,
servicer or subservicer with respect to a Reconstitution, the Owner agrees that
in such Reconstitution any servicing performance termination triggers shall be
approved by the Subservicer in its reasonable discretion; provided, that in the
event that the Subservicer does not approve any servicing performance
termination triggers, the Owner shall, with respect to the Reconstitution, have
the right to terminate the Subservicer hereunder (a "Servicing Performance
Trigger Termination") and designate a successor servicer to act as master
servicer, servicer or subservicer. In the event of a Servicing Performance
Trigger Termination, the Subservicer shall be entitled to reimbursement of the
applicable Deboarding Fee and all transfer related expenses pursuant to Section
3.04; provided, however, in no event will Owner be obligated to pay any
Termination Fee in connection with such termination.
All Loans not sold or transferred pursuant to a Reconstitution shall be
subject to this Agreement and shall continue to be serviced in accordance with
the terms of this Agreement and with respect thereto this Agreement shall remain
in full force and effect.
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SECTION 2.20 ANNUAL STATEMENT AS TO COMPLIANCE.
The Subservicer will deliver to the Owner on or before March 31st of each
year, beginning with March 31, 2006, an officer's certificate stating that (i) a
review of the activities of the Subservicer during the preceding calendar year
and of performance under this Agreement has been made under such officer's
supervision, (ii) the Subservicer has fully complied with the provisions of this
Agreement and (iii) to the best of such officer's knowledge, based on such
review, the Subservicer 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. Copies of such statement shall be
provided by the Subservicer to the Owner upon request.
SECTION 2.21 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
SERVICING REPORT.
On or before March 31st of each year beginning March 31, 2006, the
Subservicer 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 Owner to the effect that such firm has examined
certain documents and records relating to the servicing of mortgage loans by the
Subservicer generally that include a sampling of the Loans, 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. Copies of such statement shall be provided
by the Subservicer to the Owner upon request.
ARTICLE III. SERVICING COMPENSATION AND REIMBURSEMENT OF EXPENSES
SECTION 3.01 SERVICING COMPENSATION.
(a) As compensation for the services to be performed hereunder in any
calendar month during the term of this Agreement, Subservicer shall earn an
amount (together with the fees described in the immediately succeeding sentence,
the "Servicing Compensation") equal to the aggregate Set Up Fees, Collection
Fees, Deboarding Fee, and Bankruptcy Fees that Subservicer is entitled to
receive that calendar month plus the total Base Fees for Loans in existence on
the last day of the calendar month. In addition, Subservicer shall be entitled
to retain all Late Fees and ancillary income, but excluding any prepayment
charges, that it collects with respect to the Loans in each month in addition to
all fees set forth on Exhibit A.
(b) For purposes of calculating Subservicer's Servicing Compensation in the
manner set forth above, the month in which Subservicer shall be entitled to
receive Subordination Fees and/or Resolution Fees shall be the month in which
the related Subordination Request and/or Satisfaction Request was received by
Subservicer, and the month in which Subservicer shall be entitled to receive the
Set Up Fee for a Loan shall be the month in which it receives the Loan Data
Report for that Loan. For purposes of Section 3.01(a), a Loan shall be deemed to
be "in existence" beginning on the date Subservicer receives the Loan Data
Report for such Loan and shall no longer be "in existence" on the first day
immediately following the day on which full payment of the Loan is received by
Subservicer following a Satisfaction Request or the day Subservicer is no longer
servicing such Loan pursuant to this Agreement.
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SECTION 3.02 PAYMENT OF SERVICING COMPENSATION.
Subservicer shall forward to Owner, on or before the tenth (10th) day of
each calendar month, a statement (the "Servicing Compensation Statement")
setting forth the Servicing Compensation earned for the immediately preceding
calendar month in accordance with Section 3.01(a) and broken down by fee types
specified on Exhibit A. Owner shall pay to Subservicer the amount of the
Servicing Compensation on the twentieth (20th) day of each month.
SECTION 3.03 EXPENSES.
Subservicer shall be entitled to the reimbursement of the following
expenses ("Expenses"): (i) any out-of-pocket expense Subservicer incurs with the
prior approval of Owner in connection with its servicing and administrative
obligations set forth in this Agreement to the extent such expense is not
ordinary to the servicing function (but not including salaries, rent and other
general operating expenses of Subservicer normally classified as overhead); (ii)
expenses which Owner has expressly agreed to pay or be liable for hereunder; and
(iii) expenses incurred in connection with the performance by Subservicer at the
request of Owner of any activity which is not specifically required to be
performed by Subservicer under this Agreement and is not reasonably ancillary to
any specific requirements of Subservicer under this Agreement. Except as
otherwise expressly provided in this Agreement, each party shall pay its own
expenses incurred in connection with the preparation of and performance under
this Agreement, including, without limitation, its own legal fees and expenses
of preparing and delivering the notices, documents, reports, accountings and any
other information required of it hereunder.
Out-of-pocket collection Expenses include the following: appraisals (pre-
and post-foreclosure), title work, attorney fees (foreclosure, bankruptcy, and
other), legal filing fees, inspection fees (interviews, drive-bys, clean out
inspections after vacated, professional services such as property surveys,
repair inspections, Environmental Protection Agency inspections, etc.), property
maintenance (utilities, lawn care, snow removal, securing costs, repairs,
winterization, removal of debris, clean-up after vacated), condominium expenses
(condo fees, association fees, etc.), insurance (premiums and deductibles),
taxes (property, estate, assessments), photographs, and travel (transportation,
meals, lodging, rental cars).
SECTION 3.04 REIMBURSEMENT OF EXPENSES.
Subservicer shall forward to Owner, on or before the tenth (10th) day of
any calendar month, a statement in substantially the form of Exhibit C hereto
(the "Expense Statement") showing the aggregate amount of Expenses and Security
Protection Expenses incurred by Subservicer during the immediately preceding
calendar month. Owner shall reimburse Subservicer for the Expenses and Security
Protection Expenses set forth in any Expense Statement by the twentieth (20th)
day of the calendar month in which the Expense Statement was forwarded to Owner.
Any Expenses and Security Protection Expenses incurred during the immediately
preceding month for which Subservicer has not yet received a ▇▇▇▇ shall be
submitted in the next month after which Subservicer actually receives the
invoice or billing statement.
ARTICLE IV. FUNDING OF LOANS; REMITTANCES
SECTION 4.01 LOAN FUNDING.
After the completed Loan Data Report is received by Subservicer containing
the information specified in the Home Equity Line Servicing Procedures,
Subservicer shall, in
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accordance with Section 2.04, advance money to fund draws on the Loans and Owner
shall reimburse Subservicer for such advances in accordance with the procedures
described in Section 4.03.
SECTION 4.02 ACCOUNTING.
On or before 2:00 p.m. Eastern time on each Banking Day, Subservicer shall
deliver a report (the "Bank Funding Report") to Owner showing on an aggregate
basis all draws on Loans funded and all Loan payments received on the
immediately preceding Banking Day.
SECTION 4.03 REMITTANCES AND REIMBURSEMENT OF BORROWER ADVANCES.
With respect to advances and principal and interest repayments on each
Loan, Subservicer shall on a daily basis determine all amounts representing
principal and interest payments received on account of the Loans on the
preceding Banking Day as well as the aggregate amount of advances made by
Subservicer and posted to the Loans on that Banking Day. To the extent that the
aggregate principal and interest payments exceed the aggregate advances,
Subservicer shall remit such difference to Owner by wire transfer of immediately
available funds by 2:00 p.m. Eastern time on the 2nd Banking Day immediately
following the day such payments and advances were received and made. To the
extent that the aggregate amount of advances exceeds the aggregate amount of
principal and interest payments, (i) Subservicer shall notify Owner of such
difference in the Bank Funding Report and (ii) Owner shall, by wire transfer,
remit to Subservicer such difference by 2:00 p.m. Eastern time on the 2nd
Banking Day immediately following the day such payments or advances were
received and made.
ARTICLE V. REPORTS
SECTION 5.01 REPORTS TO OWNER.
Subservicer shall provide Owner with such management reports in connection
with the administration of the Loans as are detailed in Exhibit B. The frequency
and timing of delivery of these reports are also described in Exhibit B.
ARTICLE VI. SERVICING DOCUMENTS AND FILES
SECTION 6.01 MAINTENANCE OF SERVICING FILES.
Subservicer shall maintain a Servicing File as to each Loan on film or hard
copy containing the Loan Data Report and all correspondence, records and other
documents received or generated by or on behalf of Subservicer with respect to
that Loan.
SECTION 6.02 SUBMISSION OF LOAN DATA REPORT AND OTHER LOAN DOCUMENTS.
Owner shall provide the Loan Data Report for each Loan to Subservicer no
later than five (5) Banking Days before the first periodic statement is due
under the Borrower Agreement. Information contained in the Loan Data Report
shall be utilized by Subservicer in the performance of the Servicing Activities
and Subservicer shall be entitled to rely on information contained in the Loan
Data Report in performing its duties hereunder. Owner shall notify Subservicer
within three (3) Banking Days, in writing, of any changes in the information
contained in the Loan Data Report, including, without limitation, any change in
a Borrower's
15
Borrowing Limit. Owner agrees to provide to Subservicer, within seven (7)
Banking Days after Subservicer's request, copies of the Borrower Agreement, the
Mortgage, the Line Charge Authorization and/or any other documents Owner has
with respect to a Loan that Subservicer deems reasonably necessary in connection
with its performance of the servicing of that Loan.
ARTICLE VII. INDEMNIFICATION AND ASSIGNMENT
SECTION 7.01 INDEMNIFICATION.
(a) The Subservicer agrees to indemnify the Owner, its successors and
assigns, and any agent of the Owner (each an "Owner Indemnified Person") and
hold each such Owner Indemnified Person harmless from and against any and all
claims, losses, damages, penalties, fines, forfeitures, reasonable legal fees
and related costs, judgments, and any other costs, fees and expenses that such
Owner Indemnified Person may sustain in any way related to the failure of the
Subservicer to perform its duties and service the Loans in compliance with the
terms of this Agreement and for breach of any representation, warranty or
covenant of the Subservicer contained herein. The Subservicer shall immediately
notify the Owner or other Owner Indemnified Person if a claim is made by a third
party with respect to this Agreement or the Loans, assume (with the prior
written consent of the Owner and such other Indemnified Person) the defense of
any such claim and pay all expenses in connection therewith, including
reasonable counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or such other Owner Indemnified Person in
respect of such claim but failure to so notify the Owner and such other Owner
Indemnified Person shall not limit its obligations hereunder. The Subservicer
agrees that it will not enter into any settlement of any such claim without the
consent of the Owner and such other Owner Indemnified Person unless such
settlement includes an unconditional release of the Owner and such other Owner
Indemnified Person from all liability that is the subject matter of such claim.
The Subservicer shall be entitled to reimbursement of any such costs and
expenses from the Owner, upon written notice, unless such claim relates to a
matter for which the Subservicer is required to indemnify the Owner Indemnified
Person.
(b) The Owner shall indemnify the Subservicer, its affiliates, and their
respective officers, directors, employees, agents, successors and assigns (each
a "Subservicer Indemnified Person") and hold each of such Subservicer
Indemnified Persons harmless from and against any and all claims, losses,
damages, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any other costs, fees and expenses that such Subservicer
Indemnified Person may sustain in any way related to the failure of the Owner to
perform its duties in compliance with the terms of this Agreement and for breach
of any representation, warranty or covenant of the Owner contained herein. The
Owner shall immediately notify the Subservicer or other Subservicer Indemnified
Party if a claim is made by a third party with respect to this Agreement or the
Loans, assume (with the prior written consent of the Subservicer and such other
Subservicer Indemnified Person and with counsel reasonably satisfactory to the
Subservicer) the defense of any such claim and pay all reasonable expenses in
connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against
Subservicer or such other Subservicer Indemnified Person in respect of such
claim but failure to so notify the Subservicer and such other Subservicer
Indemnified Person shall not limit its obligations hereunder. The Owner agrees
that it will not enter into any settlement of any such claim without the consent
of the Subservicer and such other Subservicer Indemnified Person unless such
settlement includes an unconditional release of the Subservicer and such other
Subservicer Indemnified Person from all liability that is the subject matter of
such claim.
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(c) In addition to the indemnification set forth in Section 7.01(b) hereof,
the Owner shall indemnify and hold Subservicer and each Subservicer Indemnified
Person harmless from and against any and all claims, losses, damages, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and any
other costs, fees and expenses resulting from or related to:
(i) (a) the Subservicer taking any action, or refraining from taking
any action, with respect to any Loan at or in conformity with the
express written direction of the Owner or this Agreement or (b) the
Subservicer taking and initiating any legal actions with respect to
any Loans on behalf of the Owner, in the name of the Subservicer or an
Affiliate thereof (in each case, unless such action or omission is
taken with a standard of care in contravention of any standard of care
required under the Agreement and such contravention is the proximate
cause of the claim or action);
(ii) any breach by the Owner of the terms of this Agreement, including
any of the Owner's representations, warranties or covenants contained
in this Agreement;
(iii) the failure of the Owner or any trustee or custodian in
possession of original Loan Documents to provide to the Subservicer
the originals of any Loan Documents within two (2) Business Days to
allow the Subservicer sufficient time to process satisfactions and
payoffs;
(iv) the failure of the Owner or any trustee or custodian in
possession of original Loan Documents to provide to the Subservicer
the originals of any Loan Document within four (4) Business Days to
allow the Subservicer sufficient time to process releases, but in no
event shall the Subservicer be liable for any damages incurred, and
Owner specifically agrees to indemnify Subservicer for any such
damages, when Subservicer is in violation of any applicable law or
regulation because any Loan Document(s) allowing Subservicer to
process a release were not delivered to Subservicer withinin two (2)
Business;
(v) any act or omission to act of any servicer, owner or originator of
a Loan or Mortgaged Property (or any other Person) prior to the
Servicing Transfer Date, including, without limitation, any data
integrity issue (and any related costs of correcting such issues);
provided, however, should the Subservicer have actual knowledge of any
data integrity error which is likely to materially affect any Loan,
the Subservicer, in consultation with the Owner and at the Owner's
expense, will take reasonable efforts to correct such error;
(vi) perpetuating the acts or omissions of prior servicers that fail
to comply with Accepted Servicing Practices, including, without
limitation, any debt-collector related liability (including, without
limitation, effects of abusive or deceptive collection acts,
improperly initiated foreclosures and imposition of improper fees or
interest charges) unless (a) the Subservicer has actual knowledge that
perpetuating such act or omission will fail to comply with Accepted
Servicing Practices or result in liability to the Subservicer and in
conscious disregard of such actual knowledge,
17
nonetheless perpetuates such act or omission, (b) the Subservicer
knowingly performs an act or omission and such act or omission as a
singular act, not in combination with any other act or omission of any
prior servicer(s), results in liability to the Subservicer, or (c) the
acts or omissions are based on a mistaken or false conception of the
law that is obvious, gross and significant and the Subservicer, over a
period of time, in more than a single instance, continues in its
course of servicing to perpetuate such acts or omissions;
(vii) a prior servicer's failure to comply with the Transfer
Instructions;
(viii) advances initially assumed as subsequently needed by the
Subservicer that ultimately are not recoverable from the Borrower or
other proceeds; and
(ix) a Loan being classified as "high cost" under the Home Ownership
and Equity Protection Act of 1994; or "high cost", "predatory" or
similar designation under any other applicable state, federal or local
law.
SECTION 7.02 LIMITATION ON LIABILITY OF SUBSERVICER AND OTHERS.
(a) Notwithstanding Section 7.01, neither the Subservicer nor any of the
directors, officers, employees or agents of the Subservicer shall be under any
liability to the Owner for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment,
provided, however, that this provision shall not protect the Subservicer or any
such Person against any breach of warranties or representations made herein, its
own negligent actions, 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 reason of any breach of the terms and conditions of this
Agreement. The Subservicer and any director, officer, employee or agent of the
Subservicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Subservicer shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties to
service the Loans in accordance with this Agreement and which in its opinion may
involve it in any expense or liability, provided, however, that the Subservicer,
with the consent of the Owner, may undertake any such action which it may deem
necessary or desirable in respect to this Agreement and the rights and duties of
the parties hereto. In such event, the Subservicer shall be entitled to
reimbursement from the Owner of the reasonable legal expenses and costs of such
action.
(b) Notwithstanding Section 7.01, the Subservicer shall not be required to
indemnify, or otherwise be liable to, the Owner or those referenced above for
any liability which the Owner is required to indemnify for pursuant to Section
7.01(b) above.
SECTION 7.03 LIMITATION ON ASSIGNMENT AND RESIGNATION BY SUBSERVICER.
The Subservicer shall not (a) assign this Agreement or the servicing
hereunder or delegate its rights hereunder or any portion hereof without the
prior written consent of the Owner, which consent shall not be unreasonably
withheld; provided that the Subservicer may assign this Agreement to an
Affiliate controlled by General Motors Corporation and capable of performing
18
all of the Subservicer's obligations hereunder without the consent of the Owner;
or (b) sell or otherwise dispose of all or substantially all of its property or
assets providing at least 90 days written notice to the Owner.
Notwithstanding the foregoing, the Subservicer may, without the consent of
the Owner, retain third party contractors to perform certain servicing and loan
administration functions, including without limitation, hazard insurance
administration, tax payment and administration, flood certification and
administration, collection services and similar functions; provided, that the
retention of such contractors by Subservicer shall not limit the obligation of
the Subservicer to service the Loans pursuant to the terms and conditions of
this Agreement.
Without in any way limiting the generality of this Section 7.03, in the
event that the Subservicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate, in aggregate, its duties hereunder
without the prior written consent of the Owner (other than to an Affiliate as
permitted by Section 7.03(a)) or sell or otherwise dispose of all or
substantially all of its property or assets without providing 90 days written
notice to the Owner, then the Owner shall have the right to terminate this
Agreement upon notice given as set forth in Article IX hereof, without any
payment of any penalty or damages and without any liability whatsoever to the
Subservicer or any third party.
SECTION 7.04 OPERATION OF INDEMNITIES.
If any Person has made any indemnity payments to any other Person pursuant
to this Article VII and such other Person thereafter collects any of such
amounts from others, such other Person will repay such amounts collected. The
provisions of this Article VIII shall survive any termination of this Agreement,
the liquidation of any Loan, or the transfer or assignment by the Owner to
another Person of any Loan or any interest in any Loan.
SECTION 7.05 ASSIGNMENT BY OWNER.
No transfer of a Loan may be made unless such transfer is in compliance
with the terms hereof. The Owner shall have the right to assign its interest
under this Agreement with respect to some or all of the Loans, and designate any
Person to exercise any rights of the Owner hereunder; provided that (a) Owner
and such Person execute an Assignment and Assumption Agreement substantially in
the form of Exhibit E and such agreement is delivered to the Subservicer; (b)
such Person has a tangible net worth of twenty million ($20,000,000.00) dollars
or such Person is otherwise acceptable to the Subservicer, in its sole and
absolute discretion, (c) there shall not be more than five owners of the Loans
exclusive of the Loans included in a Reconstitution, and (d) the Owner provides
the Subservicer with written notice of the transfer fifteen (15) days prior to
the effective date of such transfer.
Upon such assignment of rights and assumption of obligations, the assignee
or designee shall accede to the rights and obligations hereunder of the Owner
with respect to such Loans and the Owner as assignor shall be released from all
obligations hereunder with respect to such Loans from and after the date of such
assignment and assumption (except that Articles VII, VIII, and IX and Sections
10.01 and 10.05 shall survive such transfer). All references to the Owner in
this Agreement shall be deemed to include its permitted assignee or designee.
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SECTION 7.06 MERGER OR CONSOLIDATION OF THE SUBSERVICER.
Any Person into which the Subservicer may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Subservicer shall be a party, or any Person succeeding to the business of the
Subservicer, shall be the successor of the Subservicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person shall be an institution whose
deposits are insured by FDIC or a company whose business includes the servicing
of mortgage loans and shall have a tangible net worth not less than twenty-five
million ($25,000,000) dollars.
SECTION 7.07 PAYMENTS.
Except as otherwise provided in Section 4.03, Owner and Subservicer shall
each make each payment due hereunder in immediately available funds prior to
12:00 noon, Eastern Standard Time, on the date due, unless the scheduled due
date shall not be a Banking Day, in which case Owner or, as appropriate,
Subservicer, shall make such payment on the next succeeding Banking Day. Any
amount owed by Owner or Subservicer (including, without limitation, any amount
owed under Section 4.03) and not paid when due shall bear interest at the Stated
Rate from the date such payment was due to and including the date of payment.
Such interest shall be payable on demand or if no demand is made then on the
date of payment of the amount on which such interest accrued.
SECTION 7.08 NON-EXCLUSIVE RIGHT TO SERVICE LOANS.
The parties understand and agree that Owner has the right, but not the
obligation, to have Subservicer service pursuant to this Agreement any
particular home equity line of credit it owns and that Owner retains the right
to service, or employ any other Person to service, any such home equity line of
credit, or to sell such servicing rights to any Person, all in the exercise of
its sole discretion. Nothing in this Section 7.08 shall be deemed to affect in
any way the provisions of Article IX of this Agreement pertaining to the
termination by Owner of Subservicer's subservicing of any Loan being subserviced
by it hereunder.
SECTION 7.09 REPRESENTATIONS AND WARRANTIES OF SUBSERVICER.
As of the Closing Date, Subservicer represents and warrants to, and
covenants with, Owner that:
(a) Organization and Good Standing; Licensing. The Subservicer is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation as now being conducted and is licensed,
qualified and in good standing in each state where a Mortgaged Property is
located if the laws of such state require licensing or qualification in order to
conduct business of the type conducted by the Subservicer, and in any event the
Subservicer is in compliance with the laws of any such state to the extent
necessary to ensure the enforceability of the related Loan in accordance with
the terms of this Agreement.
(b) Authorization; Binding Obligations. The Subservicer has the power and
authority to make, execute, deliver and perform this Agreement, and perform all
of the transactions contemplated to be performed by it under this Agreement, and
has taken all necessary action to authorize the execution, delivery and
performance of this Agreement. When executed and delivered, this Agreement will
constitute the legal, valid and binding obligation of the
20
Subservicer enforceable in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency or similar laws affecting the enforcement
of creditors' rights generally and by the availability of equitable remedies.
(c) No Consent Required. The Subservicer is not required to obtain the
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except such as have been obtained or made or
as to which the failure to obtain or make will not materially adversely affect
the ability of the Subservicer to perform all obligations hereunder.
(d) No Violation. The execution, delivery and performance of this Agreement
by the Subservicer will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the Subservicer,
except for violations that will not adversely affect the Subservicer's ability
to perform its obligations under this Agreement or the certificate of
incorporation of the Subservicer, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the Subservicer is a
party or by which the Subservicer may be bound.
(e) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Subservicer.
(f) Ability to Service. The Subservicer has the facilities, procedures, and
experienced personnel necessary for the sound servicing of mortgage loans of the
same type as the Loans. The Subservicer is in good standing to enforce and
service mortgage loans in the jurisdiction wherein the Mortgaged Properties are
located.
(g) Ability to Perform. The Subservicer 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.
(h) Litigation. No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending or to the knowledge of
the Subservicer threatened, against the Subservicer or with respect to this
Agreement, which if adversely determined would have a material adverse effect on
the transactions contemplated by this Agreement.
(i) Neither the execution and delivery of this Agreement, nor the
fulfillment of or compliance with the terms and conditions of this Agreement
will conflict with any of the terms, conditions or provisions of the
Subservicer's charter or by laws or materially conflict with or result in a
material breach of any of the terms, conditions or provisions of any legal
restriction or any agreement or instrument to which the Subservicer 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 Subservicer or its
property is subject.
(j) The Subservicer has complied with all applicable anti-money laundering
laws and regulations, including without limitation the USA Patriot Act of 2001.
SECTION 7.10 REPRESENTATIONS AND WARRANTIES OF OWNER.
As of the Closing Date, Owner represents and warrants to, and covenants with,
Subservicer that:
21
(a) Organization and Good Standing; Licensing. The Owner is a New York
corporation duly organized and validly existing and has the power and authority
to own its assets and to transact the business in which it is currently engaged.
(b) Authorization; Binding Obligations. The Owner has the power and
authority to make, execute, deliver and perform this Agreement, and perform all
of the transactions contemplated to be performed by it under this Agreement, and
has taken all necessary action to authorize the execution, delivery and
performance of this Agreement. When executed and delivered, this Agreement will
constitute the legal, valid and binding obligation of the Owner enforceable in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies.
(c) No Consent Required. The Owner is not required to obtain the consent of
any other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except such as have been obtained or made or
as to which the failure to obtain or make will not materially adversely affect
the ability of the Owner to perform all obligations hereunder.
(d) No Violations. The execution, delivery and performance of this
Agreement by the Owner will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the Owner, except
for violations that will not adversely affect the Owner's ability to perform its
obligations under this Agreement or the certificate of incorporation of the
Owner, or constitute a material breach of any mortgage, indenture, contract or
other agreement to which the Owner is a party or by which the Owner may be
bound.
(e) Ownership. With respect to each Loan, Owner is the owner of all right,
title, and interest in and to the Loan (and the servicing rights appurtenant
thereto). Each Loan is a valid and collectible obligation of the respective
Borrower; and no Loan is subject to the Home Ownership and Equity Protection Act
of 1994 or any Mortgage Loan classified as "high cost", "predatory" (or similar
designation) under any other applicable state, federal or local law.
(f) Accuracy. To the Owner's knowledge, the information provided by Owner
with respect to each Loan is, in the aggregate, true and correct in all material
respects as of the Servicing Transfer Date.
(g) Amount Disbursed. Except as otherwise disclosed to the Subservicer in
the Loan Data Report, all available line amounts available to a Borrower were
disbursed at the time of Loan Closing.
(h) Checks. None of the Owner, originator or any prior servicer has
provided a Borrower with checks with which to access any available credit line
amounts.
(i) Borrower Agreements. All Loans were originated in accordance with a
Borrower Agreement attached to Exhibit F.
(j) Litigation. No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending or to the knowledge of
the Subservicer threatened, against the Subservicer or with respect to this
Agreement, which if adversely
22
determined would have a material adverse effect on the transactions contemplated
by this Agreement.
(k) The Owner has complied with all applicable anti-money laundering laws
and regulations, including without limitation the USA Patriot Act of 2001, where
applicable.
ARTICLE VIII. DEFAULT
SECTION 8.01 DEFAULT BY SUBSERVICER.
The occasion of any one or more of the following circumstances shall
constitute an Event of Default by Subservicer:
(a) the failure of Subservicer to make any payment required to be made
under the terms of this Agreement within two (2) Banking Days following Owner's
delivery of written notice of such failure;
(b) any representation or warranty made by Subservicer herein shall prove
to be incorrect in any material respect;
(c) the material failure of Subservicer to perform any of its obligations
under this Agreement within sixty (60) days following its receipt of a written
notice from Owner specifying the nature of such failure;
(d) proceedings in bankruptcy, or for reorganization of Subservicer, or for
the readjustment of any of its debts, under the Bankruptcy Code, as amended, or
any part thereof, or under any state or federal receivership or other insolvency
laws for the relief of debtors, now or hereafter existing, shall be commenced
against or by Subservicer, and, with respect to any such proceedings commenced
against Subservicer, such proceedings shall not be dismissed or discharged
within sixty (60) days of their commencement;
(e) Subservicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to Subservicer or
of or relating to all or substantially all of the property belonging to
Subservicer;
(f) Subservicer shall admit in writing of its inability to pay its debts
generally as they become due, the file of a petition to take advantage of any
applicable insolvency or reorganization statute, the make of any assignment for
the benefit of its creditors or the voluntary suspension of payment of its
obligations;
(g) the Subservicer attempts, without the consent of the Owner, to assign
this Agreement or the servicing responsibilities hereunder or to delegate its
duties hereunder or any portion thereof except as otherwise permitted herein;
(h) the Subservicer ceases to be qualified to transact business in any
jurisdiction where it is currently so qualified, but only to the extent such
non-qualification materially and adversely affects the Subservicer's ability to
perform its obligations hereunder;
(i) the Subservicer ceases to be (i) licensed to service home equity line
of credit residential mortgage loans in any jurisdiction in which a Mortgaged
Property is located and such
23
licensing is required, and (ii) qualified to transact business in any
jurisdiction where it is currently so qualified, but in each case only to the
extent it materially and adversely affects the Subservicer's ability to perform
its obligations hereunder; or
(j) he Subservicer fails to meet the eligibility criteria set forth in
Section 7.06.
In case one or more of such Events of Default shall occur and be
continuing, Owner may at its option (i) by written notice to Subservicer,
terminate this Agreement, in which event, on the sixtieth (60th) day following
delivery of such notice, or immediately without notice or other action of any
kind in the case of any Event of Default of the type described in clauses (d) ,
(e) and (f) above, this Agreement shall terminate, (ii) enforce this Agreement
in accordance with its terms, and/or (iii) pursue such other rights and remedies
as may be provided by law. It is understood and agreed that (a) the remedies set
forth in this Section 8.01 shall be cumulative and not alternative, and shall be
in addition to any and all other rights and remedies provided by law, and (b)
the provisions of this Section 8.01 shall not be construed to discharge
Subservicer from any liability it may otherwise possess under this Agreement.
From and after receipt by the Subservicer of a notice of termination under this
Section and upon written request from the Owner, the Subservicer shall prepare,
execute and deliver, any and all documents and other instruments, place in
successor subservicer's possession all Servicing Files, and do or accomplish all
other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Loans and related documents, or otherwise, at the
Subservicer's sole expense. The Subservicer agrees to reasonably cooperate with
the Owner and such successor in effecting the termination of the Subservicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Subservicer to Borrower's account or
thereafter received with respect to the Loans.
SECTION 8.02 DEFAULT BY OWNER.
The occasion of any one or more of the following circumstances shall
constitute an Event of Default by Owner:
(a) the failure of Owner to make any payment required to be made under the
terms of this Agreement within two (2) Banking Days following Subservicer's
delivery of written notice of such failure;
(b) any representation or warranty made by Owner herein shall prove to be
incorrect in any material respect; or
(c) the material failure of Owner to perform any of its other obligations
under this Agreement within sixty (60) days following written notice from
Subservicer specifying the nature of such failure.
(d) proceedings in bankruptcy, or for reorganization of Owner, or for the
readjustment of any of its debts, under the Bankruptcy Code, as amended, or any
part thereof, or under any state or federal receivership or other insolvency
laws for the relief of debtors, now or hereafter existing, shall be commenced
against or by Owner, and, with respect to any such proceedings commenced against
Owner, such proceedings shall not be dismissed or discharged within sixty (60)
days of their commencement;
24
(e) Owner shall consent to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to Owner or of or relating to
all or substantially all the property belonging to Owner; or
(f) Owner shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations.
In case one or more of such Events of Default shall occur and be
continuing, Subservicer may at its option (i) by written notice to Owner,
terminate this Agreement, in which event, on the one hundred twentieth (120th)
day following delivery of such notice, this Agreement shall terminate, (ii)
enforce this Agreement in accordance with its terms, and/or (iii) pursue such
other rights and remedies as may be provided by law. It is understood and agreed
that (a) the remedies set forth in this Section 8.02 shall be cumulative and not
alternative, and shall be in addition to any and all other rights and remedies
provided by law, and (b) the provisions of this Section 8.02 shall not be
construed to discharge Owner from any liability it may otherwise possess under
this Agreement.
ARTICLE IX. TERM AND VOLUNTARY TERMINATION
SECTION 9.01 TERM.
The term of this Agreement shall start on the Commencement Date and
continue until the 21st day of January, 2008, exactly three years from the
Commencement Date, (the "Stated Termination Date"), unless terminated earlier
under the provisions of Section 8.01, 8.02 or 9.03. Unless either party gives
the other party written notice of its intent not to extend the term of this
Agreement at least ninety (90) days prior to the Stated Termination Date, this
Agreement will automatically be extended two (2) additional years.
SECTION 9.02 TERMINATION FOR CAUSE.
(a) Owner Terminates Agreement for Cause. If Owner terminates this
Agreement under Section 8.01, Subservicer shall be liable for all expenses
associated with the transfer of the Loans. Subservicer will not receive a
Termination Fee or a Deboarding Fee if this Agreement is terminated by Owner
pursuant to Section 8.01.
(b) Subservicer Terminates Agreement for Cause. If Subservicer terminates
this Agreement under Section 8.02, Owner agrees to pay upon demand the
Termination Fee, the Deboarding Fee and all expenses associated with the
transfer of the Loans.
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SECTION 9.03 VOLUNTARY TERMINATION.
(a) Owner Terminates Agreement Without Cause. If Owner causes there to be a
Termination Without Cause, Owner will pay Subservicer the Termination Fee, the
Deboarding Fee, and all expenses associated with the transfer of the Loans.
(b) Subservicer Terminates Agreement Without Cause. If Subservicer causes
there to be a Termination Without Cause, Subservicer will not receive the
Termination Fee or a Deboarding Fee from Owner and will be liable for all costs
and expenses associated with the transfer of Loans.
SECTION 9.04 TRANSFER OF FILES.
Upon termination of the Subservicer's responsibilities and duties under
this Agreement pursuant to Sections 7.03, 8.01 or 9.03(b), the Owner shall
appoint a successor having the characteristics set forth in Section 7.06 and
which shall succeed to all rights and assume all of the responsibilities, duties
and liabilities of the Subservicer under this Agreement prior to the termination
of the Subservicer's responsibilities, duties and liabilities under this
Agreement. In connection with such appointment and assumption, the Owner may
make such arrangements for the compensation of such successor out of payments on
Loans as the Owner and such successor shall agree. In the event that the
Subservicer's duties, responsibilities and liabilities under this Agreement
should be terminated pursuant to the aforementioned sections, the Subservicer
shall discharge such duties and responsibilities during the period from the date
it acquires knowledge of such termination until the effective date thereof with
the same degree of diligence and prudence which it is obligated to exercise
under this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor; provided, however,
that a successor servicer shall be in place within two hundred and ten (210)
days of the date the Subservicer acquires knowledge of such termination. Except
as provided for in the preceding sentence, the Termination Without Cause by the
Subservicer or removal of the Subservicer pursuant to the aforementioned
sections shall not become effective until a successor shall be appointed
pursuant to this section and shall in no event relieve the Subservicer of the
representations and warranties made pursuant to Section 7.10 and the remedies
available to the Owner under Section 7.01, it being understood and agreed that
the provisions of such Section 7.10 and Section 7.01 shall be applicable to the
Subservicer notwithstanding any such Termination Without Cause by the
Subservicer or termination of the Subservicer, or the termination of this
Agreement. Upon any termination of this Agreement and Subservicer's receipt of
all amounts due Subservicer hereunder, Subservicer shall forward all documents
and other information stored in any format in Subservicer's possession (or in
any of its subcontractor's, agent's or assignee's possession) pertaining to any
Loan to such location as is specified by Owner and the Subservicer shall account
for all funds. As to any Loan with respect to which any payment is thirty (30)
or more days delinquent, all such documents and other information shall be
transmitted to Owner within five (5) days and as to any other Loan, all data
concerning the current status of that Loan shall be transmitted as directed by
Owner within ten (10) days and any actual physical files (if any) with respect
to such Loans shall be transmitted as directed by Owner within thirty (30) days.
All out-of-pocket Expenses incurred in connection with any such transfer shall
be borne by Owner except in the case of termination of this Agreement by Owner
pursuant to Section 8.01 or termination by Subservicer pursuant to Section
9.03(b). The Subservicer shall execute and deliver such instruments and do such
other things as may reasonably be required to more fully and definitely vest and
confirm in the successor all such rights, powers, duties, responsibilities,
obligations and liabilities of the Subservicer.
26
Upon a successor's acceptance of appointment as such, the Subservicer shall
notify the Owner of such appointment.
SECTION 9.05 TRANSFER OF SERVICING.
In the event that Subservicer shall cease, in accordance with the terms of
this Agreement, to service any Loans serviced by it pursuant to this Agreement,
Subservicer agrees that it will take all such action as Owner shall reasonably
designate in order to facilitate the transfer of the servicing with respect to
that Loan, including, without limitation, transferring the Servicing Files in
accordance with Owner's reasonable instructions and making any representations
or warranties reasonably requested by Owner and within the domain of information
available to Subservicer in its capacity as subservicer of the Loans to any
prospective purchaser of servicing rights and/or to Owner with respect to the
status of that Loan and Subservicer's servicing thereof pursuant to this
Agreement. The provisions of this Section 9.05 shall survive any termination of
this Agreement. All out-of-pocket Expenses incurred in connection with such
transfer shall be borne by Owner except in the case of termination of this
Agreement by Owner pursuant to Section 8.01 or termination by Subservicer
pursuant to Section 9.03(b).
ARTICLE X. MISCELLANEOUS
SECTION 10.01 NOTICES.
All notices, requests, demands and other communications which are required
or permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given upon the delivery or mailing thereof, as the case
may be, sent by registered or certified mail, return receipt requested:
(a) If to Owner to:
MortgageIT, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Subservicer:
GMAC Mortgage Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ |
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Executive Vice President of National Loan
Administration
Telecopier No: (▇▇▇) ▇▇▇ ▇▇▇▇
With a Copy to:
GMAC Mortgage Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Manager
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
27
With a Copy to:
GMAC Mortgage Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 10.02 WAIVERS.
The Subservicer or the Owner may, by written notice to the other party,
waive compliance with any of the terms, conditions or covenants required to be
complied with by the other party hereunder; and waive or modify performance of
any of the obligations of the other party hereunder. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any other subsequent breach.
SECTION 10.03 ENTIRE AGREEMENT; AMENDMENT.
This Agreement, including all documents and exhibits incorporated by
reference herein, constitutes the entire agreement between the parties with
respect to servicing of the Loans. This Agreement may be amended and any
provision hereof waived, but, only in writing signed by the party against whom
such enforcement is sought.
SECTION 10.04 EXECUTION; BINDING EFFECT.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Sections 7.03 and 7.05, this
Agreement shall inure to the benefit of and be binding upon the Subservicer and
the Owner and their respective permitted successors and assigns.
SECTION 10.05 CONFIDENTIALITY OF INFORMATION.
The Subservicer and the Owner each agrees that any information and
documents that are furnished for the purposes of performing under this Agreement
or that are produced or are otherwise furnished to or come to the attention of
either party are proprietary and shall be used only for the purposes of this
Agreement. This information includes the terms of this Agreement, technical
specifications and operating manuals, services and information concerning
current, future, or proposed products and services and combinations of products
and services; product and services descriptions; financial information;
information related to mergers or acquisitions; passwords and security
procedures; computer programs, software, and software documentation; customer
and/or prospective client lists, and all other information relating in any way
to the customer and/or prospective client; printouts; records; policies,
practices and procedures; and any or all other information, data or materials
relating to the business, trade secrets and technology of either party, its
customers, clients, employees, business affairs, Affiliates, subsidiaries and
the Affiliates of its parent organization (all of the foregoing collectively
referred to as "Confidential Information"). Neither party shall, without the
prior consent of the other party, advertise or announce that it is providing or
has provided services to the other party, or otherwise use any trade name,
trademark, service ▇▇▇▇ or other information which identifies the other party or
its Affiliates in a party's marketing and publicity activities.
28
Each party shall maintain the Confidential Information of the other in
confidence using the same care and discretion to avoid disclosure of
Confidential Information as it uses to protect its own confidential information
that it does not want disclosed, but in no event less than a reasonable standard
of care. Each party further agrees to (a) restrict disclosure of Confidential
Information of the disclosing party solely to persons who need to know the
Confidential Information to perform under this Agreement, (b) not to disclose
any Confidential Information to any third party or copy Confidential Information
without written approval of the disclosing party, and (c) inform those third
parties and other persons who receive Confidential Information of its
confidential nature and obtain their agreement to abide by the obligations set
forth herein. Each party shall implement all policies and procedures to ensure
compliance with all applicable provisions of the Privacy Requirements.
The obligations imposed under this Agreement shall not apply to
Confidential Information that is (a) made public by the party whose Confidential
Information is disclosed, party, (b) generally available to the public other
than by a breach of this Agreement by the receiving party, its employees or
agents, (c) necessary to be disclosed or used by either party in litigation with
the other party or (d) rightfully received from a third person having the legal
right to disclose the Confidential Information free of any obligation of
confidence, nor shall this Section 10.05 be deemed to prohibit any disclosure by
a party that is necessary or appropriate in such party's work with legal
counsel, accountants, auditors or as required by applicable law or regulation.
In the event that the receiving party, or any of such party's agents or
employees, becomes legally compelled (by deposition, interrogatory, request for
documents, subpoena, civil or criminal investigative demand or similar process)
to disclose any Confidential Information of the disclosing party, such receiving
party shall provide prompt prior notice to the disclosing party so that it may
seek a protective order or other appropriate remedy. In the event that such
protective order or other remedy is not obtained, or that the disclosing party
waives compliance with the provisions of this Section 10.05, the receiving party
will furnish only that portion of the Confidential Information which in the
judgment of its counsel is legally required and will exercise reasonable efforts
to obtain assurances that confidential treatment will be accorded the
Confidential Information.
Each party acknowledges and agrees that any breach or threatened breach of
any of the provisions of this Section 10.05 by the other party will result in
immediate and irreparable harm and that any remedies at law in such event will
be inadequate. The parties agree that such breaches, whether threatened or
actual, will give the disclosing party the right to obtain injunctive relief to
restrain such disclosure or use. This right shall, however, be in addition to
and not in lieu of any other remedies at law or in equity.
Upon termination of the Agreement, all copies of the Confidential
Information will either be destroyed or returned to the disclosing party
immediately upon such party's request. Each party agrees that it will not retain
any copy, summary or extract of the Confidential Information or any related work
papers on any storage medium whatsoever. Notwithstanding anything to the
contrary contained herein, neither party shall in any event have any obligation
hereunder to destroy Loan documents related thereto.
The Subservicer and the Owner each acknowledges that the provisions of the
federal securities laws restrict any person who is in the possession of
material, non-public information regarding any company from purchasing or
selling securities of such company and from communicating such information to
any other person under circumstances in which it is reasonably foreseeable that
such person is likely to purchase or sell such securities. The Subservicer and
the Owner each agrees to abide by such laws as they relate to the other's
securities and Confidential Information.
29
SECTION 10.06 HEADINGS.
Headings of the Articles and Sections in this Agreement are for reference
purposes only and shall not be deemed to have any substantive effect.
SECTION 10.07 APPLICABLE LAW.
This Agreement shall be construed in accordance with the laws of the State
of New York and the obligations, rights and remedies hereunder shall be
determined in accordance with the substantive laws of the State of New York
(without regard to conflicts of laws principles), except to the extent preempted
by federal law.
SECTION 10.08 RELATIONSHIP OF PARTIES.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties. The duties and
responsibilities of the Subservicer shall be rendered by it as an independent
contractor and not as an agent of the Owner. The Subservicer shall have full
control of all of its acts, doings, proceedings, relating to or requisite in
connection with the discharge of its duties and responsibilities under this
Agreement.
SECTION 10.09 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
SECTION 10.10 EXHIBITS.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are integral parts of this Agreement.
SECTION 10.11 WAIVER OF TRIAL BY JURY.
The Subservicer and the Owner each knowingly, voluntarily and intentionally
waives to the fullest extent permitted by applicable law any right it may have
to a trial by jury of any dispute arising under or relating to this Agreement or
the transactions contemplated hereby.
SECTION 10.12 LIMITATION OF DAMAGES.
Notwithstanding anything to the contrary contained herein, the parties
agree that neither party shall be liable to the other for any special,
consequential or punitive damages whatsoever, whether in contract, tort
(including negligence and strict liability), or any other legal or equitable
principle, provided, however, that such limitation shall not be applicable with
respect to third party claims made against a party.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their
duly authorized officers as of the day and year first above written.
GMAC MORTGAGE CORPORATION
SUBSERVICER
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Vice President
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MORTGAGEIT, INC.
OWNER
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
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Title: General Counsel and Secretary
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