______________________________________________________________________________________________________________________
BEAR ▇▇▇▇▇▇▇ ASSET-BACKED SECURITIES I LLC,
as Depositor
NATIONSTAR MORTGAGE LLC,
as Servicer
NEWCASTLE MORTGAGE SECURITIES TRUST 2007-1,
as Issuing Entity
▇▇▇▇▇ FARGO BANK, N.A.
as Master Servicer, Securities Administrator and Custodian
and
THE BANKOF NEW YORK,
as Indenture Trustee
_______________________________
SALE AND SERVICING AGREEMENT
Dated as of July 12, 2007
_______________________________
Mortgage Loans
Newcastle Mortgage Securities Trust 2007-1
______________________________________________________________________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.................................................................................2
Section 1.02. Other Definitional Provisions...............................................................2
Section 1.03. Interest Calculations.......................................................................2
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans................................................................4
Section 2.02. Acceptance by Indenture Trustee.............................................................7
Section 2.03. Repurchase or Substitution of Mortgage Loans by the Originator..............................8
Section 2.04. Representations and Warranties Regarding the Master Servicer...............................11
Section 2.05. Representations, Warranties and Covenants of the Servicer..................................12
Section 2.06. Existence..................................................................................14
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. Servicer to Act as Servicer................................................................15
Section 3.02. Sub-Servicing Agreements Between Servicer and Sub-Servicers................................17
Section 3.03. Successor Sub-Servicers....................................................................18
Section 3.04. Liability of the Servicer..................................................................18
Section 3.05. No Contractual Relationship Between Sub-Servicers, the Indenture Trustee
or the Noteholders.........................................................................18
Section 3.06. Assumption or Termination of Sub-Servicing Agreements by the Indenture
Trustee....................................................................................19
Section 3.07. Collection of Certain Mortgage Loan Payments...............................................19
Section 3.08. Sub-Servicing Accounts.....................................................................20
Section 3.09. Collection of Taxes, Assessments and Similar Items; Servicing Accounts.....................20
Section 3.10. Collection Account and Note Account........................................................21
Section 3.11. Withdrawals from the Collection Account and Note Account...................................23
Section 3.12. Investment of Funds in the Collection Account and the Note Account.........................25
Section 3.13. [Reserved].................................................................................26
Section 3.14. Maintenance of Hazard Insurance and Errors and Omissions and Fidelity
Coverage...................................................................................26
Section 3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements..................................28
Section 3.16. Realization Upon Defaulted Mortgage Loans..................................................29
Section 3.17. Custodian and Indenture Trustee to Cooperate; Release of Mortgage Files....................30
Section 3.18. Servicing Compensation.....................................................................32
Section 3.19. Reports to the Securities Administrator and Others; Collection Account
Statements.................................................................................32
Section 3.20. Statement as to Compliance.................................................................32
Section 3.21. Assessments of Compliance and Attestation Reports..........................................33
Section 3.22. Access to Certain Documentation; Filing of Reports by Indenture Trustee....................36
Section 3.23. Title, Management and Disposition of REO Property..........................................36
Section 3.24. Obligations of the Servicer in Respect of Prepayment Interest Shortfalls...................38
Section 3.25. [Reserved].................................................................................39
Section 3.26. Obligations of the Servicer in Respect of Mortgage Rates and Monthly
Payments...................................................................................39
Section 3.27. [Reserved].................................................................................39
Section 3.28. [Reserved].................................................................................39
Section 3.29. Advance Facility...........................................................................39
Section 3.30. Master Servicer............................................................................41
Section 3.31. Monitoring of Servicer.....................................................................42
Section 3.32. Fidelity Bond..............................................................................43
Section 3.33. Power to Act; Procedures...................................................................43
Section 3.34. Due-on-Sale Clauses; Assumption Agreements.................................................44
Section 3.35. Documents, Records and Funds in Possession of Master Servicer To Be Held
for Trustee................................................................................44
Section 3.36. Possession of Certain Insurance Policies and Documents.....................................45
Section 3.37. Compensation for the Master Servicer.......................................................45
Section 3.38. Obligation of the Master Servicer in Respect of Prepayment Interest
Shortfalls.................................................................................45
Section 3.39. Merger or Consolidation....................................................................45
Section 3.40. Resignation of Master Servicer.............................................................46
Section 3.41. Assignment or Delegation of Duties by the Master Servicer..................................46
ARTICLE IV
REMITTANCE REPORTS; ADVANCES; EXCHANGE ACT REPORTING
Section 4.01. Remittance Reports and Advances............................................................48
Section 4.02. Exchange Act Reporting.....................................................................49
Section 4.03. Swap Account...............................................................................60
Section 4.04. Cap Account................................................................................60
ARTICLE V
THE SERVICER AND THE DEPOSITOR
Section 5.01. Liability of the Servicer, Master Servicer and the Depositor...............................62
Section 5.02. Merger or Consolidation of, or Assumption of the Obligations of, the
Servicer or the Depositor..................................................................62
Section 5.03. Limitation on Liability of the Servicer, Master Servicer and Others........................62
Section 5.04. Servicer Not to Resign.....................................................................63
Section 5.05. Delegation of Duties.......................................................................63
Section 5.06. Indemnification............................................................................64
Section 5.07. Inspection.................................................................................64
ARTICLE VI
DEFAULT
Section 6.01. Servicer Events of Termination.............................................................65
Section 6.02. Master Servicer to Act; Appointment of Successor...........................................66
Section 6.03. Waiver of Defaults.........................................................................68
Section 6.04. Notification to Noteholders................................................................68
Section 6.05. Survivability of Liabilities...............................................................69
Section 6.06. Master Servicer Events of Termination......................................................69
Section 6.07. Appointment of Successor Master Servicer...................................................71
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. Amendment..................................................................................74
Section 7.02. GOVERNING LAW..............................................................................74
Section 7.03. Notices....................................................................................74
Section 7.04. Severability of Provisions.................................................................76
Section 7.05. Third-Party Beneficiaries..................................................................76
Section 7.06. Counterparts...............................................................................77
Section 7.07. Effect of Headings and Table of Contents...................................................77
Section 7.08. Termination................................................................................77
Section 7.09. No Petition................................................................................77
Section 7.10. No Recourse................................................................................77
Section 7.11. Indenture Trustee Rights...................................................................77
Section 7.12. Compliance.................................................................................77
Section 7.13. Intention of the Parties and Interpretation................................................77
ARTICLE VIII
DUTIES OF THE ADMINISTRATOR
Section 8.01. Administrative Duties......................................................................79
Section 8.02. Records....................................................................................80
Section 8.03. Additional Information to be Furnished.....................................................80
Section 8.04. No Recourse to Owner Trustee...............................................................81
EXHIBITS
Exhibit A Form of Assignment Agreement
Exhibit B Mortgage Loan Schedule
Exhibit C Form of Request for Release
Exhibit D-1 Form of Custodian's Initial Certification
Exhibit D-2 Form of Custodian's Final Certification
Exhibit E Form of Lost Note Affidavit
Exhibit F Form of Power of Attorney
Exhibit G-1 Form of Certification to Be Provided by the Servicer with Form 10-K
Exhibit G-2 Form of Certification to Be Provided to the Servicer by the Securities Administrator
Exhibit H Servicing Criteria
Exhibit I Form 10-D, Form 8-K and Form 10-K Reporting Responsibility
Exhibit J Standard File Layout-Scheduled/Scheduled
Exhibit K Standard File Layout- Delinquency Reporting
Exhibit L Calculation of Realized Loss/Form 332
Exhibit M Additional Disclosure Notification
This Sale and Servicing Agreement, dated as of July 12, 2007 (the "Agreement"), among
Bear ▇▇▇▇▇▇▇ Asset Backed Securities I LLC., as depositor (the "Depositor" ), Nationstar Mortgage LLC,
as servicer (the "Servicer"), Newcastle Mortgage Securities Trust 2007-1 (the "Issuing Entity"), ▇▇▇▇▇
Fargo bank, N.A., as master servicer and securities administrator (the "Master Servicer" and "Securities
Administrator") and The Bank of New York, as indenture trustee (the "Indenture Trustee").
W I T N E S S E T H T H A T :
WHEREAS, pursuant to the terms of the Assignment Agreement, the Depositor will acquire
the Mortgage Loans;
WHEREAS, the Depositor will create Newcastle Mortgage Securities Trust 2007-1, a
Delaware statutory trust;
WHEREAS, pursuant to the terms of this Sale and Servicing Agreement, the Depositor
will convey the Mortgage Loans and all of its rights under the Assignment Agreement to the Issuing
Entity in exchange for the Notes and the Certificates (as defined below);
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuing Entity will issue
and transfer to or at the direction of the Depositor, the Certificates;
WHEREAS, pursuant to the terms of the Indenture the Issuing Entity will pledge the
Mortgage Loans and issue the Notes and the Certificates; and
WHEREAS, pursuant to the terms of this Sale and Servicing Agreement, the Servicer will
service the Mortgage Loans set forth on the Mortgage Loan Schedule attached hereto as Exhibit B directly
or through one or more Sub-Servicers;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
For all purposes of this Sale and Servicing Agreement, except as otherwise expressly
provided herein or unless the context otherwise requires, capitalized terms not otherwise defined herein
shall have the meanings assigned to such terms in the Definitions contained in Appendix A to the
Indenture which is incorporated by reference herein. All other capitalized terms used herein shall have
the meanings specified herein.
Section 1.02. Other Definitional Provisions.
(a) All terms defined in this Sale and Servicing Agreement shall have the defined
meanings when used in any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.
(b) As used in this Sale and Servicing Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not defined in this Sale and
Servicing Agreement or in any such certificate or other document, and accounting terms partly defined in
this Sale and Servicing Agreement or in any such certificate or other document, to the extent not
defined, shall have the respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this Sale and Servicing Agreement
or in any such certificate or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this Sale and Servicing Agreement
or in any such certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar import when
used in this Sale and Servicing Agreement shall refer to this Sale and Servicing Agreement as a whole
and not to any particular provision of this Sale and Servicing Agreement; Section and Exhibit references
contained in this Sale and Servicing Agreement are references to Sections and Exhibits in or to this
Sale and Servicing Agreement unless otherwise specified; and the term "including" shall mean "including
without limitation".
(d) The definitions contained in this Sale and Servicing Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine as well as the feminine
and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such agreement, instrument or statute
as from time to time amended, modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
Section 1.03. Interest Calculations.
All calculations of interest hereunder that are made in respect of the Stated
Principal Balance of a Mortgage Loan shall be made on the basis of a 360-day year consisting of twelve
30-day months, notwithstanding the terms of the related Mortgage Note and Mortgage.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof, does hereby sell,
transfer, assign, set over and otherwise convey to the Issuing Entity as of the Closing Date, without
recourse, and for the benefit of the Noteholders, all the right, title and interest of the Depositor,
including any security interest therein for the benefit of the Depositor, in and to (i) each Mortgage
Loan identified on the Mortgage Loan Schedule, including the related Cut-off Date Principal Balance, all
interest accruing thereon on and after the Cut-off Date and all collections in respect of interest and
principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has
been acquired by foreclosure or deed in lieu of foreclosure; (iii) its interest in any insurance
policies in respect of the Mortgage Loans; (iv) the rights of the Depositor under the Purchase Agreement
(as assigned to the Depositor pursuant to the terms of the Assignment Agreement); and (v) all proceeds
of any of the foregoing. Such sale includes all interest and principal due and collected by the
Depositor or the Servicer after the Cut-off Date with respect to the Mortgage Loans. In consideration
of the sale to it of such property, the Issuing Entity shall deliver to or at the order of the Depositor
the Notes and the Certificates.
In connection with such sale, transfer, and assignment, the Depositor shall instruct
the Seller to deliver to and deposit with the Custodian, on behalf of the Indenture Trustee, the
following documents or instruments with respect to each Original Mortgage Loan so sold, transferred, and
assigned, the following documents or instruments (with respect to each Mortgage Loan, a "Mortgage File"):
(i) the original Mortgage Note, endorsed either (A) in blank or (B) in
the following form: "Pay to the order of The Bank of New York, as Indenture Trustee, without
recourse" or with respect to any lost Mortgage Note, an original Lost Note Affidavit stating
that the original mortgage note was lost, misplaced or destroyed, together with a copy of the
related mortgage note; provided, however, that such substitutions of Lost Note Affidavits for
original Mortgage Notes may occur only with respect to Mortgage Loans, the aggregate Cut-off
Date Principal Balance of which is less than or equal to 1.00% of the Pool Balance as of the
Cut-off Date;
(ii) the original Mortgage (noting the presence of the MIN of the Mortgage
Loan and language indicating that the Mortgage Loan is a MOM Loan if the Mortgage Loan is a MOM
Loan), with evidence of recording thereon, and the original recorded power of attorney, if the
Mortgage was executed pursuant to a power of attorney, with evidence of recording thereon or,
if such Mortgage or power of attorney has been submitted for recording but has not been
returned from the applicable public recording office, has been lost or is not otherwise
available, a copy of such Mortgage or power of attorney, as the case may be, certified to be a
true and complete copy of the original submitted for recording;
(iii) unless the Mortgage Loan is registered on the MERS® System, an
original Assignment, in form and substance acceptable for recording. The Mortgage shall be
assigned either (A) in blank or (B) to "The Bank of New York, as Indenture Trustee, without
recourse";
(iv) an original of any intervening assignment of Mortgage showing a
complete chain of assignments (or to MERS if the Mortgage Loan is registered on the MERS®
System and noting the presence of MIN);
(v) the original or a certified copy of lender's title insurance policy;
and
(vi) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any.
The Depositor herewith also delivers to the Custodian, on behalf of the Indenture
Trustee, an executed copy of the Assignment Agreement and the Purchase Agreement.
If any of the documents referred to in Section 2.01(ii), (iii) or (iv) above has as of
the Closing Date been submitted for recording but either (x) has not been returned from the applicable
public recording office or (y) has been lost or such public recording office has retained the original
of such document, the obligations of the Depositor to instruct the Seller to deliver such documents
shall be deemed to be satisfied upon (1) delivery to the Custodian, on behalf of the Indenture Trustee,
no later than the Closing Date, of a copy of each such document certified by the Originator in the case
of (x) above or the applicable public recording office in the case of (y) above to be a true and
complete copy of the original that was submitted for recording and (2) if such copy is certified by the
Originator, delivery to the Custodian, on behalf of the Indenture Trustee, promptly upon receipt thereof
of either the original or a copy of such document certified by the applicable public recording office to
be a true and complete copy of the original. If the original lender's title insurance policy, or a
certified copy thereof, was not delivered pursuant to Section 2.01(v) above, the Depositor shall
instruct the Seller to deliver or cause to be delivered to the Custodian, on behalf of the Indenture
Trustee, the original or a copy of a written commitment or interim binder or preliminary report of title
issued by the title insurance or escrow company, with the original or a certified copy thereof to be
delivered to the Custodian, on behalf of the Indenture Trustee, promptly upon receipt thereof. The
Servicer or the Depositor shall deliver or cause to be delivered to the Custodian, on behalf of the
Indenture Trustee, promptly upon receipt thereof any other documents constituting a part of a Mortgage
File received with respect to any Mortgage Loan, including, but not limited to, any original documents
evidencing an assumption or modification of any Mortgage Loan.
Upon discovery or receipt of notice of any materially defective document in, or that a
document is missing from, a Mortgage File, the Custodian, on behalf of the Indenture Trustee, shall
promptly notify the Seller and the Originator of such defect or missing document and request that the
Originator deliver such missing document or cure such defect within 15 days from the date the Originator
was notified of such missing document or defect, and if the Originator does not deliver such missing
document or cure such defect in all material respects during such period, the Custodian, on behalf of
the Indenture Trustee, shall notify the Seller and the Originator of the Originator's obligation to
repurchase such Mortgage Loan from the Trust on or prior to the Determination Date following the
expiration of such 15 day period (subject to Section 2.03(e)); provided that, in connection with any
such breach that could not reasonably have been cured within such 15 day period, if the Originator has
commenced to cure such breach within such 15 day period, the Originator shall be permitted to proceed
thereafter diligently and expeditiously to cure the same within any additional period provided under the
Assignment Agreement.
Except with respect to any Mortgage Loan for which MERS is identified on the Mortgage,
the Servicer shall cause the Assignments with respect to any Mortgage Loan located in Maryland which
were delivered in blank to be completed and recorded. In the event that any such Assignment is lost or
returned unrecorded because of a defect therein, the Servicer or the Custodian via the Exception Report
shall notify the Originator of its obligations under the Assignment Agreement to promptly have a
substitute Assignment prepared or have such defect cured, as the case may be, and thereafter cause each
such Assignment to be duly recorded.
For administrative convenience and facilitation of servicing and to reduce closing
costs, the Assignments of Mortgage shall not be required to be submitted for recording (except with
respect to any Mortgage Loan located in Maryland) unless the Servicer receives written notice that such
failure to record would result in a withdrawal or a downgrading by any Rating Agency of the rating on
any Class of Notes; provided, however, each Assignment, except with respect to any Mortgage Loan for
which MERS is identified on the Mortgage, shall be submitted for recording by the Originator in the
manner described above, at no expense to the Trust, the Depositor, the Custodian or the Securities
Administrator, upon the earliest to occur of: (i) reasonable direction by the Holders of 25% of the
aggregate Note Balance of the Notes, (ii) the occurrence of a Servicer Event of Termination, (iii) the
occurrence of a bankruptcy, insolvency or foreclosure relating to the Seller and (iv) the occurrence of
a servicing transfer as described in Section 6.02 hereof. In addition to the foregoing, the Servicer
shall cause each Assignment of Mortgage to be recorded in accordance with customary servicing practices
in order to convey, upon foreclosure, the title of any Mortgaged Property to the Trust as set forth in
Section 3.23 hereof. The cost of recording the Assignments shall be paid by the Servicer and the
Servicer shall be reimbursed for such expenses by the Trust.
In connection with the assignment of any Mortgage Loan registered on the MERS® System,
the Servicer further agrees that it will request that the Depositor cause, within 30 Business Days after
the Closing Date, the MERS® System to indicate that such Mortgage Loans have been assigned by the
Depositor to the Indenture Trustee in accordance with this Sale and Servicing Agreement for the benefit
of the Noteholders by including (or deleting, in the case of Mortgage Loans which are repurchased in
accordance with this Agreement) in such computer files (a) the code in the field which identifies the
specific Indenture Trustee and (b) the code in the field "Pool Field" which identifies the series of the
Notes issued in connection with such Mortgage Loans. The Depositor further agrees that it will not, and
the Servicer agrees that it will not, alter the codes referenced in this paragraph with respect to any
Mortgage Loan during the term of this Agreement unless and until such Mortgage Loan is repurchased in
accordance with the terms of this Agreement.
The Servicer shall forward to the Custodian, on behalf of the Indenture Trustee,
original documents evidencing an assumption, modification, consolidation or extension of any Mortgage
Loan entered into in accordance with this Agreement within two weeks of their execution; provided,
however, that the Servicer shall provide the Custodian with a certified true copy of any such document
submitted for recordation within two weeks of its execution, and shall provide the original of any
document submitted for recordation or a copy of such document certified by the appropriate public
recording office to be a true and complete copy of the original within 365 days of its submission for
recordation. In the event that the Servicer cannot provide a copy of such document certified by the
public recording office within such 365 day period, the Servicer shall deliver to the Custodian, within
such 365 day period, an Officers' Certificate of the Servicer which shall (A) identify the recorded
document, (B) state that the recorded document has not been delivered to the Custodian due solely to a
delay caused by the public recording office, (C) state the amount of time generally required by the
applicable recording office to record and return a document submitted for recordation, if known and (D)
specify the date the applicable recorded document is expected to be delivered to the Custodian, and,
upon receipt of a copy of such document certified by the public recording office, the Servicer shall
immediately deliver such document to the Custodian. In the event the appropriate public recording
office will not certify as to the accuracy of such document, the Servicer shall deliver a copy of such
document certified by an officer of the Servicer to be a true and complete copy of the original to the
Custodian.
Section 2.02. Acceptance by ▇▇▇▇▇▇▇▇▇ on behalf of Indenture Trustee.
Subject to the provisions of Section 2.01 and subject to the review described below and
any exceptions noted on the Exception Report, the Custodian, on behalf of the Indenture Trustee,
acknowledges receipt of the documents referred to in Section 2.01 above and declares that it holds and will
hold such documents and the other documents delivered to it constituting a Mortgage File, and that it holds
or will hold all such assets and such other assets included in the definition of "Trust Estate" in trust
for the exclusive use and benefit of all present and future Noteholders.
The Custodian, on behalf of the Indenture Trustee and for the benefit of the
Noteholders, agrees to review each Mortgage File no later than the Closing Date (or, with respect to any
document delivered after the Closing Date, within 45 days of receipt and with respect to any Qualified
Substitute Mortgage Loan, within 45 days after the assignment thereof). The Custodian, on behalf of the
Indenture Trustee and for the benefit of the Noteholders, further agrees to certify to the Depositor,
the Indenture Trustee and the Servicer in substantially the form attached hereto as Exhibit D-1, on the
Closing Date (or, with respect to any document delivered after the Closing Date, within 45 days of
receipt and with respect to any Qualified Substitute Mortgage Loan, within 45 days after the assignment
thereof) that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or any Mortgage Loan specifically identified in the Exception Report annexed thereto
as not being covered by such certification), (i) all documents required to be delivered to it pursuant
Section 2.01 (other than Section 2.01(vi)) of this Agreement and if actually delivered to it, the
documents required to be delivered to it pursuant to Section 2.01(vi) of this Agreement are in its
possession, (ii) such documents have been reviewed by it and appear regular on their face and relate to
such Mortgage Loan and (iii) based on its examination of the foregoing documents, the information set
forth in the Mortgage Loan Schedule that corresponds to items (i), (iii), (x), (xi), (xii), (xviii) and
(xxv), (but only as to Gross Margin and Maximum Mortgage Rate) of the Mortgage Loan Schedule accurately
reflects information set forth in the Mortgage File. It is herein acknowledged that, in conducting such
review, the Custodian is under no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are recordable or genuine, legally
enforceable, valid or binding or appropriate for the represented purpose or that they have actually been
recorded or that they are other than what they purport to be on their face.
No later than the first anniversary date of this Agreement, or the following Business
Day if such first anniversary date is not a Business Day, the Custodian shall deliver to the Depositor,
the Indenture Trustee and the Servicer a final certification in the form annexed hereto as Exhibit D-2,
with any applicable exceptions noted on the Exception Report attached thereto.
If in the process of reviewing the Mortgage Files and making or preparing, as the case
may be, the certifications referred to above, the Custodian finds any document or documents constituting a
part of a Mortgage File to be missing or defective in any material respect, at the conclusion of its review
the Custodian shall so notify the Indenture Trustee, the Originator, the Depositor, the Sponsor and the
Seller, such notification to be in the form of the exception report attached to its certification following
a review of the Mortgage Files (an "Exception Report"). In addition, upon the discovery by the Depositor,
the Master Servicer or the Servicer (or upon receipt by a Responsible Officer of the Indenture Trustee of
written notification of such breach) of a breach of any of the representations and warranties made by the
Originator in the Assignment Agreement in respect of any Mortgage Loan which materially adversely affects
such Mortgage Loan or the interests of the related Noteholders in such Mortgage Loan, the party discovering
such breach shall give prompt written notice to the other parties to this Agreement.
The Depositor and the Issuing Entity intend that the assignment and transfer herein
contemplated constitute a sale of the Mortgage Loans, the related Mortgage Notes and the related
documents, conveying good title thereto free and clear of any liens and encumbrances, from the Depositor
to the Issuing Entity for the benefit of the Noteholders and that such property not be part of the
Depositor's estate or property of the Depositor in the event of any insolvency by the Depositor. In the
event that such conveyance is deemed to be, or to be made as security for, a loan, the parties intend
that the Depositor shall be deemed to have granted and the Depositor does hereby grant to the Issuing
Entity a first priority perfected security interest in all of the Depositor's right, title and interest
in and to the Mortgage Loans, the related Mortgage Notes and the related documents, and that this
Agreement shall constitute a security agreement under applicable law.
Section 2.03. Repurchase or Substitution of Mortgage Loans by the Originator.
(a) Upon discovery or receipt of written notice of any materially defective document in,
or that a document is missing from, a Mortgage File or of the breach by the Originator of any
representation, warranty or covenant under the Purchase Agreement in respect of any Mortgage Loan which
materially adversely affects the value of such Mortgage Loan or the interest therein of the Noteholders,
the Custodian, on behalf of the Indenture Trustee, shall promptly notify the Originator and the Seller of
such defect, missing document (via the Exception Report with respect to a defect, or missing document) and
the party discovering the breach shall give prompt written notice of the breach to the other parties to
this Agreement and the Originator and the Securities Administrator shall request that the Originator
deliver such missing document or cure such defect or that the Originator cure such breach within 30 days
from the date the Originator was notified of such missing document, defect or breach, and if the Originator
does not deliver such missing document or cure such defect or if the Originator does not cure such breach
in all material respects during such period, the Securities Administrator, on behalf of the Indenture
Trustee shall notify the Sponsor and the Originator of the Originator's obligation to repurchase such
Mortgage Loan from the Trust on or prior to the Determination Date following the expiration of such 30 day
period (subject to Section 2.03(e)); provided that, in connection with any such breach that could not
reasonably have been cured within such 30 day period, if the Originator has commenced to cure such breach
within such 30 day period, the Originator shall be permitted to proceed thereafter diligently and
expeditiously to cure the same within any additional period provided under the Assignment Agreement.
Notwithstanding the foregoing, to the extent the price required to be paid by the Originator for a
repurchased Mortgage Loan is less than the Purchase Price, the Seller, as required pursuant to the terms of
the Assignment Agreement, shall pay the difference between that amount and the Purchase Price.
The Purchase Price for the repurchased Mortgage Loan shall be remitted to the Servicer
for deposit in the Collection Account, and the Custodian, on behalf of the Indenture Trustee and upon
receipt of written certification (in the form of a Request for Release hereto as Exhibit C) from the
Servicer of such deposit, shall release to the Originator the related Mortgage File and the Indenture
Trustee shall execute and deliver such instruments of transfer or assignment, in each case without
recourse, representation or warranty, as the Originator shall furnish to it and as shall be necessary to
vest in the Originator any Mortgage Loan released pursuant hereto and the Indenture Trustee and the
Custodian shall have no further responsibility with regard to such Mortgage File (it being understood
that neither the Indenture Trustee nor the Custodian shall have any responsibility for determining the
sufficiency of such assignment for its intended purpose). In lieu of repurchasing any such Mortgage Loan
as provided above, the Originator may cause such Mortgage Loan to be removed from the Trust (in which
case it shall become a Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage
Loans in the manner and subject to the limitations set forth in Section 2.03(d); provided, however, the
Originator may not substitute for any Mortgage Loan which breaches a representation or warranty
regarding abusive or predatory lending laws. It is understood and agreed that the obligation of the
Originator to cure or to repurchase (or to substitute for) any Mortgage Loan as to which a document is
missing, a material defect in a constituent document exists or as to which such a breach has occurred
and is continuing shall constitute the sole remedy (other than any indemnification obligation of the
Originator pursuant to the Purchase Agreement) against the Originator respecting such omission, defect
or breach available to the Indenture Trustee on behalf of the Noteholders.
In the event that the Originator fails to comply with any of the terms of the Purchase
Agreement, the Indenture Trustee, upon notice thereof from the Securities Administrator or the Master
Servicer and on behalf of the Noteholders, shall enforce the obligations of the Originator to the extent
such failure has a materially adverse effect on the value of such Mortgage Loan or the interest therein
of the Noteholders.
(b) Within 90 days of the earlier of discovery by the Servicer or receipt of
notice by the Servicer of the breach of any representation, warranty or covenant of the Servicer set
forth in Section 2.05 which materially and adversely affects the interests of the Noteholders in any
Mortgage Loan, the Servicer shall cure such breach in all material respects. Within 90 days of the
earlier of discovery by the Master Servicer or receipt of notice by the Master Servicer of the breach of
any representation, warranty or covenant of the Servicer set forth in Section 2.04 which materially and
adversely affects the interests of the Noteholders in any Mortgage Loan, the Master Servicer shall cure
such breach in all material respects.
(c) As to any Deleted Mortgage Loan for which the Originator substitutes a Qualified
Substitute Mortgage Loan or Loans, such substitution shall be effected by the Originator delivering to the
Custodian on behalf of the Indenture Trustee, for such Qualified Substitute Mortgage Loan or Loans, the
Mortgage Note, the Mortgage and the Assignment to the Indenture Trustee, and such other documents and
agreements, with all necessary endorsements thereon, as are required by Section 2.01, together with an
Officers' Certificate providing that each such Qualified Substitute Mortgage Loan satisfies the definition
thereof and specifying the Substitution Adjustment (as described below), if any, in connection with such
substitution. The Custodian, on behalf of the Indenture Trustee, shall acknowledge receipt for such
Qualified Substitute Mortgage Loan or Loans and, within 45 days thereafter, shall review such documents as
specified in Section 2.02 and deliver to the Depositor, the Indenture Trustee, the Seller and the Servicer,
with respect to such Qualified Substitute Mortgage Loan or Loans, a certification substantially in the form
attached hereto as Exhibit D-1, with any applicable exceptions noted thereon. Within one year of the date
of substitution, the Custodian, on behalf of the Indenture Trustee, shall deliver to the Depositor, the
Indenture Trustee, the Seller and the Servicer a certification substantially in the form of Exhibit D-2
hereto with respect to such Qualified Substitute Mortgage Loan or Loans, with any applicable exceptions
noted thereon. Monthly Payments due with respect to Qualified Substitute Mortgage Loans in the month of
substitution are not part of the Trust and will be retained by the Originator. For the month of
substitution, payments to Noteholders will reflect the collections and recoveries in respect of such
Deleted Mortgage Loan in the Due Period preceding the month of substitution and the Originator shall
thereafter be entitled to retain all amounts subsequently received in respect of such Deleted Mortgage
Loan. The Servicer shall give or cause to be given written notice to the Securities Administrator, who
shall forward such notice to the Noteholders, that such substitution has taken place, shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage Loan or Loans and shall deliver a copy
of such amended Mortgage Loan Schedule to the Indenture Trustee, the Securities Administrator, and the
Custodian. Upon such substitution by the Originator such Qualified Substitute Mortgage Loan or Loans shall
constitute part of the Mortgage Pool and shall be subject in all respects to the terms of this Agreement
and the Assignment Agreement, including all applicable representations and warranties thereof included in
the Assignment Agreement as of the date of substitution.
(d) For any month in which the Originator substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer will determine the amount
(the "Substitution Adjustment"), if any, by which the aggregate Purchase Price of all such Deleted
Mortgage Loans exceeds the aggregate, as to each such Qualified Substitute Mortgage Loan, of the Stated
Principal Balance thereof as of the date of substitution, together with one month's interest on such
Stated Principal Balance at the applicable Mortgage Rate. On the date of such substitution, the
Originator will deliver or cause to be delivered to the Servicer for deposit in the Collection Account
an amount equal to the Substitution Adjustment, if any, and Custodian, on behalf of the Indenture
Trustee, upon receipt of the related Qualified Substitute Mortgage Loan or Loans and certification by
the Servicer of such deposit, shall release (or shall cause the Custodian to release) to the Originator
the related Mortgage File or Files and the Indenture Trustee shall execute and deliver such instruments
of transfer or assignment, in each case without recourse, representation or warranty, as the Originator
shall deliver to it and as shall be necessary to vest therein any Deleted Mortgage Loan released
pursuant hereto.
Section 2.04. Representations and Warranties Regarding the Master Servicer.
The Master Servicer represents and warrants to the Issuing Entity, the Depositor, the
Seller, the Sponsor and the Indenture Trustee for the benefit of the Noteholders, as follows:
(i) The Master Servicer is a national banking association duly organized,
validly existing and in good standing under the laws of the United States of America and has
the corporate power to own its assets and to transact the business in which it is currently
engaged. The Master Servicer is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the character of the business transacted by it
or properties owned or leased by it requires such qualification and in which the failure to so
qualify would have a material adverse effect on the business, properties, assets, or condition
(financial or other) of the Master Servicer or the validity or enforceability of this Agreement;
(ii) The Master Servicer has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated under this
Agreement, and has taken all necessary corporate action to authorize the execution, delivery
and performance of this Agreement. When executed and delivered, this Agreement will constitute
the legal, valid and binding obligation of the Master Servicer enforceable in accordance with
its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and by the availability
of equitable remedies;
(iii) The Master Servicer is not required to obtain the consent of any
other Person or any consent, license, approval or authorization from, or registration or
declaration with, any governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this Agreement, except for such
consent, license, approval or authorization, or registration or declaration, as shall have been
obtained or filed, as the case may be;
(iv) The execution and delivery of this Agreement and the performance of
the transactions contemplated hereby by the Master Servicer will not violate any provision of
any existing law or regulation or any order or decree of any court applicable to the Master
Servicer or any provision of the charter or bylaws of the Master Servicer, or constitute a
material breach of any mortgage, indenture, contract or other agreement to which the Master
Servicer is a party or by which the Master Servicer may be bound; and
(v) No litigation or administrative proceeding of or before any court,
tribunal or governmental body is currently pending (other than litigation with respect to which
pleadings or documents have been filed with a court, but not served on the Master Servicer), or
to the knowledge of the Master Servicer threatened, against the Master Servicer or any of its
properties or with respect to this Agreement or the Notes or the Certificates which, to the
knowledge of the Master Servicer, has a reasonable likelihood of resulting in a material
adverse effect on the transactions contemplated by this Agreement.
The foregoing representations and warranties shall survive any termination of the Master
Servicer hereunder.
Section 2.05. Representations, Warranties and Covenants of the Servicer.
The Servicer hereby represents, warrants and covenants to the Issuing Entity and for
the benefit of the Indenture Trustee, as pledgee of the Mortgage Loans and the Noteholders, the Master
Servicer, the Securities Administrator and to the Depositor, that as of the Closing Date or as of such
date specifically provided herein:
(i) The Servicer is duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its formation and has all licenses necessary to
carry on its business as now being conducted and is licensed, qualified and in good standing in
the states where the Mortgaged Property is located (or is otherwise exempt under applicable law
from such qualification) if the laws of such state require licensing or qualification in order
to conduct business of the type conducted by the Servicer or to ensure the enforceability or
validity of each Mortgage Loan; the Servicer has the power and authority to execute and deliver
this Agreement and to perform in accordance herewith; the execution, delivery and performance
of this Agreement (including all instruments of transfer to be delivered pursuant to this
Agreement) and all documents and instruments contemplated hereby which are executed and
delivered by the Servicer and the consummation of the transactions contemplated hereby have
been duly and validly authorized; this Agreement and all documents and instruments contemplated
hereby which are executed and delivered by the Servicer, assuming due authorization, execution
and delivery by the other parties hereto, evidences the valid, binding and enforceable
obligation of the Servicer, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights generally; and
all requisite corporate action has been taken by the Servicer to make this Agreement and all
documents and instruments contemplated hereby which are executed and delivered by the Servicer
valid and binding upon the Servicer in accordance with its terms;
(ii) The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Servicer and will not result in the material
breach of any term or provision of the certificate of formation or limited liability company
agreement of the Servicer or result in the breach of any term or provision of, or conflict with
or constitute a default under or result in the acceleration of any obligation under, any
agreement, indenture or loan or credit agreement or other instrument to which the Servicer or
its property is subject, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Servicer or its property is subject;
(iii) The execution and delivery of this Agreement by the Servicer and the
performance and compliance with its obligations and covenants hereunder do not require the
consent or approval of any governmental authority or, if such consent or approval is required,
it has been obtained;
(iv) [Reserved];
(v) The Servicer 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;
(vi) There is no action, suit, proceeding or investigation pending or, to
its knowledge, threatened against the Servicer that, either individually or in the aggregate,
(A) may result in any change in the business, operations, financial condition, properties or
assets of the Servicer that might prohibit or materially and adversely affect the performance
by such Servicer of its obligations under, or the validity or enforceability of, this
Agreement, or (B) may result in any material impairment of the right or ability of the Servicer
to carry on its business substantially as now conducted, or (C) would draw into question the
validity or enforceability of this Agreement or of any action taken or to be taken in
connection with the obligations of the Servicer contemplated herein, or (D) would otherwise be
likely to impair materially the ability of the Servicer to perform under the terms of this
Agreement;
(vii) Neither this Agreement nor any information, certificate of an
officer, statement furnished in writing or any report delivered to the Securities Administrator
or Indenture Trustee in connection with the transactions contemplated hereby contains any
untrue statement of a material fact;
(viii) The Servicer will not waive any Prepayment Charge unless it is waived
in accordance with the standard set forth in Section 3.01; and
(ix) The Servicer has accurately and fully reported, and will continue to
accurately and fully report on a monthly basis, its borrower credit files for the Mortgage
Loans to each of the three national credit repositories in a timely manner.
The foregoing representations and warranties shall survive any termination of the
Servicer hereunder.
It is understood and agreed that the representations, warranties and covenants set
forth in this Section 2.05 shall survive delivery of the Mortgage Files to the Indenture Trustee and
shall inure to the benefit of the Indenture Trustee, the Depositor, the Master Servicer, the Securities
Administrator, the Noteholders and the Holders of the Certificates. Upon discovery by any of the
Depositor, the Servicer, the Master Servicer or the Indenture Trustee of a breach of any of the
foregoing representations, warranties and covenants which materially and adversely affects the value of
any Mortgage Loan, Prepayment Charge or the interests therein of the Noteholders, the party discovering
such breach shall give prompt written notice (but in no event later than two Business Days following
such discovery) to the Servicer and the Indenture Trustee. Notwithstanding the foregoing, within 90 days
of the earlier of discovery by the Servicer or receipt of notice by the Servicer of the breach of the
representation or covenant of the Servicer set forth in Section 2.05(viii) above which materially and
adversely affects the interests of the Holders of the Owner Trust Certificates in any Prepayment Charge,
the Servicer must pay the amount of such waived Prepayment Charge, for the benefit of the Holders of the
Owner Trust Certificates, by depositing such amount into the Collection Account. The foregoing shall
not, however, limit any remedies available to the Noteholders, the Holders of the Certificates, the
Depositor or the Indenture Trustee on behalf of the Noteholders and, pursuant to the Assignment
Agreement respecting a breach of the representations, warranties and covenants of the Originator.
Section 2.06. Existence.
The Issuing Entity will keep in full effect its existence, rights and franchises as a
statutory trust under the laws of the State of Delaware (unless it becomes, or any successor Issuing
Entity hereunder is or becomes, organized under the laws of any other state or of the United States of
America, in which case the Issuing Entity will keep in full effect its existence, rights and franchises
under the laws of such other jurisdiction) and will obtain and preserve its qualification to do business
in each jurisdiction in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement.
ARTICLE III
ADMINISTRATION ANDSERVICING OF MORTGAGE LOANS
Section 3.01. Servicer to Act as Servicer.
The Servicer shall service and administer the Mortgage Loans on behalf of the Trust
and in the best interests of and for the benefit of the Noteholders (as determined by the Servicer in
its reasonable judgment) in accordance with the terms of this Agreement and the Mortgage Loans and, to
the extent consistent with such terms, in the same manner in which it services and administers similar
mortgage loans for its own portfolio, giving due consideration to customary and usual standards of
practice of mortgage lenders and loan servicers administering similar mortgage loans but without regard
to:
(i) any relationship that the Servicer, any Sub-Servicer or any Affiliate
of the Servicer or any Sub-Servicer may have with the related Mortgagor;
(ii) the ownership or non-ownership of any Note by the Servicer or any
Affiliate of the Servicer;
(iii) the Servicer's obligation to make Advances or Servicing Advances; or
(iv) the Servicer's or any Sub-Servicer's right to receive compensation
for its services hereunder or with respect to any particular transaction.
To the extent consistent with the foregoing, the Servicer (a) shall seek to maximize
the timely and complete recovery of principal and interest on the Mortgage Notes and (b) shall waive (or
permit a Sub-Servicer to waive) a Prepayment Charge only under the following circumstances: (i) such
waiver is standard and customary in servicing similar Mortgage Loans, (ii) such waiver relates to a
default or a reasonably foreseeable default and would, in the reasonable judgment of the Servicer,
maximize recovery of total proceeds taking into account the value of such Prepayment Charge and the
related Mortgage Loan, (iii) the collection of such Prepayment Charge would be in violation of
applicable laws or (iv) such waiver is in accordance with the Servicer's internal policies. If a
Prepayment Charge is waived as permitted by meeting the standard described in clause (iii) above, then
the Servicer shall make commercially reasonable efforts to enforce the Indenture Trustee's rights under
the Purchase Agreement including the obligation of the Originator to pay the amount of such waived
Prepayment Charge to the Servicer for deposit in the Collection Account for the benefit of the Holders
of the Owner Trust Certificates. If the Servicer makes a good faith determination, as evidenced by an
Officer's Certificate delivered by the Servicer to the Indenture Trustee and the Master Servicer, that
the Servicer's efforts are not reasonably expected to be successful in enforcing such rights, it shall
notify the Indenture Trustee and the Master Servicer of such failure, and the Master Servicer shall
notify the Originator of its obligation under the Purchase Agreement to pay to the Servicer the amount
of such waived Prepayment Charge. If a Prepayment Charge is waived as permitted by meeting the standard
described in clause (iv) above, then the Servicer shall deposit the amount of such waived Prepayment
Charge in the Collection Account for the benefit of the Holders of the Owner Trust Certificates.
Subject only to the above-described servicing standards and the terms of this
Agreement and of the Mortgage Loans, the Servicer shall have full power and authority, acting alone or
through Sub-Servicers as provided in Section 3.02, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or desirable. Without
limiting the generality of the foregoing, the Servicer, in the name of the Trust, is hereby authorized
and empowered by the Indenture Trustee when the Servicer believes it appropriate in its best judgment in
accordance with the Servicing Standard, to execute and deliver, on behalf of the Trust, the Issuing
Entity, the Noteholders and the Indenture Trustee, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other comparable instruments, with
respect to the Mortgage Loans and the Mortgaged Properties and to institute foreclosure proceedings or
obtain a deed-in-lieu of foreclosure so as to convert the ownership of such properties, and to hold or
cause to be held title to such properties, on behalf of the Indenture Trustee and the Noteholders. The
Servicer shall service and administer the Mortgage Loans in accordance with applicable state and federal
law and shall provide to the Mortgagors any reports required to be provided to them thereby. The
Servicer shall also comply in the performance of this Agreement with all reasonable rules and
requirements of each insurer under any standard hazard insurance policy. Subject to Section 3.17,
within five (5) days of the Closing Date, the Indenture Trustee shall execute and furnish to the
Servicer and any Sub-Servicer any limited powers of attorney in the form of Exhibit F hereto and other
documents necessary or appropriate to enable the Servicer or any Sub-Servicer to carry out their
servicing and administrative duties hereunder; provided, such limited powers of attorney or other
documents shall be prepared by the Servicer and submitted to the Indenture Trustee for execution. The
Indenture Trustee shall not be liable for the actions by the Servicer or any Sub-Servicers under such
powers of attorney and shall be indemnified by the Servicer (from its own funds without any right of
reimbursement from the Collection Account), for any costs, liabilities or expenses incurred by the
Indenture Trustee in connection with the use or misuse of such powers of attorney.
The Servicer further is hereby authorized and empowered, on behalf of the Noteholders
and the Indenture Trustee, in its own name or in the name of the Sub-Servicer, when the Servicer or the
Sub-Servicer, as the case may be, believes it is appropriate in its best judgment to register any
Mortgage Loan on the MERS® System, or cause the removal from the registration of any Mortgage Loan on
the MERS® System, to execute and deliver, on behalf of the Indenture Trustee and the Noteholders or any
of them, any and all instruments of assignment and other comparable instruments with respect to such
assignment or re-recording of a Mortgage in the name of MERS, solely as nominee for the Indenture
Trustee and its successors and assigns. Any reasonable expenses incurred in connection with the actions
described in the preceding sentence or as a result of MERS discontinuing or becoming unable to continue
operations in connection with the MERS® System, shall be reimbursable to the Servicer by withdrawal from
the Collection Account pursuant to Section 3.11.
Subject to Section 3.09 hereof, in accordance with the standards of the preceding
paragraph, the Servicer, on escrowed accounts, shall advance or cause to be advanced funds as necessary
for the purpose of effecting the payment of taxes and assessments on the Mortgaged Properties, which
advances shall be Servicing Advances reimbursable in the first instance from related collections from
the Mortgagors pursuant to Section 3.09, and further as provided in Section 3.11. Any cost incurred by
the Servicer or by Sub-Servicers in effecting the payment of taxes and assessments on a Mortgaged
Property shall not, for the purpose of calculating payments to Noteholders, be added to the unpaid
Stated Principal Balance of the related Mortgage Loan, notwithstanding that the terms of such Mortgage
Loan so permit.
Notwithstanding anything in this Agreement to the contrary, the Servicer may not make
any future advances with respect to a Mortgage Loan (except as provided in Section 4.01) and the
Servicer shall not permit any modification with respect to any Mortgage Loan that would change the
Mortgage Rate, reduce or increase the Stated Principal Balance (except for reductions resulting from
actual payments of principal) or change the final maturity date on such Mortgage Loan, (unless, in any
such case, as provided in Section 3.07, the Mortgagor is in default with respect to the Mortgage Loan or
such default is, in the judgment of the Servicer, reasonably foreseeable). In addition and
notwithstanding anything in this Agreement to the contrary, neither the Servicer nor the Indenture
Trustee shall, under any circumstance, be permitted to sell any Mortgage Loan (other than with respect
to the exercise of an optional redemption pursuant to Section 8.07 of the Indenture or the repurchase of
a Mortgage Loan pursuant to Section 2.03).
Section 3.02. Sub-Servicing Agreements Between Servicer and Sub-Servicers.
(a) The Servicer may enter into Sub-Servicing Agreements with Sub-Servicers, which
may be Affiliates of the Servicer, for the servicing and administration of the Mortgage Loans; provided,
however, such sub-servicing arrangement and the terms of the related Sub-Servicing Agreement must
provide for the servicing of the Mortgage Loans in a manner consistent with the servicing arrangement
contemplated hereunder and in accordance with the Servicing Standard. The Master Servicer is hereby
authorized to acknowledge, at the request of the Servicer, any Sub-Servicing Agreement. No such
acknowledgment shall be deemed to imply that the Master Servicer has consented to any such Sub-Servicing
Agreement, has passed upon whether such Sub-Servicing Agreement meets the requirements applicable to
Sub-Servicing Agreements set forth in this Agreement or has passed upon whether such Sub-Servicing
Agreement is otherwise permitted under this Agreement.
Each Sub-Servicer shall be (i) authorized to transact business in the state or states
where the related Mortgaged Properties it is to service are situated, if and to the extent required by
applicable law to enable the Sub-Servicer to perform its obligations hereunder and under the
Sub-Servicing Agreement and (ii) a Freddie Mac or ▇▇▇▇▇▇ ▇▇▇ approved mortgage servicer. Each
Sub-Servicing Agreement must impose on the Sub-Servicer requirements conforming to the provisions set
forth in Section 3.08 and provide for servicing of the Mortgage Loans consistent with the terms of this
Agreement. The Servicer will examine each Sub-Servicing Agreement and will be familiar with the terms
thereof. The terms of any Sub-Servicing Agreement will not be inconsistent with any of the provisions of
this Agreement. Any variation in any Sub-Servicing Agreements from the provisions set forth in Section
3.08 relating to insurance or priority requirements of Sub-Servicing Accounts, or credits and charges to
the Sub-Servicing Accounts or the timing and amount of remittances by the Sub-Servicers to the Servicer,
are conclusively deemed to be inconsistent with this Agreement and therefore prohibited. The Servicer
shall deliver to the Master Servicer copies of all Sub-Servicing Agreements, and any amendments or
modifications thereof, promptly upon the Servicer's execution and delivery of such instruments.
(b) As part of its servicing activities hereunder, the Servicer, for the benefit
of the Indenture Trustee and the Noteholders, shall enforce the obligations of each Sub-Servicer under
the related Sub-Servicing Agreement, including, without limitation, any obligation to make advances in
respect of delinquent payments as required by a Sub-Servicing Agreement. Such enforcement, including,
without limitation, the legal prosecution of claims, termination of Sub-Servicing Agreements, and the
pursuit of other appropriate remedies, shall be in such form and carried out to such an extent and at
such time as the Servicer, in its good faith business judgment, would require were it the owner of the
related Mortgage Loans. The Servicer shall pay the costs of such enforcement at its own expense, and
shall be reimbursed therefor only (i) from a general recovery resulting from such enforcement, to the
extent, if any, that such recovery exceeds all amounts due in respect of the related Mortgage Loans, or
(ii) from a specific recovery of costs, expenses or attorneys' fees against the party against whom such
enforcement is directed.
Section 3.03. Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing Agreement and the rights
and obligations of any Sub-Servicer pursuant to any Sub-Servicing Agreement in accordance with the terms
and conditions of such Sub-Servicing Agreement. In the event of termination of any Sub-Servicer, all
servicing obligations of such Sub-Servicer shall be assumed simultaneously by the Servicer without any
act or deed on the part of such Sub-Servicer or the Servicer, and the Servicer either shall service
directly the related Mortgage Loans or shall enter into a Sub-Servicing Agreement with a successor
Sub-Servicer which qualifies under Section 3.02.
Any Sub-Servicing Agreement shall include the provision that such agreement may be
immediately terminated by the Servicer or the Successor Servicer without fee, in accordance with the
terms of this Agreement.
Section 3.04. Liability of the Servicer.
Notwithstanding any Sub-Servicing Agreement or the provisions of this Agreement
relating to agreements or arrangements between the Servicer and a Sub-Servicer or reference to actions
taken through a Sub-Servicer or otherwise, the Servicer shall remain obligated and primarily liable to
the Indenture Trustee and the Noteholders for the servicing and administering of the Mortgage Loans in
accordance with the provisions of Section 3.01 without diminution of such obligation or liability by
virtue of such Sub-Servicing Agreements or arrangements or by virtue of indemnification from the
Sub-Servicer and to the same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Mortgage Loans. The Servicer shall be entitled to enter into any
agreement with a Sub-Servicer for indemnification of the Servicer by such Sub-Servicer and nothing
contained in this Agreement shall be deemed to limit or modify such indemnification.
Section 3.05. No Contractual Relationship Between Sub-Servicers, the Indenture
Trustee or the Noteholders.
Any Sub-Servicing Agreement that may be entered into and any transactions or services
relating to the Mortgage Loans involving a Sub-Servicer in its capacity as such shall be deemed to be
between the Sub-Servicer and the Servicer alone, and the Indenture Trustee,the Master Servicer, the
Securities Administrator or Noteholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Sub-Servicer except as set forth in
Section 3.06. The Servicer shall be solely liable for all fees owed by it to any Sub-Servicer,
irrespective of whether the Servicer's compensation pursuant to this Agreement is sufficient to pay such
fees.
Section 3.06. Assumption or Termination of Sub-Servicing Agreements by the
Successor Servicer.
In the event the Servicer shall for any reason no longer be the servicer (including by
reason of the occurrence of a Servicer Event of Termination), the Successor Servicer shall thereupon
assume all of the rights and obligations of the Servicer under each Sub-Servicing Agreement that the
Servicer may have entered into, unless the Successor Servicer elects to terminate any Sub-Servicing
Agreement in accordance with its terms as provided in Section 3.03. Upon such assumption, the Successor
Servicer shall be deemed, subject to Section 3.03, to have assumed all of the departing Servicer's
interest therein and to have replaced the departing Servicer as a party to each Sub-Servicing Agreement
to the same extent as if each Sub-Servicing Agreement had been assigned to the assuming party, except
that (i) the departing Servicer shall not thereby be relieved of any liability or obligations under any
Sub-Servicing Agreement that arose before it ceased to be the Servicer and (ii) the Successor Servicer
shall not be deemed to have assumed any liability or obligation of the Servicer that arose before it
ceased to be the Servicer.
The Servicer at its expense shall, upon request of the Successor Servicer, deliver to
the assuming party all documents and records relating to each Sub-Servicing Agreement and the Mortgage
Loans then being serviced and an accounting of amounts collected and held by or on behalf of it, and
otherwise use its best efforts to effect the orderly and efficient transfer of the Sub-Servicing
Agreements to the assuming party. All Servicing Transfer Costs shall be paid by the predecessor Servicer
upon presentation of reasonable documentation of such costs, and if such predecessor Servicer defaults
in its obligation to pay such costs, such costs shall be paid by Successor Servicer (in which case the
Successor Servicer shall be entitled to reimbursement therefor from the assets of the Trust).
Section 3.07. Collection of Certain Mortgage Loan Payments.
The Servicer shall make reasonable efforts, in accordance with the Servicing Standard,
to collect all payments called for under the terms and provisions of the Mortgage Loans and the
provisions of any applicable insurance policies provided to the Servicer. Consistent with the
foregoing, the Servicer may in its discretion (i) waive any late payment charge or, if applicable, any
penalty interest, or any provisions of any Mortgage Loan requiring the related Mortgagor to submit to
mandatory arbitration with respect to disputes arising thereunder or (ii) extend the due dates for the
Monthly Payments due on a Mortgage Note for a period of not greater than 180 days; provided, however,
that any extension pursuant to clause (ii) above shall not affect the amortization schedule of any
Mortgage Loan for purposes of any computation hereunder, except as provided below. In the event of any
such arrangement pursuant to clause (ii) above, the Servicer shall make timely Advances on such Mortgage
Loan during such extension pursuant to Section 4.01 and in accordance with the amortization schedule of
such Mortgage Loan without modification thereof by reason of such arrangement. Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in the judgment of the Servicer, such
default is reasonably foreseeable, the Servicer, consistent with the standards set forth in Section
3.01, may also waive, modify or vary any term of such Mortgage Loan (including modifications that would
change the Mortgage Rate, forgive the payment of principal or interest or extend the final maturity date
of such Mortgage Loan), accept payment from the related Mortgagor of an amount less than the Stated
Principal Balance in final satisfaction of such Mortgage Loan, or consent to the postponement of strict
compliance with any such term or otherwise grant indulgence to any Mortgagor (any and all such waivers,
modifications, variances, forgiveness of principal or interest, postponements, or indulgences
collectively referred to herein as "forbearance"). The Servicer's analysis supporting any forbearance
and the conclusion that any forbearance meets the standards of Section 3.01 shall be reflected in
writing in the Mortgage File.
Section 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage Loan pursuant to a Sub-
Servicing Agreement, the Sub-Servicer will be required to establish and maintain one or more accounts
(collectively, the "Sub-Servicing Account"). The Sub-Servicing Account shall be an Eligible Account and
shall comply with all requirements of this Agreement relating to the Collection Account. The
Sub-Servicer shall deposit in the clearing account in which it customarily deposits payments and
collections on mortgage loans in connection with its mortgage loan servicing activities on a daily
basis, and in no event more than one Business Day after the Sub-Servicer's receipt thereof, all proceeds
of Mortgage Loans received by the Sub-Servicer less its servicing compensation to the extent permitted
by the Sub-Servicing Agreement, and shall thereafter deposit such amounts in the Sub-Servicing Account,
in no event more than two Business Days after the receipt of such amounts. The Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or remit such proceeds to the Servicer for
deposit in the Collection Account not later than two Business Days after the deposit of such amounts in
the Sub-Servicing Account. For purposes of this Agreement, the Servicer shall be deemed to have received
payments on the Mortgage Loans when the Sub-Servicer receives such payments.
Section 3.09. Collection of Taxes, Assessments and Similar Items; Servicing
Accounts.
To the extent required by the related Mortgage Note, the Servicer shall establish and
maintain, or cause to be established and maintained, one or more accounts (the "Escrow Accounts"), into
which all Escrow Payments shall be deposited and retained. Escrow Accounts shall be Eligible Accounts.
The Servicer shall deposit in the clearing account in which it customarily deposits payments and
collections on mortgage loans in connection with its mortgage loan servicing activities, all Escrow
Payments collected on account of the Mortgage Loans and shall deposit in the Escrow Accounts, in no
event more than two Business Days after the receipt of such Escrow Payments, all Escrow Payments
collected on account of the Mortgage Loans for the purpose of effecting the payment of any such items as
required under the terms of this Agreement. Withdrawals of amounts from an Escrow Account may be made
only to (i) effect payment of taxes, assessments, hazard insurance premiums, and comparable items in a
manner and at a time that assures that the lien priority of the Mortgage is not jeopardized (or, with
respect to the payment of taxes, in a manner and at a time that avoids the loss of the Mortgaged
Property due to a tax sale or the foreclosure as a result of a tax lien); (ii) reimburse the Servicer
(or a Sub-Servicer to the extent provided in the related Sub-Servicing Agreement) out of related
collections for any Servicing Advances made pursuant to Section 3.01 (with respect to taxes and
assessments) and Section 3.14 (with respect to hazard insurance); (iii) refund to Mortgagors any sums as
may be determined to be overages; (iv) pay interest, if required and as described below, to Mortgagors
on balances in the Escrow Account; or (v) clear and terminate the Escrow Account at the termination of
the Servicer's obligations and responsibilities in respect of the Mortgage Loans under this Agreement in
accordance with Section 8.07 of the Indenture. In the event the Servicer shall deposit in a Escrow
Account any amount not required to be deposited therein, it may at any time withdraw such amount from
such Escrow Account, any provision herein to the contrary notwithstanding. The Servicer will be
responsible for the administration of the Escrow Accounts and will be obligated to make Servicing
Advances to such accounts when and as necessary to avoid the lapse of insurance coverage on the
Mortgaged Property, or which the Servicer knows, or in the exercise of the required standard of care of
the Servicer hereunder should know, is necessary to avoid the loss of the Mortgaged Property due to a
tax sale or the foreclosure as a result of a tax lien. If any such payment has not been made and the
Servicer receives notice of a tax lien with respect to the Mortgage being imposed, the Servicer will,
within 10 Business Days of receipt of such notice, advance or cause to be advanced funds necessary to
discharge such lien on the Mortgaged Property. As part of its servicing duties, the Servicer or any
Sub-Servicers shall pay to the Mortgagors interest on funds in the Escrow Accounts, to the extent
required by law and, to the extent that interest earned on funds in the Escrow Accounts is insufficient,
to pay such interest from its or their own funds, without any reimbursement therefor. The Servicer may
pay to itself any excess interest on funds in the Escrow Accounts, to the extent such action is in
conformity with the Servicing Standard, is permitted by law and such amounts are not required to be paid
to Mortgagors or used for any of the other purposes set forth above.
Section 3.10. Collection Account and Note Account.
(a) On behalf of the Trust, the Servicer shall establish and maintain, or cause to
be established and maintained, one or more accounts (such account or accounts, the "Collection
Account"), held in trust for the benefit of the Trust, the Indenture Trustee and the Noteholders. On
behalf of the Trust, the Servicer shall deposit or cause to be deposited in the Collection Account, in
no event more than two Business Days after the Servicer's receipt thereof, as and when received or as
otherwise required hereunder, the following payments and collections received or made by it subsequent
to the Cut-off Date (other than in respect of principal or interest on the Mortgage Loans due on or
before the Cut-off Date) or payments (other than Principal Prepayments) received by it on or prior to
the Cut-off Date but allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including Principal Prepayments
(but not Prepayment Charges), on the Mortgage Loans;
(ii) all payments on account of interest (net of the Servicing Fee) on
each Mortgage Loan;
(iii) all Insurance Proceeds, Liquidation Proceeds, Subsequent Recoveries
and condemnation proceeds (other than proceeds collected in respect of any particular REO
Property and amounts paid in connection with the redemption of the Notes pursuant to Section
8.07 of the Indenture) and Subsequent Recoveries;
(iv) any amounts required to be deposited pursuant to Section 3.12 in
connection with any losses realized on Permitted Investments with respect to funds held in the
Collection Account;
(v) any amounts required to be deposited by the Servicer pursuant to the
second paragraph of Section 3.14(a) in respect of any blanket policy deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or purchased in
accordance with Section 2.03 or Section 8.07 of the Indenture;
(vii) all amounts required to be deposited in connection with Substitution
Adjustments pursuant to Section 2.03; and
(viii) all Prepayment Charges collected by the Servicer in connection with
the Principal Prepayment of any of the Mortgage Loans.
The foregoing requirements for deposit in the Collection Account shall be exclusive,
it being understood and agreed that, without limiting the generality of the foregoing, payments in the
nature of Servicing Fees, late payment charges, Prepayment Interest Excess, assumption fees,
insufficient funds charges and ancillary income (other than Prepayment Charges) need not be deposited by
the Servicer in the Collection Account and may be retained by the Servicer as additional compensation.
In the event the Servicer shall deposit in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from the Collection Account, any provision
herein to the contrary notwithstanding.
(b) On behalf of the Trust, the Servicer shall deliver to the Securities
Administrator in immediately available funds for deposit in the Note Account on or before 2:00 p.m. New
York time on the Servicer Remittance Date, that portion of the Available Funds (calculated without
regard to the references in the definition thereof to amounts that may be withdrawn from the Note
Account) for the related Payment Date then on deposit in the Collection Account, the amount of all
Prepayment Charges collected during the applicable Prepayment Period by the Servicer in connection with
the Principal Prepayment of any of the Mortgage Loans then on deposit in the Collection Account, the
amount of any funds reimbursable to an Advancing Person pursuant to Section 3.29 (unless such amounts
are to be remitted in another manner as specified in the documentation establishing the related Advance
Facility).
(c) Funds in the Collection Account may be invested in Permitted Investments in
accordance with the provisions set forth in Section 3.12. The Servicer shall give notice to the
Securities Administrator of the location of the Collection Account maintained by it when established and
prior to any change thereof. The Securities Administrator shall give notice to the Servicer, the Master
Servicer and the Sponsor of the location of the Note Account when established and prior to any change
thereof.
(d) Funds held in the Collection Account at any time may be delivered by the
Servicer to the Securities Administrator for deposit in an account (which may be the Note Account and
must satisfy the standards for the Note Account as set forth in the definition thereof) and for all
purposes of this Agreement shall be deemed to be a part of the Collection Account; provided, however,
that the Securities Administrator shall have the sole authority to withdraw any funds held pursuant to
this subsection (d).
The Securities Administrator shall establish and maintain an Eligible Account (the
"Note Account") in which the Securities Administrator shall deposit, on the same day as it is received
from the Servicer, each remittance received by the Securities Administrator with respect to the Mortgage
Loans. In the event the Servicer shall deliver to the Securities Administrator for deposit in the Note
Account any amount not required to be deposited therein, it may at any time request that the Securities
Administrator withdraw such amount from the Note Account and remit to it any such amount, any provision
herein to the contrary notwithstanding. In addition, the Servicer, with respect to items (i) through
(iv) below, shall deliver to the Securities Administrator from time to time for deposit, and the
Securities Administrator, with respect to items (i) through (iv) below, shall so deposit, in the Note
Account:
(i) any Advances, as required pursuant to Section 4.01;
(ii) any amounts required to be deposited pursuant to Section 3.23(d) or
(f) in connection with any REO Property;
(iii) any Compensating Interest to be deposited pursuant to Section 3.24 in
connection with any Prepayment Interest Shortfall; and
(iv) any amounts required to be paid to the Securities Administrator
pursuant to the Agreement, including, but not limited to Section 3.06 and Section 6.02.
Section 3.11. Withdrawals from the Collection Account and Note Account.
(a) The Servicer shall, from time to time, make withdrawals from the Collection
Account for any of the following purposes or as described in Section 4.01:
(i) to remit to the Securities Administrator for deposit in the Note
Account the amounts required to be so remitted pursuant to Section 3.10(b) or permitted to be
so remitted pursuant to the first sentence of Section 3.10(d);
(ii) subject to Section 3.16(d), to reimburse the Servicer for (a) any
unreimbursed Advances to the extent of amounts received which represent Late Collections (net
of the related Servicing Fees), Liquidation Proceeds, Insurance Proceeds and Subsequent
Recoveries on Mortgage Loans or REO Properties with respect to which such Advances were made in
accordance with the provisions of Section 4.01; or (b) without limiting any right of withdrawal
set forth in clause (vi) below, any unreimbursed Advances that, upon a Final Recovery
Determination with respect to such Mortgage Loan, are Nonrecoverable Advances, but only to the
extent that Late Collections (net of the related Servicing Fees), Liquidation Proceeds and
Insurance Proceeds received with respect to such Mortgage Loan are insufficient to reimburse
the Servicer for such unreimbursed Advances;
(iii) subject to Section 3.16(d), to pay the Servicer or any Sub-Servicer
(a) any unpaid Servicing Fees, (b) any unreimbursed Servicing Advances with respect to each
Mortgage Loan, but only to the extent of any Late Collections, Liquidation Proceeds and
Insurance Proceeds received with respect to such Mortgage Loan or REO Property, and (c) without
limiting any right of withdrawal set forth in clause (vi) below, any Servicing Advances made
with respect to a Mortgage Loan that, upon a Final Recovery Determination with respect to such
Mortgage Loan are Nonrecoverable Advances, but only to the extent that Late Collections,
Liquidation Proceeds and Insurance Proceeds received with respect to such Mortgage Loan are
insufficient to reimburse the Servicer or any Sub-Servicer for Servicing Advances;
(iv) to pay to the Servicer as additional servicing compensation (in
addition to the Servicing Fee) on the Servicer Remittance Date any interest or investment
income earned on funds deposited in the Collection Account;
(v) to pay itself or the Originator with respect to each Mortgage Loan
that has previously been purchased or replaced pursuant to Section 2.03 all amounts received
thereon subsequent to the date of purchase or substitution, as the case may be;
(vi) to reimburse the Servicer for any Advance or Servicing Advance
previously made which the Servicer has determined to be a Nonrecoverable Advance in accordance
with the provisions of Section 4.01;
(vii) to pay, or to reimburse the Servicer for Servicing Advances in
respect of, expenses incurred in connection with any Mortgage Loan pursuant to Section 3.16(b);
(viii) to reimburse the Servicer for expenses incurred by or reimbursable to
the Servicer pursuant to Section 5.03;
(ix) to pay itself any Prepayment Interest Excess; and
(x) to clear and terminate the Collection Account.
The foregoing requirements for withdrawal from the Collection Account shall be
exclusive. In the event the Servicer shall deposit in the Collection Account any amount not required to
be deposited therein, it may at any time withdraw such amount from the Collection Account, any provision
herein to the contrary notwithstanding.
The Servicer shall keep and maintain separate accounting, on a Mortgage Loan by
Mortgage Loan basis, for the purpose of justifying any withdrawal from the Collection Account, to the
extent held by or on behalf of it, pursuant to subclauses (ii), (iii), (iv), (v), (vi) and (vii) above.
The Servicer shall provide written notification to the Securities Administrator, on or prior to the next
succeeding Servicer Remittance Date, upon making any withdrawals from the Collection Account pursuant to
subclause (vi) above; provided that an Officers' Certificate in the form described under Section 4.01(d)
shall suffice for such written notification to the Securities Administrator in respect hereof.
(b) The Securities Administrator shall, from time to time, make withdrawals from
the Note Account, for any of the following purposes, without priority:
(i) to make payments in accordance with Section 3.05 of the Indenture;
(ii) to pay and reimburse itself and the Owner Trustee amounts to which it
or the Owner Trustee is entitled pursuant to Section 6.07 of the Indenture;
(iii) to clear and terminate the Note Account pursuant to Section 8.07 of
the Indenture;
(iv) to pay any amounts required to be paid to the Securities
Administrator, Master Servicer, Custodian or the Indenture Trustee pursuant to this Agreement,
including but not limited to funds required to be paid pursuant to Section 2.01, Section 3.06
and Section 6.02 and Section 3.05 and Section 6.07 of the Indenture;
(v) to pay to an Advancing Person reimbursements for Advances and/or
Servicing Advances pursuant to Section 3.29; and
(vi) to pay to the Sponsor on each Payment Date any interest or investment
income earned on funds deposited in the Note Account.
Section 3.12. Investment of Funds in the Collection Account and the Note Account.
(a) The Servicer may direct any depository institution maintaining the Collection
Account and any REO Account to invest the funds on deposit in such accounts and the Sponsor may direct
any depository institution maintaining the Note Account to invest the funds on deposit in such accounts
(each such account, for the purposes of this Section 3.12, an "Investment Account"). All investments
pursuant to this Section 3.12 shall be in one or more Permitted Investments bearing interest or sold at
a discount, and maturing, unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such account pursuant to this
Agreement, if a Person other than the Securities Administrator is the obligor thereon or if such
investment is managed or advised by a Person other than the Securities Administrator or an Affiliate of
the Securities Administrator, and (ii) no later than the date on which such funds are required to be
withdrawn from such account pursuant to this Agreement, if the Securities Administrator is the obligor
thereon or if such investment is managed or advised by the Securities Administrator or any Affiliate or
if the Securities Administrator or any Affiliate of the Securities Administrator is the Custodian,
sub-custodian or administrator. All such Permitted Investments shall be held to maturity, unless
payable on demand. Any investment of funds in an Investment Account shall be made in the name of the
Indenture Trustee (in its capacity as such), or in the name of a nominee of the Indenture Trustee. The
Securities Administrator shall be entitled to sole possession (except with respect to investment
direction of funds held in the Collection Account, Note Account and any REO Account, and any income and
gain realized thereon) over each such investment, and any certificate or other instrument evidencing any
such investment shall be delivered directly to the Securities Administrator or its agent, together with
any document of transfer necessary to transfer title to such investment to the Indenture Trustee or its
nominee. In the event amounts on deposit in an Investment Account are at any time invested in a
Permitted Investment payable on demand, the Securities Administrator shall:
(x) consistent with any notice required to be given thereunder, demand that
payment thereon be made on the last day such Permitted Investment may otherwise mature
hereunder in an amount equal to the lesser of (1) all amounts then payable thereunder and (2)
the amount required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly upon determination by a
Responsible Officer of the Securities Administrator that such Permitted Investment would not
constitute a Permitted Investment in respect of funds thereafter on deposit in the Investment
Account.
(b) All income and gain realized from the investment of funds deposited in the
Collection Account and any REO Account held by or on behalf of the Servicer shall be for the benefit of
the Servicer and shall be subject to its withdrawal in accordance with Section 3.11 or Section 3.23, as
applicable. The Servicer shall deposit in the Collection Account or any REO Account, as applicable, the
amount of any loss of principal incurred in respect of any such Permitted Investment made with funds in
such Account immediately upon realization of such loss.
(c) All income and gain realized from the investment of funds deposited in the
Note Account held by or on behalf of the Sponsor shall be for the benefit of the Sponsor and shall be
subject to its withdrawal in accordance with Section 3.11. The Sponsor shall deposit in the Note Account
the amount of any loss of principal incurred in respect of any such Permitted Investment made with funds
in such Account immediately upon realization of such loss.
(d) Except as otherwise expressly provided in this Agreement, if any default
occurs in the making of a payment due under any Permitted Investment, or if a default occurs in any
other performance required under any Permitted Investment, the Indenture Trustee may and, upon the
request of the Holders of the 50% of the aggregate Note Balance of the Notes, shall take such action as
may be appropriate to enforce such payment or performance, including the institution and prosecution of
appropriate proceedings.
Section 3.13. [Reserved].
Section 3.14. Maintenance of Hazard Insurance and Errors and Omissions and Fidelity
Coverage.
(a) The Servicer shall cause to be maintained for each Mortgage Loan hazard
insurance with extended coverage on the Mortgaged Property in an amount which is at least equal to the
lesser of (i) the current Principal Balance of such Mortgage Loan and (ii) the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such property on a replacement
cost basis, in each case in an amount not less than such amount as is necessary to avoid the application
of any coinsurance clause contained in the related hazard insurance policy. The Servicer shall also
cause to be maintained hazard insurance with extended coverage on each REO Property in an amount which
is at least equal to the lesser of (i) the maximum insurable value of the improvements which are a part
of such property and (ii) the outstanding Principal Balance of the related Mortgage Loan at the time it
became an REO Property. The Servicer will comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under any such hazard policies. Any amounts to be
collected by the Servicer under any such policies (other than amounts to be applied to the restoration
or repair of the property subject to the related Mortgage or amounts to be released to the Mortgagor in
accordance with the procedures that the Servicer would follow in servicing loans held for its own
account, subject to the terms and conditions of the related Mortgage and Mortgage Note) shall be
deposited in the Collection Account, subject to withdrawal pursuant to Section 3.11, if received in
respect of a Mortgage Loan, or in the REO Account, subject to withdrawal pursuant to Section 3.23, if
received in respect of an REO Property. Any cost incurred by the Servicer in maintaining any such
insurance shall not, for the purpose of calculating payments to Noteholders, be added to the unpaid
Principal Balance of the related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so
permit. It is understood and agreed that no earthquake or other additional insurance is to be required
of any Mortgagor other than pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. If the Mortgaged Property or REO Property is at
any time in an area identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards and flood insurance has been made available, the Servicer will cause to be
maintained a flood insurance policy in respect thereof. Such flood insurance shall be in an amount equal
to the lesser of (i) the unpaid Principal Balance of the related Mortgage Loan and (ii) the maximum
amount of such insurance available for the related Mortgaged Property under the national flood insurance
program (assuming that the area in which such Mortgaged Property is located is participating in such
program).
In the event that the Servicer shall obtain and maintain a blanket policy insuring
against hazard losses on all of the Mortgage Loans, it shall conclusively be deemed to have satisfied
its obligations as set forth in the first two sentences of this Section 3.14, it being understood and
agreed that such policy may contain a deductible clause on terms substantially equivalent to those
commercially available and maintained by competent servicers, in which case the Servicer shall, in the
event that there shall not have been maintained on the related Mortgaged Property or REO Property a
policy complying with the first two sentences of this Section 3.14, and there shall have been one or
more losses which would have been covered by such policy, deposit to the Collection Account from its own
funds the amount not otherwise payable under the blanket policy because of such deductible clause. In
connection with its activities as servicer of the Mortgage Loans, the Servicer agrees to prepare and
present, on behalf of itself, the Indenture Trustee and Noteholders, claims under any such blanket
policy in a timely fashion in accordance with the terms of such policy.
(b) The Servicer shall keep in force during the term of this Agreement a policy or
policies of insurance covering errors and omissions for failure in the performance of the Servicer's
obligations under this Agreement, which policy or policies shall be in such form and amount that would
meet the requirements of ▇▇▇▇▇▇ ▇▇▇ or Freddie Mac if it were the purchaser of the Mortgage Loans,
unless the Servicer has obtained a waiver of such requirements from ▇▇▇▇▇▇ ▇▇▇ or Freddie Mac. The
Servicer shall also maintain a fidelity bond in the form and amount that would meet the requirements of
▇▇▇▇▇▇ ▇▇▇ or Freddie Mac, unless the Servicer has obtained a waiver of such requirements from ▇▇▇▇▇▇
▇▇▇ or Freddie Mac. The Servicer shall be deemed to have complied with this provision if an Affiliate of
the Servicer has such errors and omissions and fidelity bond coverage and, by the terms of such
insurance policy or fidelity bond, the coverage afforded thereunder extends to the Servicer. Any such
errors and omissions policy and fidelity bond shall by its terms not be cancelable without thirty days'
prior written notice to the Master Servicer and the Indenture Trustee. The Servicer shall also cause
each Sub-Servicer to maintain a policy of insurance covering errors and omissions and a fidelity bond
which would meet such requirements.
Section 3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements.
The Servicer will, to the extent it has knowledge of any conveyance or prospective
conveyance of any Mortgaged Property by any Mortgagor (whether by absolute conveyance or by contract of
sale, and whether or not the Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan under the "due-on-sale"
clause, if any, applicable thereto; provided, however, that the Servicer shall not be required to take
such action if in its sole business judgment the Servicer believes it is not in the best interests of
the Trust and shall not exercise any such rights if prohibited by law from doing so. If the Servicer
reasonably believes it is unable under applicable law to enforce such "due-on-sale" clause, or if any of
the other conditions set forth in the proviso to the preceding sentence apply, the Servicer will enter
into an assumption and modification agreement from or with the person to whom such property has been
conveyed or is proposed to be conveyed, pursuant to which such person becomes liable under the Mortgage
Note and, to the extent permitted by applicable state law, the Mortgagor remains liable thereon. The
Servicer is also authorized, to the extent permitted under the related Mortgage Note, to enter into a
substitution of liability agreement with such person, pursuant to which the original Mortgagor is
released from liability and such person is substituted as the Mortgagor and becomes liable under the
Mortgage Note, provided that no such substitution shall be effective unless such person satisfies the
current underwriting criteria of the Servicer for a mortgage loan similar to the related Mortgage Loan.
In connection with any assumption, modification or substitution, the Servicer shall apply such
underwriting standards and follow such practices and procedures as shall be normal and usual in its
general mortgage servicing activities and as it applies to other mortgage loans owned solely by it. The
Servicer shall not take or enter into any assumption and modification agreement, however, unless (to the
extent practicable in the circumstances) it shall have received confirmation, in writing, of the
continued effectiveness of any applicable hazard insurance policy. Any fee collected by the Servicer in
respect of an assumption, modification or substitution of liability agreement shall be retained by the
Servicer as additional servicing compensation. In connection with any such assumption, no material term
of the Mortgage Note (including but not limited to the related Mortgage Rate and the amount of the
Monthly Payment) may be amended or modified, except as otherwise required pursuant to the terms thereof.
The Servicer shall notify the Master Servicer and the Indenture Trustee that any such substitution,
modification or assumption agreement has been completed by forwarding to the Custodian, on behalf of the
Indenture Trustee, the executed original of such substitution, modification or assumption agreement,
which document shall be added to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and instruments constituting a part
thereof.
Notwithstanding the foregoing paragraph or any other provision of this Agreement, the
Servicer shall not be deemed to be in default, breach or any other violation of its obligations
hereunder by reason of any assumption of a Mortgage Loan by operation of law or by the terms of the
Mortgage Note or any assumption which the Servicer may be restricted by law from preventing, for any
reason whatsoever. For purposes of this Section 3.15, the term "assumption" is deemed to also include a
sale (of the Mortgaged Property) subject to the Mortgage that is not accompanied by an assumption or
substitution of liability agreement.
Section 3.16. Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall use its reasonable efforts, consistent with the Servicing
Standard, to foreclose upon or otherwise comparably convert the ownership of properties securing such of
the Mortgage Loans as come into and continue in default and as to which no satisfactory arrangements can
be made for collection of delinquent payments pursuant to Section 3.07. Title to any such property
shall be taken in the name of the Indenture Trustee or its nominee on behalf of the Noteholders or in
the name of the Servicer in accordance with the Servicer's customary servicing practices and held for
the benefit of the Trust, subject to applicable law. The Servicer shall be responsible for all costs
and expenses incurred by it in any such proceedings; provided, however, that such costs and expenses
will be recoverable as Servicing Advances by the Servicer as contemplated in Section 3.11(a) and Section
3.23. The foregoing is subject to the provision that, in any case in which a Mortgaged Property shall
have suffered damage from an Uninsured Cause, the Servicer shall not be required to expend its own funds
toward the restoration of such property unless it shall determine in its discretion that such
restoration will increase the proceeds of liquidation of the related Mortgage Loan after reimbursement
to itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section 3.16 or any other
provision of this Agreement, with respect to any Mortgage Loan as to which the Servicer has received
actual notice of, or has actual knowledge of, the presence of any toxic or hazardous substance on the
related Mortgaged Property, the Servicer shall not, on behalf of the Indenture Trustee, either (i)
obtain title to such Mortgaged Property as a result of or in lieu of foreclosure or otherwise, or (ii)
otherwise acquire possession of, or take any other action with respect to, such Mortgaged Property, if,
as a result of any such action, the Indenture Trustee, the Trust or the Noteholders would be considered
to hold title to, to be a "mortgagee-in-possession" of, or to be an "owner" or "operator" of such
Mortgaged Property within the meaning of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time, or any comparable law, unless the Servicer has also
previously determined, based on its reasonable judgment and a report prepared by a Person who regularly
conducts environmental audits using customary industry standards, that:
(i) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic interest of the Trust to
take such actions as are necessary to bring the Mortgaged Property into compliance therewith;
and
(ii) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous substances, hazardous materials,
hazardous wastes, or petroleum-based materials for which investigation, testing, monitoring,
containment, clean-up or remediation could be required under any federal, state or local law or
regulation, or that if any such materials are present for which such action could be required,
that it would be in the best economic interest of the Trust to take such actions with respect
to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this Section 3.16 shall be
advanced by the Servicer, subject to the Servicer's right to be reimbursed therefor from the Collection
Account as provided in Section 3.11(a)(vii), such right of reimbursement being prior to the rights of
Noteholders to receive any amount in the Collection Account received in respect of the affected Mortgage
Loan or other Mortgage Loans.
If the Servicer determines, as described above, that it is in the best economic
interest of the Trust to take such actions as are necessary to bring any such Mortgaged Property into
compliance with applicable environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous wastes or
petroleum-based materials affecting any such Mortgaged Property, then the Servicer shall take such
action as it deems to be in the best economic interest of the Trust; provided that any amounts disbursed
by the Servicer pursuant to this Section 3.16(b) shall constitute Servicing Advances, subject to Section
4.01(d). The cost of any such compliance, containment, clean-up or remediation shall be advanced by the
Servicer, subject to the Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.11(a)(vii), such right of reimbursement being prior to the rights of Noteholders
to receive any amount in the Collection Account received in respect of the affected Mortgage Loan or
other Mortgage Loans.
(c) Reserved.
(d) Proceeds received in connection with any Final Recovery Determination, as well
as any recovery resulting from a partial collection of Insurance Proceeds, Liquidation Proceeds or
condemnation proceeds, in respect of any Mortgage Loan, will be applied in the following order of
priority: first, to unpaid Servicing Fees; second, to reimburse the Servicer or any Sub-Servicer for any
related unreimbursed Servicing Advances pursuant to Section 3.11(a)(iii) and Advances pursuant to
Section 3.11(a)(ii); third, to accrued and unpaid interest on the Mortgage Loan, to the date of the
Final Recovery Determination, or to the Due Date prior to the Payment Date on which such amounts are to
be paid if not in connection with a Final Recovery Determination; and fourth, as a recovery of principal
of the Mortgage Loan. The portion of the recovery so allocated to unpaid Servicing Fees shall be
reimbursed to the Servicer or any Sub-Servicer pursuant to Section 3.11(a)(iii).
Section 3.17. Custodian and Indenture Trustee to Cooperate; Release of Mortgage
Files.
(a) Upon the payment in full of any Mortgage Loan, or the receipt by the Servicer
of a notification that payment in full shall be escrowed in a manner customary for such purposes, the
Servicer shall immediately notify or cause to be notified the Custodian, on behalf of the Indenture
Trustee, by a certification and shall deliver to the Custodian, on behalf of the Indenture Trustee, in
written or electronic format, which format is acceptable to the Custodian, two executed copies of a
Request for Release in the form of Exhibit C hereto (which certification shall include a statement to
the effect that all amounts received or to be received in connection with such payment which are
required to be deposited in the Collection Account pursuant to Section 3.10 have been or will be so
deposited) signed by a Servicing Officer (or in a mutually agreeable electronic format that will, in
lieu of a signature on its face, originate from a Servicing Officer) and shall request delivery to it of
the Mortgage File. Upon receipt of such certification and request, the Custodian, on behalf of the
Indenture Trustee, shall, within three Business Days, release and send by overnight mail, at the expense
of the Servicer or the related Mortgagor, the related Mortgage File to the Servicer. No expenses
incurred in connection with any instrument of satisfaction or deed of reconveyance shall be chargeable
to the Collection Account or the Note Account.
(b) From time to time and as appropriate for the servicing or foreclosure of any
Mortgage Loan, including, for this purpose, collection under any insurance policy relating to the
Mortgage Loans, the Custodian, on behalf of the Indenture Trustee, shall, upon any request made by or on
behalf of the Servicer and delivery to the Custodian, on behalf of the Indenture Trustee, of two
executed copies of a written Request for Release in the form of Exhibit C hereto signed by a Servicing
Officer (or in a mutually agreeable electronic format that will, in lieu of a signature on its face,
originate from a Servicing Officer), release the related Mortgage File to the Servicer within three
Business Days, and the Indenture Trustee shall, at the direction of the Servicer, execute such documents
provided to it by the Servicer as shall be necessary to the prosecution of any such proceedings. Such
Request for Release shall obligate the Servicer to return each and every document previously requested
from the Mortgage File to the Custodian when the need therefor by the Servicer no longer exists, unless
the Mortgage Loan has been liquidated and the Liquidation Proceeds relating to the Mortgage Loan have
been deposited in the Collection Account or the Mortgage File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law, for purposes of initiating
or pursuing legal action or other proceedings for the foreclosure of the Mortgaged Property either
judicially or non-judicially, and the Servicer has delivered, or caused to be delivered, to the
Custodian, on behalf of the Indenture Trustee, an additional Request for Release certifying as to such
liquidation or action or proceedings. Upon the request of the Indenture Trustee or the Custodian, the
Servicer shall provide notice to the Indenture Trustee or the Custodian, as applicable, of the name and
address of the Person to which such Mortgage File or such document was delivered and the purpose or
purposes of such delivery. Upon receipt of a Request for Release, in written (with two executed copies)
or electronic format, from a Servicing Officer stating that such Mortgage Loan was liquidated and that
all amounts received or to be received in connection with such liquidation that are required to be
deposited into the Collection Account have been so deposited, or that such Mortgage Loan has become an
REO Property, such Mortgage Loan shall be released by the Custodian, on behalf of the Indenture Trustee,
to the Servicer or its designee within three Business Days.
(c) Upon written certification of a Servicing Officer, the Indenture Trustee shall
execute and deliver to the Servicer or the Sub-Servicer, as the case may be, copies of any court
pleadings, requests for Indenture Trustee's sale or other documents necessary to the foreclosure or
Indenture Trustee's sale in respect of a Mortgaged Property or to any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Mortgage or to obtain a deficiency judgment, or
to enforce any other remedies or rights provided by the Mortgage Note or Mortgage or otherwise available
at law or in equity. Each such certification shall include a request that such pleadings or documents be
executed by the Indenture Trustee and a statement as to the reason such documents or pleadings are
required and that the execution and delivery thereof by the Indenture Trustee will not invalidate or
otherwise affect the lien of the Mortgage, except for the termination of such a lien upon completion of
the foreclosure or Indenture Trustee's sale.
Section 3.18. Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be entitled to the
Servicing Fee with respect to each Mortgage Loan payable solely from payments of interest in respect of
such Mortgage Loan, subject to Section 3.24. In addition, the Servicer shall be entitled to recover
unpaid Servicing Fees out of Insurance Proceeds, Liquidation Proceeds, Subsequent Recoveries or
condemnation proceeds to the extent permitted by Section 3.11(a)(iii) and out of amounts derived from
the operation and sale of an REO Property to the extent permitted by Section 3.23. Except as provided in
Section 3.29, the right to receive the Servicing Fee may not be transferred in whole or in part except
in connection with the transfer of all of the Servicer's responsibilities and obligations under this
Agreement; provided, however, that the Servicer may pay from the Servicing Fee any amounts due to a
Sub-Servicer pursuant to a Sub-Servicing Agreement entered into under Section 3.02.
Additional servicing compensation in the form of assumption fees, late payment
charges, insufficient funds charges or ancillary income (other than Prepayment Charges) shall be
retained by the Servicer only to the extent such fees or charges are received by the Servicer. The
Servicer shall also be entitled pursuant to Section 3.11(a)(iv) to withdraw from the Collection Account
and pursuant to Section 3.23(b) to withdraw from any REO Account, as additional servicing compensation,
interest or other income earned on deposits therein, subject to Section 3.12 and Section 3.24. The
Servicer shall also be entitled to receive Prepayment Interest Excess pursuant to Section 3.10 and 3.11
as additional servicing compensation. The Servicer shall be required to pay all expenses incurred by it
in connection with its servicing activities hereunder (including premiums for the insurance required by
Section 3.14, to the extent such premiums are not paid by the related Mortgagors or by a Sub-Servicer,
and servicing compensation of each Sub-Servicer) and shall not be entitled to reimbursement therefor
except as specifically provided herein.
The Servicer shall be entitled to any Prepayment Interest Excess, which it may
withdraw from the Collection Account pursuant to Section 3.11(a)(ix).
Section 3.19. Reports to the Securities Administrator and Others; Collection
Account Statements.
On each Servicer Remittance Date, the Servicer shall forward to the Securities
Administrator, the Master Servicer, the Sponsor and the Depositor an account statement evidencing the
status of the collection account reflecting activity in the previous month and an Officer's Certificates
shall accompany such account statement certifying that the information contained in such account
statement is true and correct.
Section 3.20. Statement as to Compliance.
(a) The Servicer, Master Servicer and Securities Administrator shall deliver to
the Depositor and the Securities Administrator, not later than March 15th of each calendar year
beginning in 2008 an Officers' Certificate (an "Annual Statement of Compliance") stating, as to each
signatory thereof, that (i) a review of the activities of each such party during the preceding calendar
year and of performance under this Agreement has been made under such officers' supervision and (ii) to
the best of such officers' knowledge, based on such review, the Servicer has fulfilled all of its
obligations under this Agreement in all material respects throughout such year, or, if there has been a
failure to fulfill any such obligation in any material respect, specifying each such failure known to
such officer and the nature and status of cure provisions thereof. Such Annual Statement of Compliance
shall contain no restrictions or limitations on its use. The Servicer, Master Servicer and Securities
Administrator shall deliver a similar Annual Statement of Compliance by any Sub-Servicer or
subcontractor to which the Servicer, Master Servicer or Securities Administrator has delegated any
servicing responsibilities with respect to the Mortgage Loans, to the Depositor and the Securities
Administrator as described above as and when required with respect to the Servicer.
Failure of the Servicer or Master Servicer to timely comply with this Section 3.20
shall be deemed a Servicer Event of Termination or Master Servicer Event of Termination, as applicable,
and the Indenture Trustee shall, at the direction of the Depositor, in addition to whatever rights the
Indenture Trustee may have under this Agreement and at law or equity or to damages, including injunctive
relief and specific performance, upon notice immediately terminate all the rights and obligations of the
Servicer or Master Servicer, as applicable, under this Agreement and in and to the Mortgage Loans and
the proceeds thereof without compensating the Servicer or Master Servicer, as applicable, for the same
(other than as provided herein with respect to unreimbursed Advances or Servicing Advances or accrued
and unpaid Servicing Fees). This paragraph shall supersede any other provision in this Agreement or any
other agreement to the contrary.
The Servicer shall indemnify and hold harmless the Depositor, the Sponsor, the Master
Servicer, the Securities Administrator, the Owner Trustee and the Indenture Trustee, as applicable and
their respective officers, directors and Affiliates from and against any actual losses, damages, claims,
penalties, fines, forfeitures, reasonable and necessary legal fees and related costs, judgments and
other costs and expenses that such Person may sustain based upon a breach of the Servicer's obligations
under this Section 3.20.
Section 3.21. Assessments of Compliance and Attestation Reports.
Pursuant to Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation
AB, the Servicer, Master Servicer, Securities Administrator and Custodian (each an "Attesting Party")
shall deliver to the Securities Administrator and the Depositor on or before March 15th of each calendar
year beginning in 2008, a report regarding such Attesting Party's assessment of compliance (an
"Assessment of Compliance") with the applicable Servicing Criteria (as set forth in Exhibit H) during the
preceding calendar year. The Assessment of Compliance must contain the following:
(i) A statement by an authorized officer of such Attesting Party of its
responsibility for assessing compliance with the Servicing Criteria applicable to such
Attesting Party;
(ii) A statement by an authorized officer of such Attesting Party that
such officer used the Servicing Criteria, and which will also be attached to the Assessment of
Compliance, to assess compliance with the Servicing Criteria applicable to such Attesting Party;
(iii) An assessment by an authorized officer of such Attesting Party of
such Attesting Party's compliance with the applicable Servicing Criteria for the period
consisting of the preceding calendar year, including disclosure of any material instance of
noncompliance with respect thereto during such period, which assessment shall be based on the
activities it performs with respect to asset-backed securities transactions taken as a whole
involving such Attesting Party, that are backed by the same asset type as the Mortgage Loans;
(iv) A statement that a registered public accounting firm has issued an
attestation report on such Attesting Party's Assessment of Compliance for the period consisting
of the preceding calendar year; and
(v) A statement as to which of the Servicing Criteria, if any, are not
applicable to such Attesting Party, which statement shall be based on the activities it
performs with respect to asset-backed securities transactions taken as a whole involving such
Attesting Party, that are backed by the same asset type as the Mortgage Loans.
Such report at a minimum shall address each of the Servicing Criteria specified on
Exhibit H hereto which are indicated as applicable to such Attesting Party.
On or before March 15th of each calendar year beginning in 2008, each Attesting Party
shall furnish to the Depositor and the Securities Administrator a report (an "Attestation Report") by a
registered public accounting firm that attests to, and reports on, the Assessment of Compliance made by
such Attesting Party, as required by Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122(b) of
Regulation AB, which Attestation Report must be made in accordance with standards for attestation
reports issued or adopted by the Public Company Accounting Oversight Board.
The Servicer, Master Servicer, Securities Administrator and Custodian shall cause any
Sub-Servicer engaged by it, and each subcontractor engaged by it and determined by such party to be
"participating in the servicing function" within the meaning of Item 1122 of Regulation AB, to deliver to
the Securities Administrator and the Depositor an Assessment of Compliance and Attestation Report as and
when provided above.
Such Assessment of Compliance, as to any Sub-Servicer, shall address each of the
Servicing Criteria applicable to the Sub-Servicer. Such Assessment of Compliance, as to any subservicer
or subcontractor, shall at a minimum address the applicable Servicing Criteria specified on Exhibit H
hereto which are indicated as applicable to any "primary servicer" to the extent such subservicer or
subcontractor is performing any servicing function for the party who engages it and to the extent such
party is not itself addressing the Servicing Criteria related to such servicing function in its own
Assessment of Compliance. The Securities Administrator shall confirm that each of the Assessments of
Compliance delivered to it, taken as a whole, address all of the Servicing Criteria and taken
individually address the Servicing Criteria for each party as set forth in Exhibit H and notify the
Depositor of any exceptions. Notwithstanding the foregoing, as to any subcontractor, an Assessment of
Compliance is not required to be delivered unless it is required as part of a Form 10-K with respect to
the Trust Fund.
The Custodian shall deliver to the Securities Administrator and the Depositor an
Assessment of Compliance and Attestation Report, as and when provided above, which shall at a minimum
address each of the Servicing Criteria specified on Exhibit H hereto which are indicated as applicable
to a "custodian". Notwithstanding the foregoing, an Assessment of Compliance or Attestation Report is
not required to be delivered by any Custodian unless it is required as part of a Form 10-K with respect
to the Trust Fund.
The Custodian has not and shall not engage any Subcontractor which is "participating
in the servicing function" within the meaning of Item 1122 of Regulation AB, unless such Subcontractor
provides, beginning March 1, 2008, a report and a statement of a registered public accounting firm
certifying its compliance with the applicable servicing criteria in Item 1122(d) of Regulation AB.
Failure of the Servicer or Master Servicer to timely comply with this Section 3.21
shall be deemed a Servicer Event of Termination or Master Servicer Event of Termination, as applicable,
and the Indenture Trustee shall, at the direction of the Depositor, in addition to whatever rights the
Indenture Trustee may have under this Agreement and at law or equity or to damages, including injunctive
relief and specific performance, upon notice immediately terminate all the rights and obligations of the
Servicer or Master Servicer, as applicable, under this Agreement and in and to the Mortgage Loans and
the proceeds thereof without compensating the Servicer or Master Servicer, as applicable, for the same
(other than as provided herein with respect to unreimbursed Advances or Servicing Advances or accrued
and unpaid Servicing Fees). This paragraph shall supercede any other provision in this Agreement or any
other agreement to the contrary. The Successor Servicer or Successor Master Servicer shall immediately
assume the rights and obligations of the Servicer or Master Servicer, as applicable, under this
Agreement.
The Servicer shall indemnify and hold harmless the Depositor, the Custodian, the
Master Servicer, the Securities Administrator, the Sponsor, the Owner Trustee and the Indenture Trustee
and their respective officers, directors and Affiliates against and from any actual losses, damages,
claims, penalties, fines, forfeitures, reasonable and necessary legal fees and related costs, judgments
and other costs and expenses that such Person may sustain based upon a breach of the Servicer's
obligations under this Section 3.21.
The Master Servicer shall indemnify and hold harmless the Depositor, the Sponsor, the
Owner Trustee and the Indenture Trustee and their respective officers, directors and Affiliates against
and from any actual losses, damages, claims, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments and other costs and expenses that such Person may sustain based
upon a breach of the Master Servicer's obligations under this Section 3.21.
The Securities Administrator shall indemnify and hold harmless the Depositor, the
Sponsor, the Owner Trustee and the Indenture Trustee and their respective officers, directors and
Affiliates against and from any actual losses, damages, claims, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other costs and expenses that such
Person may sustain based upon a breach of the Securities Administrator's obligations under this Section
3.21.
Notwithstanding the foregoing provisions of Section 3.21, in any calendar year in
which an annual report on Form 10-K is not required to be filed, then, in each such event, the Servicer,
Master Servicer and Securities Administrator may, in lieu of providing an assessment of compliance and
attestation thereon in accordance with Item 1122 of Regulation AB, provide (and cause each Subservicer
and Subcontractor described above to provide) to the Depositor, the Sponsor and the Master Servicer, by
not later than March 1 of such calendar year, an Annual Independent Public Accountants' Servicing
Report. If the Servicer, Master Servicer or Securities Administrator provides an Annual Independent
Public Accountants' Servicing Report pursuant to this paragraph, then the certification required to be
delivered by the Servicer, Master Servicer and Securities Administrator, as applicable (and its
Subservicers and Subcontractors), shall be in the form of Exhibit G-1 attached hereto.
Section 3.22. Access to Certain Documentation.
The Servicer shall provide to the Office of Thrift Supervision, the FDIC, and any
other federal or state banking or insurance regulatory authority that may exercise authority over any
Noteholder, access to the documentation regarding the Mortgage Loans required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon reasonable request and during
normal business hours at the offices of the Servicer designated by it. In addition, access to the
documentation regarding the Mortgage Loans will be provided to any Noteholder, the Indenture Trustee,
the Owner Trustee, the Master Servicer and to any Person identified to the Servicer as a prospective
transferee of a Note, upon reasonable request during normal business hours at the offices of the
Servicer designated by it, at the expense of the Person requesting such access.
Section 3.23. Title, Management and Disposition of REO Property.
(a) The deed or certificate of sale of any REO Property shall, subject to
applicable laws, be taken in the name of the Indenture Trustee, or its nominee, in trust for the benefit
of the Noteholders or in the name of the Servicer in accordance with the Servicer's customary servicing
practices and held for the benefit of the Trust. The Servicer, on behalf of the Issuing Entity, shall
sell any REO Property as soon as practicable and in any event no later than the end of the third full
taxable year after the taxable year in which such Issuing Entity acquires ownership of such REO Property
for purposes of the Code or request from the Internal Revenue Service, no later than 60 days before the
day on which the three-year grace period would otherwise expire, an extension of such three-year period.
The Servicer shall manage, conserve, protect and operate each REO Property for the Noteholders solely
for the purpose of its prompt disposition and sale in a manner which does not cause such REO Property to
fail to qualify as "foreclosure property" within the meaning of the Code.
(b) The Servicer shall separately account for all funds collected and received in
connection with the operation of any REO Property and shall establish and maintain, or cause to be
established and maintained, with respect to REO Properties an account held in trust for the Indenture
Trustee for the benefit of the Noteholders (the "REO Account"), which shall be an Eligible Account. The
Servicer shall be permitted to allow the Collection Account to serve as the REO Account, subject to
separate ledgers for each REO Property. The Servicer shall be entitled to retain or withdraw any
interest income paid on funds deposited in the REO Account.
(c) The Servicer shall have full power and authority, subject only to the specific
requirements and prohibitions of this Agreement, to do any and all things in connection with any REO
Property as are consistent with the manner in which the Servicer manages and operates similar property
owned by the Servicer or any of its Affiliates, all on such terms and for such period (subject to the
requirement of prompt disposition set forth in Section 3.23(a)) as the Servicer deems to be in the best
interests of Noteholders. In connection therewith, the Servicer shall deposit, or cause to be deposited
in the REO Account, in no event more than two Business Days after the Servicer's receipt thereof, all
revenues received by it with respect to an REO Property and shall withdraw therefrom funds necessary for
the proper operation, management and maintenance of such REO Property including, without limitation:
(i) all insurance premiums due and payable in respect of such REO
Property;
(ii) all real estate taxes and assessments in respect of such REO Property
that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain, operate and dispose of
such REO Property.
To the extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through (iii) above with respect to
such REO Property, the Servicer shall advance from its own funds such amount as is necessary for such
purposes if, but only if, the Servicer would make such advances if the Servicer owned the REO Property
and if in the Servicer's judgment, the payment of such amounts will be recoverable from the rental or
sale of the REO Property.
The Servicer may contract with any Independent Contractor for the operation and
management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered to require,
that the Independent Contractor pay all costs and expenses incurred in connection with the
operation and management of such REO Property, including those listed above and remit all
related revenues (net of such costs and expenses) to the Servicer as soon as practicable, but
in no event later than thirty days following the receipt thereof by such Independent Contractor;
(iii) none of the provisions of this Section 3.23(c) relating to any such
contract or to actions taken through any such Independent Contractor shall be deemed to relieve
the Servicer of any of its duties and obligations to the Indenture Trustee on behalf of the
Noteholders with respect to the operation and management of any such REO Property; and
(iv) the Servicer shall be obligated with respect thereto to the same
extent as if it alone were performing all duties and obligations in connection with the
operation and management of such REO Property.
The Servicer shall be entitled to enter into any agreement with any Independent
Contractor performing services for it related to its duties and obligations hereunder for
indemnification of the Servicer by such Independent Contractor, and nothing in this Agreement shall be
deemed to limit or modify such indemnification. The Servicer shall be solely liable for all fees owed
by it to any such Independent Contractor, irrespective of whether the Servicer's compensation pursuant
to Section 3.18 is sufficient to pay such fees; provided, however, that to the extent that any payments
made by such Independent Contractor would constitute Servicing Advances if made by the Servicer, such
amounts shall be reimbursable as Servicing Advances made by the Servicer.
(d) In addition to the withdrawals permitted under Section 3.23(c), the Servicer
may from time to time make withdrawals from the REO Account for any REO Property: (i) to pay itself or
any Sub-Servicer unpaid Servicing Fees in respect of the related Mortgage Loan; and (ii) to reimburse
itself or any Sub-Servicer for unreimbursed Servicing Advances and Advances made in respect of such REO
Property or the related Mortgage Loan. On the Servicer Remittance Date, the Servicer shall withdraw from
each REO Account maintained by it and deposit into the Note Account in accordance with Section
3.10(d)(ii), for payment on the related Payment Date in accordance with Section 3.05 of the Indenture,
the income from the related REO Property received during the prior calendar month, net of any
withdrawals made pursuant to Section 3.23(c) or this Section 3.23(d).
(e) Subject to the time constraints set forth in Section 3.23(a), each REO
Disposition shall be carried out by the Servicer in a manner, at such price and upon such terms and
conditions as shall be normal and usual in the Servicing Standard.
(f) The proceeds from the REO Disposition, net of any amount required by law to be
remitted to the Mortgagor under the related Mortgage Loan and net of any payment or reimbursement to the
Servicer or any Sub-Servicer as provided above, shall be deposited in the Note Account in accordance
with Section 3.10(d)(ii) on the Servicer Remittance Date in the month following the receipt thereof for
payment on the related Payment Date in accordance with Section 3.05 of the Indenture. Any REO
Disposition shall be for cash only (unless changes in the REMIC Provisions made subsequent to the
Closing Date allow a sale for other consideration).
(g) The Servicer shall file information returns with respect to the receipt of
mortgage interest received in a trade or business, reports of foreclosures and abandonments of any
Mortgaged Property and cancellation of indebtedness income with respect to any Mortgaged Property as
required by the Code. Such reports shall be in form and substance sufficient to meet the reporting
requirements of the Code.
Section 3.24. Obligations of the Servicer in Respect of Prepayment Interest
Shortfalls.
Not later than 4:00 p.m. New York time on each Servicer Remittance Date, the Servicer
shall remit to the Note Account an amount ("Compensating Interest") equal to the lesser of (A) the
aggregate of the Prepayment Interest Shortfalls for the related Payment Date and (B) its aggregate
Servicing Fee for the related Payment Date. The Servicer shall not have the right to reimbursement for
any amounts remitted to the Securities Administrator in respect of Compensating Interest. Such amounts
so remitted shall be included in the Available Funds and paid therewith on the next Payment Date. The
Servicer shall not be obligated to pay Compensating Interest with respect to Relief Act Interest
Shortfalls.
Section 3.25. [Reserved].
Section 3.26. Obligations of the Servicer in Respect of Mortgage Rates and Monthly
Payments.
In the event that a shortfall in any collection on or liability with respect to the
Mortgage Loans in the aggregate results from or is attributable to adjustments to Mortgage Rates,
Monthly Payments or Stated Principal Balances that were made by the Servicer in a manner not consistent
with the terms of the related Mortgage Note and this Agreement, the Servicer, upon discovery or receipt
of notice thereof, immediately shall deposit in the Collection Account from its own funds the amount of
any such shortfall and shall indemnify and hold harmless the Trust, the Indenture Trustee, the
Depositor, the Securities Administrator, the Master Servicer and any successor servicer in respect of any
such liability. Such indemnities shall survive the resignation or termination of the Servicer or the
termination or discharge of this Agreement or the Indenture. Notwithstanding the foregoing, this
Section 3.26 shall not limit the ability of the Servicer to seek recovery of any such amounts from the
related Mortgagor under the terms of the related Mortgage Note, as permitted by law.
Section 3.27. [Reserved].
Section 3.28. [Reserved].
Section 3.29. Advance Facility.
The Servicer is hereby authorized to enter into a financing or other facility (any
such arrangement, an "Advance Facility") under which (1) the Servicer sells, assigns or pledges to
another Person (together with such Person's successors and assigns, an "Advancing Person") the
Servicer's rights under this Agreement to be reimbursed for any Advances or Servicing Advances and/or (2)
an Advancing Person agrees to fund some or all Advances and/or Servicing Advances required to be made by
the Servicer pursuant to this Agreement. No consent of the Depositor, the Indenture Trustee,the Master
Servicer, the Securities Administrator the Noteholders or any other party shall be required before the
Servicer may enter into an Advance Facility. The Servicer shall notify each other party to this
Agreement in writing prior to or promptly after entering into or terminating any Advance Facility
stating the identity of the Advancing Person. Notwithstanding the existence of any Advance Facility
under which an Advancing Person agrees to fund Advances and/or Servicing Advances on the Servicer's
behalf, the Servicer shall remain obligated pursuant to this Agreement to make Advances and Servicing
Advances pursuant to and as required by this Agreement. If the Servicer enters into an Advance
Facility, and for so long as an Advancing Person remains entitled to receive reimbursement for any
Advances including Nonrecoverable Advances ("Advance Reimbursement Amounts") and/or Servicing Advances
including Nonrecoverable Advances ("Servicing Advance Reimbursement Amounts" and together with Advance
Reimbursement Amounts, "Reimbursement Amounts") (in each case to the extent such type of Reimbursement
Amount is included in the Advance Facility), as applicable, pursuant to this Agreement, then the
Servicer shall identify, in the Officer's Certificate described in the next two sentences, such
Reimbursement Amounts consistent with the reimbursement rights set forth in Section 3.11(a)(ii), (iii),
(vi) and (vii) and remit such Reimbursement Amounts in accordance with Section 3.10(b) or otherwise in
accordance with the documentation establishing the Advance Facility to such Advancing Person or to a
trustee, agent or custodian (an "Advance Facility Trustee") designated by such Advancing Person.
Notwithstanding the foregoing, if so required pursuant to the terms of the Advance Facility, the
Servicer may direct, and if so directed the Securities Administrator is hereby authorized to and shall
pay to the Advance Facility Trustee the Reimbursement Amounts identified pursuant to the preceding
sentence. To the extent that an Advancing Person funds any Advance and the Servicer provides the
Securities Administrator and Master Servicer with an Officer's Certificate that such Advancing Person is
entitled to reimbursement, such Advancing Person shall be entitled to receive reimbursement pursuant to
this Agreement for such amount to the extent provided in this section. Such Officer's Certificate must
specify the amount of the reimbursement, the remittance date, the Section of this Agreement that permits
the applicable Advance to be reimbursed and either the section(s) of the Advance Facility that entitle
the Advancing Person to request reimbursement from the Securities Administrator, rather than the
Servicer, or proof of an event of default by the Servicer under the Advance Facility entitling the
Advancing Person to reimbursement from the Securities Administrator. Notwithstanding anything to the
contrary herein, in no event shall Advance Reimbursement Amounts or Servicing Advance Reimbursement
Amounts be included in the Available Funds or paid to Noteholders.
Reimbursement Amounts shall consist solely of amounts in respect of Advances and/or
Servicing Advances made with respect to the Mortgage Loans for which the Servicer would be permitted to
reimburse itself in accordance with this Agreement, assuming the Servicer or the Advancing Person had
made the related Advance(s) and/or Servicing Advance(s). Notwithstanding the foregoing, except with
respect to reimbursement of Nonrecoverable Advances as set forth in this Agreement, no Person shall be
entitled to reimbursement from funds held in the Collection Account for future payment to Noteholders
pursuant to this Agreement. None of the Depositor, Master Servicer, Securities Administrator or the
Indenture Trustee shall have any duty or liability with respect to the calculation of any Reimbursement
Amount and shall be entitled to rely, without independent investigation, on the Officer's Certificate
provided pursuant to this Section 3.29, nor shall the Depositor, Master Servicer, Securities
Administrator or the Indenture Trustee have any responsibility to track or monitor the administration
of any Advance Facility and the Depositor shall not have any responsibility to track, monitor or verify
the payment of Reimbursement Amounts to the related Advancing Person or Advance Facility Trustee. The
Servicer shall maintain and provide to any successor servicer and (upon request) the Indenture Trustee,
Master Servicer or Securities Administrator a detailed accounting on a loan by loan basis as to amounts
advanced by, sold, pledged or assigned to, and reimbursed to any Advancing Person. The Successor
Servicer shall be entitled to rely on any such information provided by the predecessor servicer, and the
Successor Servicer shall not be liable for any errors in such information. Any Successor Servicer shall
reimburse the predecessor Servicer and itself for outstanding Advances and ▇▇▇▇▇▇▇▇▇ Advances,
respectively, with respect to each Mortgage Loan on a first in, first out ("FIFO") basis; provided that
the Successor Servicer has received prior written notice from the predecessor Servicer or the Advancing
Person of reimbursement amounts owed to the predecessor Servicer. Liquidation Proceeds with respect to
a Mortgage Loan shall be applied to reimburse Advances outstanding with respect to that Mortgage Loan
before being applied to reimburse Servicing Advances outstanding with respect to that Mortgage Loan.
An Advancing Person who receives an assignment or pledge of the rights to be
reimbursed for Advances and/or Servicing Advances, and/or whose obligations hereunder are limited to the
funding or purchase of Advances and/or Servicing Advances shall not be required to meet the criteria for
qualification of a subservicer set forth in this Agreement.
Upon the direction of and at the expense of the Servicer, the Securities Administrator
agrees to execute such acknowledgments, certificates, and other documents provided by the Servicer
recognizing the interests of any Advance Facility Trustee in such Reimbursement Amounts as the Servicer
may cause to be made subject to Advance Facilities pursuant to this Section 3.29.
The Servicer shall remain entitled to be reimbursed for all Advances and Servicing
Advances funded by the Servicer to the extent the related rights to be reimbursed therefor have not been
sold, assigned or pledged to an Advancing Person.
The Servicer shall indemnify the Depositor, the Indenture Trustee, the Owner Trustee,
the Master Servicer, the Securities Administrator, any Successor Servicer and the Trust for any loss,
liability or damage resulting from any Advance Facility, including, without limitation, any claim by the
related Advancing Person, except to the extent that such claim, loss, liability or damage resulted from
or arose out of negligence, recklessness or willful misconduct or breach of its duties hereunder on the
part of the Depositor, the Indenture Trustee or any successor servicer.
Any amendment to this Section 3.29 or to any other provision of this Agreement that
may be necessary or appropriate to effect the terms of an Advance Facility as described generally in
this Section 3.29, including amendments to add provisions relating to a successor servicer, may be
entered into by the Indenture Trustee, the Depositor and the Servicer without the consent of any
Noteholder but with the consent of the Majority Certificateholder, provided such amendment complies with
Section 7.01 hereof. All reasonable costs and expenses (including attorneys' fees) of each party hereto
of any such amendment shall be borne solely by the Servicer. Prior to entering into an Advance
Facility, the Servicer shall notify the Advancing Person in writing that: (a) the Advances and/or
Servicing Advances purchased, financed by and/or pledged to the Advancing Person are obligations owed to
the Servicer on a non-recourse basis payable only from the cash flows and proceeds received under this
Agreement for reimbursement of Advances and/or Servicing Advances only to the extent provided herein,
and none of the Indenture Trustee, the Securities Administrator nor the Trust are otherwise obligated or
liable to repay any Advances and/or Servicing Advances financed by the Advancing Person and (b) none of
the Indenture Trustee, Master Servicer or Securities Administrator shall have any responsibility to
calculate any Reimbursement Amounts or to track or monitor the administration of the Advance Facility
between the Servicer and the Advancing Person.
Section 3.30. Master Servicer.
The Master Servicer shall supervise, monitor and oversee the obligation of the
Servicer to service and administer the Mortgage Loans in accordance with the terms of the Agreement and
shall have full power and authority to do any and all things which it may deem necessary or desirable in
connection with such master servicing and administration. In performing its obligations hereunder, the
Master Servicer shall act in a manner consistent with Accepted Master Servicing Practices. Furthermore,
the Master Servicer shall oversee and consult with the Servicer as necessary from time-to-time to carry
out the Master Servicer's obligations hereunder, shall receive, review and evaluate all reports,
information and other data provided to the Master Servicer by the Servicer and shall enforce the
obligations of the Servicer to perform and observe the covenants, obligations and conditions to be
performed or observed by the Servicer under this Agreement. The Master Servicer shall independently and
separately monitor the Servicer's servicing activities with respect to each related Mortgage Loan,
reconcile the results of such monitoring with such information provided in the previous sentence on a
monthly basis and coordinate corrective adjustments to the Servicer's and Master Servicer's records.
The Master Servicer shall reconcile the results of its Mortgage Loan monitoring with the actual
remittances of the Servicer to the Note Account pursuant to the terms hereof based on information
provided to the Master Servicer by the Securities Administrator pursuant to the third paragraph of
Section 6.01(j) of the Indenture.
The Indenture Trustee, Master Servicer, Custodian and Securities Administrator shall
provide access, in each case to the records and documentation in possession of the Indenture Trustee,
the Mater Servicer, the Custodian, or the Securities Administrator, as the case may be, regarding the
related Mortgage Loans and REO Property and the servicing thereof to the Noteholders, the FDIC, and the
supervisory agents and examiners of the FDIC, such access being afforded only upon reasonable prior
written request and during normal business hours at the office of the Indenture Trustee, the Custodian
or the Securities Administrator; provided, however, that, unless otherwise required by law, none of the
Indenture Trustee, the Custodian or the Securities Administrator shall be required to provide access to
such records and documentation if the provision thereof would violate the legal right to privacy of any
Mortgagor. The Indenture Trustee, the Custodian and the Securities Administrator shall allow
representatives of the above entities, in each case to photocopy any of the records and documentation
and shall provide equipment for that purpose at a charge that covers the Indenture Trustee's, the
Custodian's or the Securities Administrator's, as the case may be, actual costs.
Section 3.31. Monitoring of Servicer.
(a) The Master Servicer shall be responsible for monitoring the compliance by the
Servicer with its duties under this Agreement. In the review of the Servicer's activities, the Master
Servicer may rely upon an Officer's Certificate of the Servicer with regard to the Servicer's compliance
with the terms of this Agreement. In the event that the Master Servicer, in its judgment, determines
that the Servicer should be terminated in accordance with the terms hereof, or that a notice should be
sent pursuant to the terms hereof with respect to the occurrence of an event that, unless cured, would
constitute a Servicer Event of Termination, the Master Servicer shall notify the Servicer, the Seller
and the Indenture Trustee thereof and the Master Servicer shall issue such notice or take such other
action as it deems appropriate.
(b) The Master Servicer, for the benefit of the Indenture Trustee and the
Noteholders, shall enforce the obligations of the Servicer under this Agreement, and shall, in the event
that the Servicer fails to perform its obligations in accordance with this Agreement, subject to the
preceding paragraph, Article III and Article VI, to terminate the rights and obligations of the Servicer
hereunder in accordance with the provisions of Article VI. Such enforcement, including, without
limitation, the legal prosecution of claims and the pursuit of other appropriate remedies, shall be in
such form and carried out to such an extent and at such time as the Master Servicer, in its good faith
business judgment, would require were it the owner of the related Mortgage Loans; provided that the
Master Servicer shall not be required to prosecute or defend any legal action except to the extent that
the Master Servicer shall have received reasonable indemnity for its costs and expenses in pursuing such
action.
(c) The Master Servicer shall be entitled to be reimbursed by the Servicer (or
from amounts on deposit in the Note Account if the Servicer does not timely fulfill its obligations
hereunder) for all Servicing Transfer Costs (or if the predecessor Servicer is the Master Servicer, from
the Servicer immediately preceding the Master Servicer), including without limitation, any reasonable
out-of-pocket or third party costs or expenses associated with the complete transfer of all servicing
data and the completion, correction or manipulation of such servicing data as may be required by the
Master Servicer to correct any errors or insufficiencies in the servicing data or otherwise to enable
the Master Servicer to service the Mortgage Loans properly and effectively, upon presentation of
reasonable documentation of such costs and expenses.
(d) The Master Servicer shall require the Servicer to comply with the remittance
requirements and other obligations set forth in this Agreement.
(e) If the Master Servicer acts as successor Servicer, it will not assume
liability for the representations and warranties of the terminated Servicer.
(f) The Master Servicer shall not be liable for any acts or omissions of the
Servicer.
Section 3.32. Fidelity Bond.
The Master Servicer, at its expense, shall maintain in effect a blanket fidelity bond
and an errors and omissions insurance policy, affording coverage with respect to all directors,
officers, employees and other Persons acting on such Master ▇▇▇▇▇▇▇▇'s behalf, and covering errors and
omissions in the performance of the Master Servicer's obligations hereunder. The errors and omissions
insurance policy and the fidelity bond shall be in such form and amount generally acceptable for
entities serving as master servicers or trustees. Upon reasonable request of the Depositor or the
Sponsor, the Master Servicer shall provide to the Depositor or the Sponsor evidence of such insurance or
fidelity bond.
Section 3.33. Power to Act; Procedures.
The Master Servicer shall master service the Mortgage Loans and shall have full power
and authority to do any and all things that it may deem necessary or desirable in connection with the
master servicing and administration of the Mortgage Loans, including but not limited to the power and
authority (i) to execute and deliver, on behalf of the Noteholders and the Indenture Trustee, customary
consents or waivers and other instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages, (iii) to collect any Insurance
Proceeds and Liquidation Proceeds, and (iv) to effectuate foreclosure or other conversion of the
ownership of the Mortgaged Property. The Indenture Trustee shall furnish the Master Servicer, upon
written request from a Master Servicing Officer, with any powers of attorney (in form delivered and
acceptable to the Indenture Trustee) empowering the Master Servicer or the Servicer to execute and
deliver instruments of satisfaction or cancellation, or of partial or full release or discharge, and to
foreclose upon or otherwise liquidate Mortgaged Property, and to appeal, prosecute or defend in any
court action relating to the Mortgage Loans or the Mortgaged Property, in accordance with this
Agreement, and the Indenture Trustee shall execute and deliver such other documents, as the Master
Servicer or the Servicer may request, to enable the Master Servicer to master service and administer the
Mortgage Loans and carry out its duties hereunder, in each case in accordance with Accepted Master
Servicing Practices (and the Indenture Trustee shall have no liability for misuse of any such powers of
attorney by the Master Servicer or the Servicer and shall be indemnified by the Master Servicer or the
Servicer, as applicable, for any cost, liability or expense incurred by the Indenture Trustee in
connection with such Person's use or misuse of any such power of attorney). If the Master Servicer or
the Indenture Trustee has been advised that it is likely that the laws of the state in which action is
to be taken prohibit such action if taken in the name of the Indenture Trustee or that the Indenture
Trustee would be adversely affected under the "doing business" or tax laws of such state if such action
is taken in its name, the Master Servicer shall join with the Indenture Trustee in the appointment of a
co-trustee pursuant to Section 6.10 of the Indenture. In the performance of its duties hereunder, the
Master Servicer shall be an independent contractor and shall not, except in those instances where it is
taking action in the name of the Indenture Trustee, be deemed to be the agent of the Indenture Trustee.
Section 3.34. Due-on-Sale Clauses; Assumption Agreements.
To the extent Mortgage Loans contain enforceable due-on-sale clauses, the Master
Servicer shall cause the Servicer to enforce such clauses in accordance with this Agreement.
Section 3.35. Documents, Records and Funds in Possession of Master Servicer To Be
Held for Trustee.
(a) The Master Servicer shall transmit to the Indenture Trustee or Custodian such
documents and instruments coming into the possession of the Master Servicer from time to time as are
required by the terms hereof to be delivered to the Indenture Trustee or Custodian. Any funds received
by the Master Servicer in respect of any Mortgage Loan or which otherwise are collected by the Master
Servicer as Liquidation Proceeds or Insurance Proceeds in respect of any Mortgage Loan shall be remitted
to the Securities Administrator for deposit in the Note Account. The Master Servicer shall, and,
subject to Section 3.11, shall enforce the obligations of the Servicer to, provide access to
information and documentation regarding the Mortgage Loans to the Indenture Trustee, its agents and
accountants at any time upon reasonable request and during normal business hours, and to Noteholders
that are savings and loan associations, banks or insurance companies, the Office of Thrift Supervision,
the FDIC and the supervisory agents and examiners of such Office and Corporation or examiners of any
other federal or state banking or insurance regulatory authority if so required by applicable
regulations of the Office of Thrift Supervision or other regulatory authority, such access to be
afforded without charge but only upon reasonable request in writing and during normal business hours at
the offices of the Master Servicer designated by it. In fulfilling such a request the Master Servicer
shall not be responsible for determining the sufficiency of such information.
(b) All funds collected or held by, or under the control of, the Master Servicer,
in respect of any Mortgage Loans, whether from the collection of principal and interest payments or from
Liquidation Proceeds or Insurance Proceeds, shall be remitted to the Securities Administrator for
deposit in the Note Account.
Section 3.36. Possession of Certain Insurance Policies and Documents.
The Custodian, shall retain possession and custody of the originals (to the extent
available) of any primary mortgage insurance policies, or certificate of insurance if applicable, and
any Notes of renewal as to the foregoing as may be issued from time to time as contemplated by this
Agreement. Until all amounts payable in respect of the Notes has been paid in full and the Master
Servicer and the Servicer have otherwise fulfilled their respective obligations under this Agreement,
the Custodian shall also retain possession and custody of each Mortgage File in accordance with and
subject to the terms and conditions of this Agreement. The Master Servicer shall promptly deliver or
cause to be delivered to the Custodian, upon the execution or receipt thereof the originals of any
primary mortgage insurance policies, any Notes of renewal, and such other documents or instruments
related to the Mortgage Loans that come into the possession of the Master Servicer from time to time.
Section 3.37. Compensation for the Master Servicer.
As compensation for the activities of the Master Servicer hereunder, the Master
Servicer shall be entitled to the Master Servicing Fee, payable to the Master Servicer on each Payment
Date (with respect to the calendar month that immediately preceded the month of such Payment Date) from
funds in the Note Account. The Master Servicing Fee payable to the Master Servicer in respect of any
Payment Date shall be reduced in accordance with Section 3.38. The Master Servicer shall be required to
pay all expenses incurred by it in connection with its activities hereunder and shall not be entitled to
reimbursement therefor except as provided in this Agreement.
Section 3.38. Obligation of the Master Servicer in Respect of Prepayment Interest
Shortfalls.
In the event that the Servicer fails to perform on any Servicer Remittance Date its
obligations pursuant to Section 3.24, the Master Servicer shall remit to the Securities Administrator
not later than the Payment Date an amount equal to the lesser of (i) the aggregate amounts required to
be paid by the Servicer with respect to Prepayment Interest Shortfalls attributable to Principal
Prepayments on the related Mortgage Loans for the related Payment Date, and not so paid by the Servicer
and (ii) the Master Servicing Fee for such Payment Date, without reimbursement therefor.
Section 3.39. Merger or Consolidation.
Any Person into which the Master Servicer may be merged or consolidated, or any Person
resulting from any merger, conversion, other change in form or consolidation to which the Master
Servicer shall be a party, or any Person succeeding to the business of the Master Servicer, shall be the
successor to the Master Servicer hereunder, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or resulting Person to the Master Servicer or its Affiliate whose primary
business is the servicing of conventional residential mortgage loans shall be a Person that is an
Approved Servicer.
Section 3.40. Resignation of Master Servicer.
Except as otherwise provided in Sections 3.39 and 3.41 hereof, the Master Servicer
shall not resign from the obligations and duties hereby imposed on it unless the Master Servicer's
duties hereunder are no longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it and cannot be cured. Any such determination
permitting the resignation of the Master Servicer shall be evidenced by an independent Opinion of
Counsel to such effect delivered to the Issuer, the Depositor, the Seller and the Indenture Trustee. No
such resignation shall become effective until the Indenture Trustee shall have assumed, or a Successor
Master Servicer shall have been appointed by the Sponsor or the Indenture Trustee and until such
successor shall have assumed, the Master Servicer's responsibilities and obligations under this
Agreement. Notice of such resignation shall be given promptly by the Master Servicer to the Indenture
Trustee.
If, at any time, the Master Servicer resigns under this Section 3.40, or transfers or
assigns its rights and obligations under Section 4.16, or is removed as Master Servicer pursuant to
Section 6.07, then at such time ▇▇▇▇▇ Fargo Bank, N.A. also shall resign (and shall be entitled to
resign) as Securities Administrator, Custodian, Paying Agent and Note Registrar. In such event, the
obligations of each such party shall be assumed by the Indenture Trustee or such Successor Master
Servicer appointed by the Indenture Trustee (subject to the provisions of Section 6.07); provided,
however, the Indenture Trustee shall have the same right to appoint, or petition a court to appoint, a
successor Securities Administrator, Paying Agent or Note Registrar as it has pursuant to Section 6.07
with respect to a successor Master Servicer.
Section 3.41. Assignment or Delegation of Duties by the Master Servicer.
Except as expressly provided herein, the Master Servicer shall not assign or transfer
any of its rights, benefits or privileges hereunder to any other Person, or delegate to or subcontract
with, or authorize or appoint any other Person to perform any of the duties, covenants or obligations to
be performed by the Master Servicer hereunder; provided, however, that the Master Servicer shall have
the right with the prior written consent of the Indenture Trustee and the Seller (which consent shall
not be unreasonably withheld), and upon delivery to the Indenture Trustee and the Seller of a letter
from each Rating Agency to the effect that such action shall not result in a downgrading of the Notes,
to delegate or assign to or subcontract with or authorize or appoint any qualified Person to perform and
carry out any duties, covenants or obligations to be performed and carried out by the Master Servicer
hereunder. Notice of such permitted assignment shall be given promptly by the Master Servicer to the
Seller and the Indenture Trustee. If, pursuant to any provision hereof, the duties of the Master
Servicer are transferred to a Successor Master Servicer, the entire amount of the Master Servicing Fees
and other compensation payable to the Master Servicer pursuant hereto shall thereafter be payable to
such Successor Master Servicer. Such Successor Master Servicer shall also pay the fees of the Indenture
Trustee and the Securities Administrator, as provided herein.
ARTICLE IV
REMITTANCE REPORTS; ADVANCES; EXCHANGE ACT REPORTING
Section 4.01. Remittance Reports and Advances.
(a) On the 10th calendar day of each month, the Servicer shall deliver to the
Master Servicer and the Sponsor by telecopy or electronic mail (or by such other means as the Servicer
and the Master Servicer may agree from time to time) a Remittance Report in the format attached as
Exhibit J, Exhibit K and Exhibit L with respect to the related Payment Date. Not later than the second
Business Day following each Determination Date, the Servicer shall deliver or cause to be delivered to
the Master Servicer in addition to the information provided in the Remittance Report, information with
respect to the Principal Prepayments in full from the portion of the Prepayment Period from the 1st to
the 15th of each calendar month and such other information reasonably available to it with respect to
the Mortgage Loans as the Master Servicer may reasonably require to perform the calculations necessary
to make the payments contemplated by Section 3.05 of the Indenture and to prepare the statements to
Noteholders contemplated by Section 3.26 of the Indenture. The Master Servicer shall not be responsible
to recompute, recalculate or verify any information provided to it by the Servicer.
(b) The amount of Advances to be made by the Servicer for any Payment Date shall
equal, subject to Section 4.01(d), the sum of (i) the aggregate amount of Monthly Payments (net of the
related Servicing Fee), due during the related Due Period in respect of the Mortgage Loans, which
Monthly Payments were delinquent on a contractual basis as of the Close of Business on the related
Determination Date and (ii) with respect to each REO Property, which REO Property was acquired during or
prior to the related Due Period and as to which REO Property an REO Disposition did not occur during the
related Due Period, an amount equal to the excess, if any, of the REO Imputed Interest on such REO
Property for the most recently ended calendar month, over the net income from such REO Property
transferred to the Note Account pursuant to Section 3.23 for payment on such Payment Date.
On or before 2:00 p.m. New York time on the Servicer Remittance Date, the Servicer
shall remit in immediately available funds to the Securities Administrator for deposit in the Note
Account an amount equal to the aggregate amount of Advances, if any, to be made in respect of the
Mortgage Loans and REO Properties for the related Payment Date either (i) from its own funds or (ii)
from the Collection Account, to the extent of funds held therein for future payment (in which case it
will cause to be made an appropriate entry in the records of the Collection Account that amounts held
for future payment have been, as permitted by this Section 4.01, used by the Servicer in discharge of
any such Advance) or (iii) in the form of any combination of (i) and (ii) aggregating the total amount
of Advances to be made by the Servicer with respect to the Mortgage Loans and REO Properties. Any
amounts held for future payment used by the Servicer to make an Advance as permitted in the preceding
sentence shall be appropriately reflected in the Servicer's records and replaced by the Servicer by
deposit in the Collection Account on or before any future Servicer Remittance Date to the extent that
the Available Funds for the related Payment Date (determined without regard to Advances to be made on
the Servicer Remittance Date) shall be less than the total amount that would be paid to the Classes of
Noteholders pursuant to Section 3.05 of the Indenture on such Payment Date if such amounts held for
future payments had not been so used to make Advances. The Securities Administrator will provide notice
to the Servicer by telecopy by the Close of Business on any Servicer Remittance Date in the event that
the amount remitted by the Servicer to the Securities Administrator on such date is less than the
Advances required to be made by the Servicer for the related Payment Date, as set forth in the related
Remittance Report.
(c) The obligation of the Servicer to make such Advances is mandatory,
notwithstanding any other provision of this Agreement but subject to (d) below, and, with respect to any
Mortgage Loan, shall continue until the Mortgage Loan is paid in full or until all Liquidation Proceeds
thereon have been recovered, or a Final Recovery Determination has been made thereon.
(d) Notwithstanding anything herein to the contrary, no Advance or Servicing
Advance shall be required to be made hereunder by the Servicer if such Advance or Servicing Advance
would, if made, constitute a Nonrecoverable Advance. The determination by the Servicer that it has made
a Nonrecoverable Advance or that any proposed Advance or Servicing Advance, if made, would constitute a
Nonrecoverable Advance, shall be evidenced by an Officers' Certificate of the Servicer delivered to the
Sponsor and the Master Servicer. Furthermore, the Servicer shall not be required to advance Relief Act
Interest Shortfalls.
(e) If the Servicer fails to remit any Monthly Advance required to be made
pursuant to this Section, the Master Servicer shall make, or the Successor Servicer shall make, such
Advance. If the Master Servicer determines that a Monthly Advance is required, it shall on the Business
Day preceding the related Payment Date immediately following such Determination Date remit to the
Securities Administrator from its own funds (or funds advanced by the applicable Servicer) for deposit
in the Note Account immediately available funds in an amount equal to such Monthly Advance. The Master
Servicer shall be entitled to be reimbursed for all Monthly Advances made by it. Notwithstanding
anything to the contrary herein, in the event the Master Servicer determines in its reasonable judgment
that a Monthly Advance is a Nonrecoverable Advance, the Master Servicer shall be under no obligation to
make such Monthly Advance. If the Master Servicer determines that a Monthly Advance is a Nonrecoverable
Advance, it shall, on or prior to the related Payment Date, deliver an Officer's Certificate to the
Indenture Trustee and the Securities Administrator to such effect.
Section 4.02. Exchange Act Reporting.
(a) (i) (A) Within 15 days after each Distribution Date, the Securities
Administrator shall, in accordance with industry standards, prepare and, in accordance with Section
(a)(i)(C) below, file with the Commission via the Electronic Data Gathering and Retrieval System
("▇▇▇▇▇"), a Distribution Report on Form 10-D, signed by the Master Servicer, with a copy of the Monthly
Statement to be furnished by the Securities Administrator to the Certificateholders for such
Distribution Date; provided that, the Securities Administrator shall have received no later than five
(5) calendar days after the related Distribution Date, all information required to be provided to the
Securities Administrator as described in clause (a)(iv) below. Any disclosure that is in addition to
the Monthly Statement and that is required to be included on Form 10-D ("Additional Form 10-D
Disclosure") shall be, pursuant to the paragraph immediately below, reported by the parties set forth on
Exhibit I to the Securities Administrator and the Depositor and approved for inclusion by the Depositor,
and the Securities Administrator will have no duty or liability for any failure hereunder to determine
or prepare any Additional Form 10-D Disclosure absent such reporting (other than in the case where the
Securities Administrator is the reporting party as set forth in Exhibit I) and approval.
(B) Within five (5) calendar days after the related Distribution Date, (i) the
parties set forth in Exhibit I shall be required to provide, pursuant to Section 4.02(a)(iv) below, to
the Securities Administrator and the Depositor, to the extent known by a responsible officer thereof, in
▇▇▇▇▇-compatible format, or in such other form as otherwise agreed upon by the Securities Administrator
and the Depositor and such party, the form and substance of any Additional Form 10-D Disclosure, if
applicable, and (ii) the Depositor will approve, as to form and substance, or disapprove, as the case
may be, the inclusion of the Additional Form 10-D Disclosure on Form 10-D. The Issuing Entity shall be
responsible for any reasonable fees and expenses assessed or incurred by the Securities Administrator in
connection with including any Additional Form 10-D Disclosure on Form 10-D pursuant to this Section.
(C) After preparing the Form 10-D, the Securities Administrator shall forward
electronically a copy of the Form 10-D to the Depositor, the Sponsor and the Master Servicer for review.
Within two Business Days after receipt of such copy, but no later than the 12th calendar day after the
Distribution Date (provided that, the Securities Administrator forwards a copy of the Form 10-D no later
than the 10th calendar after the Distribution Date), the Depositor shall notify the Securities
Administrator in writing (which may be furnished electronically) of any changes to or approval of such
Form 10-D. In the absence of receipt of any written changes or approval, the Securities Administrator
shall be entitled to assume that such Form 10-D is in final form and the Securities Administrator may
proceed with the execution and filing of the Form 10-D. No later than the 13th calendar day after the
related Distribution Date, a duly authorized officer of the Master Servicer shall sign the Form 10-D
and, in the case where the Master Servicer and the Securities Administrator are not affiliated, return
an electronic or fax copy of such signed Form 10-D (with an original executed hard copy to follow by
overnight mail) to the Securities Administrator. If a Form 10-D cannot be filed on time or if a
previously filed Form 10-D needs to be amended, the Securities Administrator shall follow the procedures
set forth in Section 3.17(a)(v)(B). Promptly (but no later than one (1) Business Day) after filing with
the Commission, the Securities Administrator shall make available on its internet website identified in
Section 7.04 of the Indenture, a final executed copy of each Form 10-D filed by the Securities
Administrator. The signing party at the Master Servicer can be contacted as set forth in Section 7.04.
Form 10-D requires the registrant to indicate (by checking "yes" or "no") that it (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. The Depositor shall notify the Securities
Administrator in writing, no later than the fifth calendar day after the related Distribution Date with
respect to the filing of a report on Form 10-D, if the answer to the questions should be "no". The
Securities Administrator shall be entitled to rely on the representations in Section 2.05(ix) and in any
such notice in preparing, executing and/or filing any such report. The parties to this Agreement
acknowledge that the performance by the Master Servicer and the Securities Administrator of their
respective duties under Sections 4.02(a)(i) and (v) related to the timely preparation, execution and
filing of Form 10-D is contingent upon such parties strictly observing all applicable deadlines in the
performance of their duties under such Sections. Neither the Master Servicer nor the Securities
Administrator shall have any liability for any loss, expense, damage, claim arising out of or with
respect to any failure to properly prepare, execute and/or timely file such Form 10-D, where such
failure results from a party's failure to deliver, on a timely basis, any information from any such
party needed to prepare, arrange for execution or file such Form 10-D, not resulting from its own
negligence, bad faith or willful misconduct.
(ii) (A) Within four (4) Business Days after the occurrence of an event requiring
disclosure on Form 8-K (each such event, a "Reportable Event"), the Securities Administrator shall
prepare and, at the direction of the Depositor, file on behalf of the Trust, any Form 8-K, as required
by the Exchange Act; provided that, the Depositor, upon receipt from the Sponsor of the relevant final
Basic Documents within 14 days after the Closing Date, shall file the initial Form 8-K in connection
with the issuance of the Notes. Any disclosure or information related to a Reportable Event or that is
otherwise required to be included on Form 8-K ("Form 8-K Disclosure Information") shall be, pursuant to
the paragraph immediately below, reported by the parties set forth on Exhibit I to the Securities
Administrator and the Depositor and approved for inclusion by the Depositor, and the Securities
Administrator will have no duty or liability for any failure hereunder to determine or prepare any Form
8-K Disclosure Information absent such reporting (other than in the case where the Securities
Administrator is the reporting party as set forth in Exhibit I) and approval.
(B) For so long as the Trust is subject to the Exchange Act reporting
requirements, no later than the close of business on the 2nd Business Day after the occurrence of a
Reportable Event (i) the parties set forth in Exhibit I shall be required pursuant to Section
4.02(a)(iv) below to provide to the Securities Administrator and the Depositor, to the extent known by a
responsible officer thereof, in ▇▇▇▇▇-compatible format, or in such other form as otherwise agreed upon
by the Securities Administrator and the Depositor and such party, the form and substance of any Form 8-K
Disclosure Information, if applicable, and (ii) the Depositor shall approve, as to form and substance,
or disapprove, as the case may be, the inclusion of the Form 8-K Disclosure Information on Form 8-K. The
Issuing Entity shall be responsible for any reasonable fees and expenses assessed or incurred by the
Securities Administrator in connection with including any Form 8-K Disclosure Information on Form 8-K
pursuant to this Section.
(C) After preparing the Form 8-K, the Securities Administrator shall forward
electronically a copy of the Form 8-K to the Depositor and the Master Servicer for review. No later
than the close of business New York City time on the 3rd Business Day after the Reportable Event, or in
the case where the Master Servicer and Securities Administrator are affiliated, no later than noon New
York City time on the 4th Business Day after the Reportable Event, a duly authorized officer of the
Master Servicer shall sign the Form 8-K and, in the case where the Master Servicer and the Securities
Administrator are not affiliated, return an electronic or fax copy of such signed Form 8-K (with an
original executed hard copy to follow by overnight mail) to the Securities Administrator. Promptly, but
no later than the close of business on the 3rd Business Day after the Reportable Event (provided that,
the Securities Administrator forwards a copy of the Form 8-K no later than noon New York time on the
third Business Day after the Reportable Event), the Depositor shall notify the Securities Administrator
in writing (which may be furnished electronically) of any changes to or approval of such Form 8-K. In
the absence of receipt of any written changes or approval, the Securities Administrator shall be
entitled to assume that such Form 8-K is in final form and the Securities Administrator may proceed with
the execution and filing of the Form 8-K. If a Form 8-K cannot be filed on time or if a previously
filed Form 8-K needs to be amended, the Securities Administrator shall follow the procedures set forth
in Section 4.02(a)(v)(B). Promptly (but no later than one (1) Business Day) after filing with the
Commission, the Securities Administrator shall, make available on its internet website a final executed
copy of each Form 8-K filed by the Securities Administrator. The signing party at the Master Servicer
can be contacted as set forth in Section 7.03. The parties to this Agreement acknowledge that the
performance by Master ▇▇▇▇▇▇▇▇ and the Securities Administrator of their respective duties under this
Section 4.02(a)(ii) related to the timely preparation, execution and filing of Form 8-K is contingent
upon such parties strictly observing all applicable deadlines in the performance of their duties under
this Section 4.02(a)(ii). Neither the Master Servicer nor the Securities Administrator shall have any
liability for any loss, expense, damage, claim arising out of or with respect to any failure to properly
prepare, execute and/or timely file such Form 8-K, where such failure results from a party's failure to
deliver, on a timely basis, any information from such party needed to prepare, arrange for execution or
file such Form 8-K, not resulting from its own negligence, bad faith or willful misconduct.
(iii) (A) Within 90 days after the end of each fiscal year of the Trust or such
earlier date as may be required by the Exchange Act (the "10-K Filing Deadline") (it being understood
that the fiscal year for the Trust ends on December 31st of each year), commencing in March 2008, the
Securities Administrator shall prepare and file on behalf of the Trust a Form 10-K, in form and
substance as required by the Exchange Act. Each such Form 10-K shall include the following items, in
each case to the extent they have been delivered to the Securities Administrator within the applicable
time frames set forth in this Agreement, (I) an annual compliance statement for each Servicer, the
Master Servicer, the Securities Administrator and any subservicer or subcontractor, as applicable, as
described under Section 3.20, (II)(A) the annual reports on assessment of compliance with Servicing
Criteria for each Servicer, the Master Servicer, each subservicer and subcontractor participating in the
servicing function, the Securities Administrator and the Custodians, as described under Section 3.21,
and (B) if any such report on assessment of compliance with Servicing Criteria described under Section
3.21 identifies any material instance of noncompliance, disclosure identifying such instance of
noncompliance, or if any such report on assessment of compliance with Servicing Criteria described under
Section 3.21 is not included as an exhibit to such Form 10-K, disclosure that such report is not
included and an explanation why such report is not included, (III)(A) the registered public accounting
firm attestation report for each Servicer, the Master Servicer, the Securities Administrator, each
subservicer, each subcontractor, as applicable, and the Custodians, as described under Section 3.21, and
(B) if any registered public accounting firm attestation report described under Section 3.21 identifies
any material instance of noncompliance, disclosure identifying such instance of noncompliance, or if any
such registered public accounting firm attestation report is not included as an exhibit to such Form
10-K, disclosure that such report is not included and an explanation why such report is not included,
and (IV) a ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification as described in Section 4.02 (a)(iii)(D) below (provided,
however, that the Securities Administrator, at its discretion, may omit from the Form 10-K any annual
compliance statement, assessment of compliance or attestation report that is not required to be filed
with such Form 10-K pursuant to Regulation AB). Any disclosure or information in addition to (I) through
(IV) above that is required to be included on Form 10-K ("Additional Form 10-K Disclosure") shall be,
pursuant to the paragraph immediately below, reported by the parties set forth on Exhibit I to the
Securities Administrator and the Depositor and approved for inclusion by the Depositor, and the
Securities Administrator will have no duty or liability for any failure hereunder to determine or
prepare any Additional Form 10-K Disclosure absent such reporting (other than in the case where the
Securities Administrator is the reporting party as set forth in Exhibit I) and approval.
(B) No later than March 15th of each year that the Trust is subject to the
Exchange Act reporting requirements, commencing in 2008, (i) the parties set forth in Exhibit I shall be
required to provide pursuant to Section 4.02(a)(iv) below to the Securities Administrator and the
Depositor, to the extent known by a responsible officer thereof, in ▇▇▇▇▇-compatible format, or in such
other form as otherwise agreed upon by the Securities Administrator and the Depositor and such party,
the form and substance of any Additional Form 10-K Disclosure, if applicable, and (ii) the Depositor
will approve, as to form and substance, or disapprove, as the case may be, the inclusion of the
Additional Form 10-K Disclosure on Form 10-K. The Issuing Entity shall be responsible for any
reasonable fees and expenses assessed or incurred by the Securities Administrator in connection with
including any Additional Form 10-K Disclosure on Form 10-K pursuant to this Section.
(C) After preparing the Form 10-K, the Securities Administrator shall forward
electronically a copy of the Form 10-K to the Depositor (only in the case where such Form 10-K includes
Additional Form 10-K Disclosure and otherwise if requested by the Depositor) and the Master Servicer for
review. Within three Business Days after receipt of such copy, but no later than March 25th (provided
that, the Securities Administrator forwards a copy of the Form 10-K no later than the third Business Day
prior to March 25th), the Depositor shall notify the Securities Administrator in writing (which may be
furnished electronically) of any changes to or approval of such Form 10-K. In the absence of receipt of
any written changes or approval, the Securities Administrator shall be entitled to assume that such Form
10-K is in final form and the Securities Administrator may proceed with the execution and filing of the
Form 10-K. No later than the close of business Eastern Standard time on the 4th Business Day prior to
the 10-K Filing Deadline, an officer of the Master Servicer in charge of the master servicing function
shall sign the Form 10-K and, in the case where the Master Servicer and the Securities Administrator are
unaffiliated, return an electronic or fax copy of such signed Form 10-K (with an original executed hard
copy to follow by overnight mail) to the Securities Administrator. If a Form 10-K cannot be filed on
time or if a previously filed Form 10-K needs to be amended, the Securities Administrator will follow
the procedures set forth in Section 4.02(a)(v)(B). Promptly (but no later than one (1) Business Day)
after filing with the Commission, the Securities Administrator shall make available on its internet
website a final executed copy of each Form 10-K filed by the Securities Administrator. The signing
party at the Master Servicer can be contacted as set forth in Section 7.03. Form 10-K requires the
registrant to indicate (by checking "yes" or "no") that it (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. The Depositor shall notify the Securities Administrator in writing,
no later than March 15th of each year in which the Trust is subject to the requirements of the Exchange
Act with respect to the filing of a report on Form 10-K, if the answer to the question should be "no".
The Securities Administrator shall be entitled to rely on such response and in any such notice in
preparing, executing and/or filing any such report. The parties to this Agreement acknowledge that the
performance by the Master Servicer and the Securities Administrator of their respective duties under
Sections 4.02(a)(iv) and (v) related to the timely preparation, execution and filing of Form 10-K is
contingent upon such parties strictly observing all applicable deadlines in the performance of their
duties under such Sections and Sections 3.20and Section 3.21. Neither the Master Servicer nor the
Securities Administrator shall have any liability for any loss, expense, damage, claim arising out of or
with respect to any failure to properly prepare, execute and/or timely file such Form 10-K, where such
failure results from the Master Servicer's or the Securities Administrator's inability or failure to
receive, on a timely basis, any information from any other party hereto needed to prepare, arrange for
execution or file such Form 10-K, not resulting from its own negligence, bad faith or willful misconduct.
(D) Each Form 10-K shall include a certification (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇
Certification") required to be included therewith pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act which shall be
signed by the Certifying Person and delivered to the Securities Administrator no later than March 15th
of each year in which the Trust is subject to the reporting requirements of the Exchange Act. The
Master Servicer shall cause the Servicer, and any subservicer or subcontractor engaged by it to, provide
to the Person who signs the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification (the "Certifying Person"), by March 10th of
each year in which the Trust is subject to the reporting requirements of the Exchange Act (or such other
date specified in the related Servicing Agreement) and otherwise within a reasonable period of time upon
request, a certification (each, a "Back-Up Certification"), in the form attached hereto as Exhibit _,
upon which the Certifying Person, the entity for which the Certifying Person acts as an officer, and
such entity's officers, directors and Affiliates (collectively with the Certifying Person,
"Certification Parties") can reasonably rely. In addition, the Mortgage Loan Seller and, in the case
where the Master Servicer and Securities Administrator are not affiliated, the Securities Administrator
shall sign a Back-Up Certification substantially in the form of Exhibit _; provided, however, the
Mortgage Loan Seller and the Securities Administrator shall not be required to undertake an analysis of
any accountant's report attached as an exhibit to the Form 10-K. An officer of the Master Servicer in
charge of the master servicing function shall serve as the Certifying Person on behalf of the Trust.
Such officer of the Certifying Person can be contacted as set forth in Section 7.03.
(iv) With respect to any Additional Form 10-D Disclosure, Additional Form 10-K
Disclosure or any Form 8-K Disclosure Information (collectively, the "Additional Disclosure") relating
to the Trust Fund, the Securities Administrator's obligation to include such Additional Information in
the applicable Exchange Act report is subject to receipt from the entity that is indicated in Exhibit I
as the responsible party for providing that information, if other than the Securities Administrator, as
and when required as described in Section 4.02(a)(i) through (iii) above. Such Additional Disclosure
shall be accompanied by a notice substantially in the form of Exhibit M. Each of the Servicer, the
Master Servicer, the Seller, the Securities Administrator and the Depositor hereby agrees to notify and
provide, to the extent known to the Servicer, the Master Servicer, the Seller, the Securities
Administrator and the Depositor all Additional Disclosure relating to the Trust Fund, with respect to
which such party is indicated in Exhibit I as the responsible party for providing that information. The
Issuing Entity shall be responsible for any reasonable fees and expenses assessed or incurred by the
Securities Administrator in connection with including any Additional Disclosure information pursuant to
this Section.
So long as the Depositor is subject to the filing requirements of the Exchange Act
with respect to the Trust Fund, the Indenture Trustee shall notify the Securities Administrator and the
Depositor of any bankruptcy or receivership with respect to the Indenture Trustee or of any proceedings
of the type described under Item 1117 of Regulation AB that have occurred as of the related Due Period,
together with a description thereof, no later than the date on which such information is required of
other parties hereto as set forth under this Section 4.02. In addition, the Indenture Trustee shall
notify the Securities Administrator and the Depositor of any affiliations or relationships that develop
after the Closing Date between the Indenture Trustee and the Depositor, the Seller, the Servicer, the
Securities Administrator, the Master Servicer or the Custodian of the type described under Item 1119 of
Regulation AB, together with a description thereof, no later than March 15 of each year that the Trust
is subject to the Exchange Act reporting requirements, commencing in 2008. Should the identification of
any of the Depositor, the Servicer, the Seller, the Securities Administrator, the Master Servicer or the
Custodian change, the Depositor and the Sponsor, to the extent known by them, shall each promptly notify
the Indenture Trustee.
(v) (A) On or prior to January 30th of the first year in which the Securities
Administrator is able to do so under applicable law, the Securities Administrator shall prepare and file
a Form 15 relating to the automatic suspension of reporting in respect of the Trust under the Exchange
Act.
(B) In the event that the Securities Administrator is unable to timely file with
the Commission all or any required portion of any Form 8-K, 10-D or 10-K required to be filed by this
Agreement because required disclosure information was either not delivered to it or delivered to it
after the delivery deadlines set forth in this Agreement or for any other reason, the Securities
Administrator shall promptly notify the Depositor and the Master Servicer. In the case of Form 10-D and
10-K, the Depositor, the Master Servicer and the Securities Administrator shall cooperate to prepare and
file a Form 12b-25 and a 10-DA and 10-KA as applicable, pursuant to Rule 12b-25 of the Exchange Act. In
the case of Form 8-K, the Securities Administrator will, upon receipt of all required Form 8-K
Disclosure Information and upon the approval of the Depositor, include such disclosure information on
the next Form 10-D. In the event that any previously filed Form 8-K, 10-D or 10-K needs to be amended,
and such amendment relates to any Additional Disclosure, the Securities Administrator shall notify the
Depositor and the parties affected thereby and such parties will cooperate to prepare any necessary Form
8-K, 10-DA or 10-KA. Any Form 15, Form 12b-25 or any amendment to Form 8-K, 10-D or 10-K shall be
signed by an appropriate officer of the Master Servicer. The parties hereto acknowledge that the
performance by the Master Servicer and the Securities Administrator of their respective duties under
this Section 3.15(a)(v) related to the timely preparation, execution and filing of Form 15, a Form
12b-25 or any amendment to Form 8-K, 10-D or 10-K is contingent upon the Master Servicer and the
Depositor timely performing their duties under this Section. Neither the Master Servicer nor the
Securities Administrator shall have any liability for any loss, expense, damage or claim arising out of
or with respect to any failure to properly prepare, execute and/or timely file any such Form 15, Form
12b-25 or any amendments to Form 8-K, 10-D or 10-K, where such failure results from a party's failure to
deliver, on a timely basis, any information from such party needed to prepare, arrange for execution or
file such Form 15, Form 12b-25 or any amendments to Form 8-K, 10-D or 10-K, not resulting from its own
negligence, bad faith or willful misconduct.
The Depositor and the Sponsor each agrees to promptly furnish to the Securities
Administrator, from time to time upon reasonable request, such further information, reports and
financial statements within its control and related to this Agreement and the Mortgage Loans as the
Securities Administrator that it reasonably deems appropriate in order to prepare and file all necessary
reports with the Commission. The Securities Administrator shall have no responsibility to file any items
other than those specified in this Section 4.02; provided, however, the Securities Administrator shall
cooperate with the Depositor in connection with any additional filings with respect to the Trust Fund as
the Depositor deems necessary under the Exchange Act. Fees and expenses incurred by the Securities
Administrator in connection with this Section 4.02 shall not be reimbursable from the Trust Fund.
(b) The Securities Administrator shall indemnify and hold harmless the Depositor,
the Indenture Trustee, the Servicer, the Seller and the Sponsor and each of its officers, directors and
affiliates from and against any losses, damages, claims, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments and other costs and expenses arising out of or based
upon a breach of the Securities Administrator's obligations under Sections 3.20, 3.21 and 4.02 or the
Securities Administrator's negligence, bad faith or willful misconduct in connection therewith. In
addition, the Securities Administrator shall indemnify and hold harmless the Depositor, the Indenture
Trustee, the Servicer, the Seller and the Sponsor and each of their respective officers, directors and
affiliates from and against any losses, damages, claims, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments and other costs and expenses arising out of or based
upon (i) any untrue statement or alleged untrue statement of any material fact contained in any Back-Up
Certification, any Annual Statement of Compliance, any Assessment of Compliance or any Additional
Disclosure provided by the Securities Administrator on its behalf or on behalf of any subservicer or
subcontractor engaged by the Securities Administrator pursuant to Section 3.20, 3.21 or 4.02 (the
"Securities Administrator Information"), or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, by way of clarification, that this
paragraph shall be construed solely by reference to the Securities Administrator Information and not to
any other information communicated in connection with the Notes, without regard to whether the
Securities Administrator Information or any portion thereof is presented together with or separately
from such other information.
The Depositor shall indemnify and hold harmless the Securities Administrator, the
Servicer, the Seller, the Indenture Trustee, the Sponsor, the Custodian and the Master Servicer and each
of its officers, directors and affiliates from and against any losses, damages, claims, penalties,
fines, forfeitures, reasonable and necessary legal fees and related costs, judgments and other costs and
expenses arising out of or based upon a breach of the obligations of the Depositor to deliver the
information to be provided by it as set forth in Exhibit I or the Depositor's negligence, bad faith or
willful misconduct in connection therewith. In addition, the Depositor shall indemnify and hold harmless
the Master Servicer, the Servicer, the Indenture Trustee, the Seller, the Sponsor, the Custodian, the
Securities Administrator and each of its respective officers, directors and affiliates from and against
any losses, damages, claims, penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments and other costs and expenses arising out of or based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any Additional Disclosure
provided by the Depositor that is required to be filed pursuant to this Section 4.02 (the "Depositor
Information"), or (ii) any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances in which they
were made, not misleading; provided, by way of clarification, that this paragraph shall be construed
solely by reference to the Depositor Information that is required to be filed and not to any other
information communicated in connection with the Notes, without regard to whether the Depositor
Information or any portion thereof is presented together with or separately from such other information.
The Master Servicer shall indemnify and hold harmless the Indenture Trustee, the
Servicer, the Seller, the Sponsor, and the Depositor and each of its respective officers, directors and
affiliates from and against any losses, damages, claims, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments and other costs and expenses arising out of or based
upon a breach of the obligations of the Master Servicer under Sections 3.20, 3.21 and 4.02 or the Master
Servicer's negligence, bad faith or willful misconduct in connection therewith. In addition, the Master
Servicer shall indemnify and hold harmless the Indenture Trustee, the Depositor, the Servicer, the
Seller, the Sponsor, and each of their officers, directors and affiliates from and against any losses,
damages, claims, penalties, fines, forfeitures, reasonable and necessary legal fees and related costs,
judgments and other costs and expenses arising out of or based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in any Annual Statement of Compliance, any Assessment of
Compliance or any Additional Disclosure provided by the Master Servicer on its behalf or on behalf of
any subservicer or subcontractor engaged by the Master Servicer pursuant to Section 3.20, 3.21 or 4.02
(the "Master Servicer Information"), or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, by way of clarification, that this
paragraph shall be construed solely by reference to the Master Servicer Information and not to any other
information communicated in connection with the Notes, without regard to whether the Master Servicer
Information or any portion thereof is presented together with or separately from such other information.
The Servicer shall indemnify and hold harmless the Securities Administrator, the
Master Servicer, the Securities Administrator, the Custodian, the Indenture Trustee, and the Depositor
and each of its respective officers, directors and affiliates from and against any losses, damages,
claims, penalties, fines, forfeitures, reasonable and necessary legal fees and related costs, judgments
and other costs and expenses arising out of or based upon a breach of the obligations of the Servicer
under Sections 3.20, 3.21 and 4.02 or the Servicer's negligence, bad faith or willful misconduct in
connection therewith. In addition, the Servicer shall indemnify and hold harmless Securities
Administrator, the Master Servicer, the Securities Administrator, the Custodian, the Indenture Trustee,
and the Depositor, and each of their officers, directors and affiliates from and against any losses,
damages, claims, penalties, fines, forfeitures, reasonable and necessary legal fees and related costs,
judgments and other costs and expenses arising out of or based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in any Annual Statement of Compliance, any Assessment of
Compliance or any Additional Disclosure provided by the Servicer on its behalf or on behalf of any
subservicer or subcontractor engaged by the Servicer pursuant to Section 3.20, 3.21 or 4.02 (the
"Servicer Information"), or (ii) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading; provided, by way of clarification, that this paragraph shall be
construed solely by reference to the Servicer Information and not to any other information communicated
in connection with the Notes, without regard to whether the Servicer Information or any portion thereof
is presented together with or separately from such other information.
The Custodian shall indemnify and hold harmless the Securities Administrator, the Master
Servicer, the Servicer, the Seller, the Sponsor, the Indenture Trustee, and the Depositor and each of its
respective officers and directors from and against any losses, damages, claims, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments and other costs and expenses
directly resulting from a material breach of the obligations of the Custodian under Sections 3.20, 3.21 and
4.02 of this Agreement constituting negligence, bad faith or willful misconduct on behalf of the Custodian
in connection therewith. In addition, the Custodian shall indemnify and hold harmless Securities
Administrator, the Master Servicer, the Securities Administrator, the Servicer, the Seller, the Sponsor,
the Indenture Trustee, and the Depositor, and each of their officers, directors and affiliates from and
against any losses, damages, claims, penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments and other costs and expenses directly resulting from (i) any untrue statement or
alleged untrue statement of any material fact contained in any Annual Statement of Compliance, any
Assessment of Compliance or any Additional Disclosure provided by the Custodian on its behalf or on behalf
of any subservicer or subcontractor engaged by the Custodian pursuant to Section 3.20, 3.21 or 4.02 of this
Agreement (the "Custodian Information"), or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, by way of clarification, that this
paragraph shall be construed solely by reference to the Custodian Information and not to any other
information communicated in connection with the Notes, without regard to whether the Custodian Information
or any portion thereof is presented together with or separately from such other information.
The Sponsor shall indemnify and hold harmless the Securities Administrator, the
Depositor, the Indenture Trustee, the Custodian, the Securities Administrator and the Master Servicer
and each of its officers, directors and affiliates from and against any losses, damages, claims,
penalties, fines, forfeitures, reasonable and necessary legal fees and related costs, judgments and
other costs and expenses arising out of or based upon a breach of the obligations of the Sponsor under
Section 4.02 or the Sponsor's negligence, bad faith or willful misconduct in connection therewith. In
addition, the Sponsor shall indemnify and hold harmless the Depositor, the Indenture Trustee, the
Custodian, the Securities Administrator and the Master Servicer and each of its respective officers,
directors and affiliates from and against any losses, damages, claims, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other costs and expenses arising
out of or based upon (i) any untrue statement or alleged untrue statement of any material fact contained
in any Additional Disclosure provided by the Sponsor that is required to be filed pursuant to this
Section 4.02 (the "Sponsor Information"), or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, by way of clarification, that this
paragraph shall be construed solely by reference to the Sponsor Information that is required to be filed
and not to any other information communicated in connection with the Notes, without regard to whether
the Sponsor Information or any portion thereof is presented together with or separately from such other
information.
If the indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, the Securities Administrator, the Sponsor, the Servicer, the Seller or the
Master Servicer, as applicable, then the defaulting party, in connection with any conduct for which it
is providing indemnification under this Section 4.02(b), agrees that it shall contribute to the amount
paid or payable by the other parties as a result of the losses, claims, damages or liabilities of the
other party in such proportion as is appropriate to reflect the relative fault and the relative benefit
of the respective parties.
The indemnification provisions set forth in this Section 4.02(b) shall survive the
termination of this Agreement or the termination of any party to this Agreement.
(c) Failure of the Master Servicer to comply with Section 3.20, 3.21 and this
Section 4.02 (including with respect to the timeframes required herein) shall constitute a Master
Servicer Event of Termination, and at the written direction of the Depositor, the Indenture Trustee
shall, in addition to whatever rights the Indenture Trustee may have under this Agreement and at law or
equity or to damages, including injunctive relief and specific performance, upon notice immediately
terminate all of the rights and obligations of the Master Servicer under this Agreement and in and to
the Mortgage Loans and the proceeds thereof without compensating the Master Servicer for the same (but
subject to the Master Servicer rights to payment of any Master Servicing Compensation and reimbursement
of all amounts for which it is entitled to be reimbursed prior to the date of termination). Failure of
the Securities Administrator to comply with this Section 3.17 (including with respect to the timeframes
required in this Section) which failure results in a failure to timely file the related Form 10-K,
shall, at the written direction of the Depositor, constitute a default and the Indenture Trustee at the
direction of the Depositor shall, in addition to whatever rights the Indenture Trustee may have under
this Agreement and at law or equity or to damages, including injunctive relief and specific performance,
upon notice immediately terminate all of the rights and obligations of the Securities Administrator
under this Agreement and in and to the Mortgage Loans and the proceeds thereof without compensating the
Securities Administrator for the same (but subject to the Securities Administrator's right to
reimbursement of all amounts for which it is entitled to be reimbursed prior to the date of
termination). This paragraph shall supersede any other provision in this Agreement or any other
agreement to the contrary. In connection with the termination of the Master Servicer or the Securities
Administrator pursuant to this Section 4.02, the Indenture Trustee shall be entitled to reimbursement of
all costs and expenses associated with such termination to the extent set forth in Section 6.08 of the
Indenture. Notwithstanding anything to the contrary in this Agreement, no Event of Default by the
Master Servicer or default by the Securities Administrator shall have occurred with respect to any
failure to properly prepare, execute and/or timely file any report on Form 8-K, Form 10-D or Form 10-K,
any Form 15 or Form 12b-25 or any amendments to Form 8-K, 10-D or 10-K, where such failure results from
a party's failure to deliver, on a timely basis, any information from such party needed to prepare,
arrange for execution or file any such report, Form or amendment, and does not result from its own
negligence, bad faith or willful misconduct.
(d) Notwithstanding the provisions of Section 7.01, this Section 4.02 may be
amended without the consent of the Noteholders.
(e) Any report, notice or notification to be delivered by the Master Servicer or
the Securities Administrator to the Depositor pursuant to this Section 4.02, may be delivered via email
to ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇ or, in the case of a notification, telephonically by calling Reg AB
Compliance Manager at ▇▇▇-▇▇▇-▇▇▇▇.
(f) Each of the parties acknowledges and agrees that the purpose of Sections 3.20,
3.21 and 4.02 of this Agreement is to facilitate compliance by the Sponsor, the Depositor and the Master
Servicer with the provisions of Regulation AB. Therefore, each of the parties agrees that (a) the
obligations of the parties hereunder shall be interpreted in such a manner as to accomplish that
purpose, (b) the parties' obligations hereunder will be supplemented and modified as necessary to be
consistent with any such amendments, interpretive advice or guidance, convention or consensus among
active participants in the asset-backed securities markets, advice of counsel, or otherwise in respect
of the requirements of Regulation AB, (c) the parties shall comply with reasonable requests made by the
Sponsor, the Depositor, the Master Servicer or the Securities Administrator for delivery of additional
or different information as the Sponsor, the Depositor, the Master Servicer or the Securities
Administrator may determine in good faith is necessary to comply with the provisions of Regulation AB,
and (d) no amendment of this Agreement shall be required to effect any such changes in the obligations
of the parties to this transaction as are necessary to accommodate evolving interpretations of the
provisions of Regulation AB.
Section 4.03. Swap Account.
(a) On the Closing Date, the Securities Administrator shall establish and maintain
a separate, segregated trust account titled, "Swap Account, The Bank of New York, as Indenture Trustee,
in trust for the registered Noteholders of Newcastle Mortgage Securities Trust 2007-1, Asset-Backed
Notes, Series 2007-1." Such account shall be an Eligible Account and funds on deposit therein shall be
held separate and apart from, and shall not be commingled with, any other moneys, including, without
limitation, other moneys of the Securities Administrator held pursuant to this Agreement. Amounts
therein shall be held uninvested.
(b) On the Business Day prior to Payment Date, prior to any payment to any Note,
the Securities Administrator shall deposit into the Swap Account the amount of any Net Swap Payment or
Swap Termination Payment (other than any Swap Termination Payment resulting from a Swap Provider Trigger
Event) owed to the Swap Provider (after taking into account any upfront payment received from the
counterparty to a replacement interest rate swap agreement) from funds collected and received with
respect to the Mortgage Loans prior to the determination of Available Funds and all amounts received by
it from the Swap Provider.
(c) The Securities Administrator shall use any payment received from the Owner
Trustee pursuant to Section 2.03 of the Trust Agreement to make any upfront payment required under a
replacement swap agreement and any upfront payment received from the counterparty to a replacement swap
agreement shall be used to pay any Swap Termination Payment owed to the Swap Provider.
Section 4.04. Cap Account.
(a) On the Closing Date, the Securities Administrator shall establish and maintain
a separate, segregated trust account titled, "Cap Account, The Bank of New York, as Indenture Trustee,
in trust for the registered Noteholders of Newcastle Mortgage Securities Trust 2007-1, Asset-Backed
Notes, Series 2007-1." Such account shall be an Eligible Account and funds on deposit therein shall be
held separate and apart from, and shall not be commingled with, any other moneys, including, without
limitation, other moneys of the Securities Administrator held pursuant to this Agreement. Amounts
therein shall be held uninvested.
ARTICLE V
THE SERVICER AND THE DEPOSITOR
Section 5.01. Liability of the Servicer, Master Servicer and the Depositor.
The Servicer and Master Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by Servicer or Master Servicer, as
the case may be, herein. The Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Depositor.
Section 5.02. Merger or Consolidation of, or Assumption of the Obligations of, the
Servicer or the Depositor.
Any entity into which the Servicer or Depositor may be merged or consolidated, or any
entity resulting from any merger, conversion or consolidation to which the Servicer or the Depositor
shall be a party, or any corporation succeeding to the business of the Servicer or the Depositor, shall
be the successor of the Servicer or the Depositor, as the case may be, 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 Servicer shall satisfy all the
requirements of Section 6.02 with respect to the qualifications of a successor Servicer.
Section 5.03. Limitation on Liability of the Servicer, Master Servicer and Others.
None of the Servicer, the Master Servicer, the Depositor nor any of the directors or
officers or employees or agents of the Servicer, the Master Servicer or the Depositor shall be under any
liability to the Trust or the Noteholders for any action taken or for refraining from the taking of any
action by the Servicer the Master Servicer, or the Depositor in good faith pursuant to this Agreement,
or for errors in judgment; provided, however, that this provision shall not protect the Servicer, the
Master Servicer, the Depositor or any such Person against any liability which would otherwise be imposed
by reason of its willful misfeasance, bad faith or negligence in the performance of duties of the
Servicer, the Master Servicer, or the Depositor, as the case may be, or by reason of its reckless
disregard of its obligations and duties as Servicer, Master Servicer, or Depositor, as the case may be,
hereunder. The Servicer and Master Servicer, and any director or officer or employee or agent of the
Servicer or Master Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder. The Servicer, the Master
Servicer and the Depositor, and any director or officer or employee or agent of the Servicer, the Master
Servicer or the Depositor, shall be indemnified by the Trust and held harmless against any loss,
liability or expense incurred in connection with (i) any legal action relating to this Agreement or the
Notes, other than any loss, liability or expense incurred by reason of its willful misfeasance, bad
faith or negligence or by reason of its reckless disregard of its obligations and duties hereunder or by
reason of its failure to perform its obligations or duties hereunder and (ii) any breach of a
representation or warranty regarding the Mortgage Loans. The Servicer, the Master Servicer or the
Depositor may undertake any such action which it may deem necessary or desirable in respect of this
Agreement, and the rights and duties of the parties hereto and the interests of the Noteholders
hereunder. In such event, unless the Depositor, the Master Servicer or the Servicer acts without the
consent of the Holders of 51% of the aggregate Note Balance of the Notes, the reasonable legal expenses
and costs of such action and any liability resulting therefrom shall be expenses, costs and liabilities
of the Trust and the Servicer shall be entitled to be reimbursed therefor from the Collection Account as
and to the extent provided in Section 3.11, any such right of reimbursement being prior to the rights of
the Noteholders to receive any amount in the Collection Account. The Master Servicer shall be
indemnified by the Issuing Entity pursuant to Section 6.07 of the Indenture.
The Servicer's and the Depositor's right to indemnity or reimbursement pursuant to
this Section shall survive any resignation or termination of the Servicer pursuant to Section 5.04 or
6.01 with respect to any losses, expenses, costs or liabilities arising prior to such resignation or
termination (or arising from events that occurred prior to such resignation or termination). The Master
Servicer's right to indemnity or reimbursement pursuant to this Section 5.03 shall survive any
resignation or termination of the Master Servicer pursuant to Section 3.40 or 6.06 with respect to any
losses, expenses, costs or liabilities arising prior to such resignation or termination (or arising from
events that occurred prior to such resignation or termination).
Section 5.04. Servicer Not to Resign.
The Servicer shall not resign from the obligations and duties hereby imposed on it
except upon determination that its duties hereunder are no longer permissible under applicable law. Any
such determination pursuant to the preceding sentence permitting the resignation of the Servicer shall
be evidenced by an Opinion of Counsel to such effect obtained at the expense of the Servicer and
delivered to the Master Servicer. No resignation of the Servicer shall become effective until the
Servicer appoints a successor servicer and the successor servicer shall have assumed the Servicer's
responsibilities, duties, liabilities (other than those liabilities arising prior to the assumption of
servicing duties by the Successor Servicer) and obligations under this Agreement. Any such resignation
shall not relieve the Servicer of responsibility for any of the obligations specified in Sections 6.01
and 6.02 as obligations that survive the resignation or receipt of notice of termination of the Servicer
Except as expressly provided in this Agreement, the Servicer shall not assign or
transfer any of its rights, benefits or privileges hereunder to any other Person, or delegate to or
subcontract with, or authorize or appoint any other Person to perform any of the duties, covenants or
obligations to be performed by the Servicer hereunder. The foregoing prohibition on assignment shall not
prohibit the Servicer from designating a Sub-Servicer as payee of any indemnification amount payable to
the Servicer hereunder; provided, however, no Sub-Servicer shall be a third-party beneficiary hereunder
and the parties hereto shall not be required to recognize any Sub-Servicer as an indemnitee under this
Agreement.
Section 5.05. Delegation of Duties.
In the ordinary course of business, the Servicer at any time may delegate any of its
duties hereunder to any Person, including any of its Affiliates, who agrees to conduct such duties in
accordance with standards comparable to those set forth in Section 3.01. Such delegation shall not
relieve the Servicer of its liabilities and responsibilities with respect to such duties and shall not
constitute a resignation within the meaning of Section 5.04. Except as provided in Section 3.02, no such
delegation is permitted that results in the delegee subservicing any Mortgage Loans. The Servicer shall
provide the Indenture Trustee, Master Servicer and Securities Administrator with 60 days prior written
notice prior to the delegation of any of its duties to any Person other than any of the Servicer's
Affiliates or their respective successors and assigns.
Section 5.06. Indemnification.
(a) The Servicer agrees to indemnify and hold the Indenture Trustee, the Owner
Trustee, the Sponsor, the Master Servicer, the Securities Administrator, the Seller, the Sponsor and the
Depositor harmless against any and all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses that the Indenture Trustee, the Owner
Trustee, the Sponsor, the Master Servicer, the Securities Administrator, the Seller, the Sponsor or the
Depositor may sustain in any way related to the failure of the Servicer to perform its duties and
service the Mortgage Loans in compliance with the terms of this Agreement.
(b) The Master Servicer shall indemnify and hold harmless the Trust, the
Securities Administrator, the Servicer, the Seller, the Sponsor, the Depositor, the Indenture Trustee
and the Owner Trustee from and against any loss, liability, expense, damage or injury suffered or
sustained by reason of the Master Servicer's willful misfeasance, bad faith or negligence in the
performance of its activities in master servicing or administering the Mortgage Loans pursuant to this
Agreement, including, but not limited to, any judgment, award, settlement, reasonable attorneys' fees
and other costs or expenses incurred in connection with the defense of any actual or threatened action,
proceeding or claim related to the Master Servicer's misfeasance, bad faith or negligence. Any such
indemnification shall not be payable from the assets of the Trust. The provisions of this Section
5.06(b) shall survive the termination of this Agreement.
(c) The Custodian shall indemnify and hold harmless the Trust, the Servicer, the
Seller, the Sponsor, the Depositor and the Indenture Trustee from and against any loss, liability,
expense, damage or injury directly resulting from a Custodial Delivery Failure. The provisions of this
Section 5.06(c) shall survive the termination of this Agreement.
Section 5.07. Inspection
The Servicer, in its capacity as Servicer, shall afford the Indenture Trustee and the
Master Servicer, upon reasonable notice, during normal business hours, access to all records maintained
by the Servicer in respect of its rights and obligations hereunder and access to officers of the
Servicer responsible for such obligations.
ARTICLE VI
DEFAULT
Section 6.01. Servicer Events of Termination.
(a) If any one of the following events ("Servicer Events of Termination") shall
occur and be continuing:
(i) (A) The failure by the Servicer to make any Advance; or (B) any other
failure by the Servicer to deposit in the Collection Account or the Note Account any deposit
required to be made under the terms of this Agreement which continues unremedied for a period
of one Business Day after the date upon which written notice of such failure shall have been
given to the Servicer by the Master Servicer, Securities Administrator or Indenture Trustee or
to the Servicer and the Indenture Trustee by any Holders of not less than 25% of the aggregate
Note Balances of the Notes; or
(ii) The failure by the Servicer to make any required Servicing Advance
which failure continues unremedied for a period of 30 days, or the failure by the Servicer duly
to observe or perform, in any material respect, any other covenants, obligations or agreements
of the Servicer as set forth in this Agreement, which failure continues unremedied for a period
of 30 days (or if such failure or breach cannot be remedied within 30 days, then such remedy
shall have been commenced within 30 days and diligently pursued thereafter; provided, however,
that in no event shall such failure or breach be allowed to exist for a period of greater than
90 days), after the date (A) on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Master Servicer, Securities
Administrator or Indenture Trustee or to the Indenture Trustee by any Holders of not less than
25% of the aggregate Note Balance of the Notes or (B) of actual knowledge of such failure by a
Servicing Officer of the Servicer; or
(iii) The entry against the Servicer of a decree or order by a court or
agency or supervisory authority having jurisdiction in the premises for the appointment of a
trustee, conservator, receiver or liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 days;
(iv) Reserved; or
(v) The Servicer shall voluntarily go into liquidation, consent to the
appointment of a conservator or receiver or liquidator or similar person in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or substantially all of its property; or a
decree or order of a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver, liquidator or similar person in any
insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings,
or for the winding-up or liquidation of its affairs, shall have been entered against the
Servicer and such decree or order shall have remained in force undischarged, unbonded or
unstayed for a period of 60 days; or the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations;
(b) then, and in each and every such case, so long as a Servicer Event of
Termination shall not have been remedied within the applicable grace period, (x) with respect solely to
clause (i)(A) above, if such Advance is not made by 11:00 A.M., New York time, on the Business Day
immediately following the Servicer Remittance Date (provided the Master Servicer shall give the
Servicer, and the Servicer shall have received, notice of such failure to advance by 5:00 P.M. New York
time on the Servicer Remittance Date), the Master Servicer shall terminate all of the rights and
obligations of the Servicer under this Agreement and the Successor Servicer appointed in accordance with
Section 6.02, shall immediately make such Advance and assume, pursuant to Section 6.02, the duties of a
successor Servicer and (y) in the case of (i)(B), (ii), (iii) and (iv) above, the Master Servicer shall,
at the direction of the Holders of each Class of Notes evidencing Percentage Interests aggregating not
less than 51%, by notice then given in writing to the Servicer and Master Servicer (and to the Indenture
Trustee if given by Holders of Notes), terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. Any such notice to the Servicer shall also be given to each Rating
Agency, the Depositor, the Sponsor and the Seller. On or after the receipt by the Servicer (and by the
Indenture Trustee if such notice is given by the Holders) of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the Notes or the Mortgage Loans or
otherwise, shall pass to and be vested in the Successor Servicer pursuant to and under this Section;
and, without limitation, and the Successor Servicer is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and endorsement of each
Mortgage Loan and related documents or otherwise. The Servicer agrees to cooperate with the Successor
Servicer (or the applicable successor Servicer) in effecting the termination of the responsibilities and
rights of the Servicer hereunder, including, without limitation, the delivery to the Successor Servicer
of all documents and records requested by it to enable it to assume the Servicer's functions under this
Agreement within ten Business Days subsequent to such notice, the transfer within one Business Day
subsequent to such notice to the Successor Servicer for the administration by it of all cash amounts
that shall at the time be held by the Servicer and to be deposited by it in the Collection Account, the
Note Account, any REO Account or any Escrow Account or that have been deposited by the Servicer in such
accounts or thereafter received by the Servicer with respect to the Mortgage Loans or any REO Property
received by the Servicer. All Servicing Transfer Costs shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses and to the extent not paid by the
Servicer, by the Trust.
Notwithstanding the termination of the Servicer hereunder, the Servicer shall be
entitled to reimbursement of all unpaid Servicing Fees and all unreimbursed Advances and Servicing
Advances in the manner and at the times set forth herein.
Section 6.02. Master Servicer to Act; Appointment of Successor.
(a) From the time the Servicer (and the Indenture Trustee, if notice is sent by
the Holders) receives a notice of termination pursuant to Section 6.01, the Master Servicer (or such
other successor Servicer as is approved in accordance with this Agreement) shall be the successor in all
respects to the Servicer in its capacity as servicer under this Agreement (the "Successor Servicer") and
the transactions set forth or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Servicer by the terms and provisions hereof
arising on and after its succession. Notwithstanding the foregoing, the parties hereto agree that the
Successor Servicer, immediately will assume all of the obligations of the Servicer to make Advances
subject to Section 4.01. Notwithstanding the foregoing, the Successor Servicer shall not be responsible
for the lack of information and/or documents that it cannot obtain through reasonable efforts. It is
understood and agreed by the parties hereto that there will be a period of transition (not to exceed 90
days) before the transition of servicing obligations is fully effective. As compensation therefor, the
Successor Servicer shall be entitled to such compensation as the Servicer would have been entitled to
hereunder if no such notice of termination or resignation had been given. The appointment of the
Successor Servicer shall not affect any liability of the predecessor Servicer which may have arisen under
this Agreement prior to its termination as Servicer to pay any deductible under an insurance policy
pursuant to Section 3.14 or to reimburse the Successor Servicer pursuant to Section 3.06, nor shall any
Successor Servicer be liable for any acts or omissions of the predecessor Servicer or for any breach by
such Servicer of any of its representations or warranties contained herein or in any related document or
agreement. The Successor Servicer shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. All reasonable Servicing Transfer Costs shall be paid by
the predecessor Servicer upon presentation of reasonable documentation of such costs, and if such
predecessor Servicer defaults in its obligation to pay such costs, such costs shall be paid by the
Successor Servicer (in which case the Successor Servicer shall be entitled to reimbursement therefor from
the assets of the Trust).
Notwithstanding the above, (a) if the Master Servicer is to act as successor servicer
and is legally unable so to act, the Indenture Trustee shall act as Successor Servicer and (b) if the
Indenture Trustee is to act as successor servicer and (i) if the Indenture Trustee is unwilling to act
as Successor Servicer or (ii) if the Indenture Trustee is legally unable so to act, the Indenture
Trustee shall appoint (with the consent of the Majority Certificateholder) or petition a court of
competent jurisdiction to appoint, any established housing and home finance institution, bank or other
mortgage loan or home equity loan servicer having a net worth of not less than $50,000,000 as the
successor to the Servicer hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder; provided, that the appointment of any such successor Servicer
will not result in the qualification, reduction or withdrawal of the ratings assigned to the Notes by
the Rating Agencies as evidenced by a letter to such effect from the Rating Agencies. Pending
appointment of a successor to the Servicer hereunder, unless the Indenture Trustee is prohibited by law
from so acting, the Indenture Trustee shall act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation which the Servicer would otherwise
have received pursuant to Section 3.18 (or such other compensation as the Indenture Trustee and such
successor shall agree, not to exceed the Servicing Fee).
(b) Any Successor Servicer shall during the term of its service as servicer
continue to service and administer the Mortgage Loans for the benefit of Noteholders, and maintain in
force a policy or policies of insurance covering errors and omissions in the performance of its
obligations as Servicer hereunder and a fidelity bond in respect of its officers, employees and agents
to the same extent as the Servicer is so required pursuant to Section 3.14.
(c) In connection with the termination or resignation of the Servicer hereunder,
either (i) the Successor Servicer, including the Master Servicer or the Indenture Trustee if acting as a
Successor Servicer, shall represent and warrant that it is a member of MERS in good standing and shall
agree to comply in all material respects with the rules and procedures of MERS in connection with the
servicing of the related Mortgage Loans that are registered with MERS, in which case the predecessor
Servicer shall cooperate with the Successor Servicer in causing MERS to revise its records to reflect
the transfer of servicing to the Successor Servicer as necessary under MERS' rules and regulations, or
(ii) the predecessor Servicer shall cooperate with the Successor Servicer in causing MERS to execute and
deliver an Assignment in recordable form to transfer the Mortgage from MERS to the Indenture Trustee and
to execute and deliver such other notices, documents and other instruments as may be necessary or
desirable to effect a transfer of such Mortgage Loan or servicing of such Mortgage Loan on the MERS®
System to the Successor Servicer. The predecessor Servicer shall file or cause to be filed any such
Assignment in the appropriate recording office. The predecessor Servicer shall bear any and all fees of
MERS, costs of preparing any Assignments, and fees and costs of filing any Assignments that may be
required under this Section 6.02(c).
Section 6.03. Waiver of Defaults.
The Majority Noteholders may, on behalf of all Noteholders, waive, in writing, any
events permitting removal of the Servicer as servicer or the Master Servicer as master servicer pursuant
to this Article VI, provided, however, that the Majority Noteholders may not waive a default in making a
required payment on a Note without the written consent of the Holder of such Note. Upon any waiver of a
past default, such default shall cease to exist and any Servicer Event of Termination or Master Servicer
Event of Termination, as applicable, arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any
right consequent thereto except to the extent expressly so waived. Notice of any such waiver shall be
given by the Securities Administrator to the Sponsor and the Rating Agencies.
Section 6.04. Notification to Noteholders.
(a) Upon any termination or appointment of a successor to the Servicer or Master
Servicer pursuant to this Article VI or Section 5.04, the Securities Administrator shall give prompt
written notice thereof to the Owner Trustee, the Sponsor, the Depositor and the Noteholders at their
respective addresses appearing in the Note Register and each Rating Agency.
(b) No later than the later of (a) 60 days after the occurrence of any event which
constitutes or which, with notice or lapse of time or both, would constitute a Servicer Event of
Termination or (b) within five Business Days after a Responsible Officer of the Securities Administrator
becomes aware of the occurrence of such an event, the Securities Administrator shall transmit by mail to
all Noteholders notice of such occurrence unless such default or Servicer Event of Termination shall
have been waived or cured.
Section 6.05. Survivability of Liabilities.
Notwithstanding anything herein to the contrary, upon termination of the Servicer or
Master Servicer hereunder, any liabilities of the Servicer or Master Servicer, as the case may be, which
accrued prior to such termination shall survive such termination.
Section 6.06. Master Servicer Events of Termination.
(a) If any one of the following events ("Master Servicer Events of Default") shall
occur and be continuing:
(i) If the Master Servicer is not the Securities Administrator, any
failure by the Master Servicer to furnish the Securities Administrator the Mortgage Loan data
sufficient to prepare the reports described in Section 7.05 of the Indenture which continues
unremedied for a period of one Business Day after the date upon which written notice of such
failure shall have been given to such Master Servicer by the Indenture Trustee or the
Securities Administrator or to such Master Servicer, the Securities Administrator and the
Indenture Trustee by the Holders of not less than 25% of the aggregate Note Balance of the
Notes; or
(ii) Any failure on the part of the Master Servicer duly to observe or
perform in any material respect any other of the covenants or agreements (other than those
referred to in clauses (viii) and (ix) below) on the part of the Master Servicer contained in
this Agreement which continues unremedied for a period of thirty (30) days after the date on
which written notice of such failure, requiring the same to be remedied, shall have been given
to the Master Servicer by the Indenture Trustee or the Securities Administrator, or to the
Master Servicer, the Securities Administrator and the Indenture Trustee by the Holders of not
less than 25% of the aggregate Note Balance of the Notes; or
(iii) A decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings,
or for the winding-up or liquidation of its affairs, shall have been entered against the Master
Servicer, and such decree or order shall have remained in force undischarged or unstayed for a
period of sixty (60) days or any Rating Agency reduces or withdraws or threatens to reduce or
withdraw the rating of the Notes because of the financial condition or loan servicing
capability of such Master Servicer; or
(iv) The Master Servicer shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities, voluntary liquidation or similar proceedings of or relating to the Master Servicer
or of or relating to all or substantially all of its property; or
(v) The Master Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations; or
(vi) The Master Servicer shall be dissolved, or shall dispose of all or
substantially all of its assets, or consolidate with or merge into another entity or shall
permit another entity to consolidate or merge into it, such that the resulting entity does not
meet the criteria for a Successor Master Servicer as specified in Section 6.04 hereof; or
(vii) If a representation or warranty set forth in Section 2.01(b) hereof
shall prove to be incorrect as of the time made in any respect that materially and adversely
affects the interests of the Noteholders, and the circumstance or condition in respect of which
such representation or warranty was incorrect shall not have been eliminated or cured within 30
days after the date on which written notice of such incorrect representation or warranty shall
have been given to the Master Servicer by the Indenture Trustee or the Securities
Administrator, or to the Master Servicer, the Securities Administrator and the Indenture
Trustee by the Holders of not less than 25% of the aggregate Note Balance of the Notes; or
(viii) A sale or pledge of any of the rights of the Master Servicer
hereunder or an assignment of this Agreement by the Master Servicer or a delegation of the
rights or duties of the Master Servicer hereunder shall have occurred in any manner not
otherwise permitted hereunder and without the prior written consent of the Indenture Trustee
and the Holders of not less than 50% of the aggregate Note Balance of the Notes; or
(ix) Any failure of the Master Servicer to make any Monthly Advances when
such Monthly Advances are due, as required to be made hereunder.
(b) then, and in each and every such case, so long as a Master Servicer Event of
Default shall not have been remedied, (x) with respect solely to clause (ix) above, upon receipt of
written notice or discovery by a Responsible Officer of the Indenture Trustee or of the Securities
Administrator of such failure, the Indenture Trustee shall give immediate telephonic notice of such
failure to a Master Servicing Officer of the Master Servicer and the Indenture Trustee shall terminate
all of the rights and obligations of the Master Servicer under this Agreement and the Successor Master
Servicer appointed in accordance with Section 6.07 shall immediately make such Monthly Advance
(provided, if the Successor Master Servicer determines in its reasonable judgment that a Monthly Advance
is a Nonrecoverable Advance or if it is prohibited by law from doing so, the Successor Master Servicer
shall be under no obligation to make such Monthly Advance) prior to the payment of funds on the related
Payment Date and assume, pursuant to Section 6.07, the duties of a Successor Master Servicer and (y) in
the case of clauses (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) above, the Indenture Trustee
shall, at the direction of the Holders of not less than 51% of the aggregate Note Balance of the Notes
by notice then given in writing to the Master Servicer (and to the Indenture Trustee if given by Holders
of Notes), terminate all of the rights and obligations of the Master Servicer as servicer under this
Agreement. Any such notice to the Master Servicer shall also be given to each Rating Agency and the
Seller. On or after receipt by the Master Servicer of such written notice, all authority and power of
the Master Servicer under this Agreement, whether with respect to the Notes or the Mortgage Loans or
otherwise, shall pass to and be vested in the Successor Master Servicer pursuant to and under this
Section 6.06; and, without limitation, the Successor Master Servicer is hereby authorized and empowered
to execute and deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Loan and related documents, or otherwise. The Master Servicer agrees to
cooperate with the Successor Master Servicer, the Servicer, the Securities Administrator and the
Indenture Trustee in effecting the termination of the responsibilities and rights of the Master Servicer
hereunder. All Servicing Transfer Costs and other reasonable out-of-pocket costs and expenses
(including attorneys' fees) incurred in connection with transferring any Mortgage Files to the Successor
Master Servicer and amending this Agreement to reflect such succession as Master Servicer pursuant to
this Section 6.06 shall be paid by the predecessor Master Servicer within 90 days of written demand,
itemized in reasonable detail, or, to the extent not paid by the predecessor Master Servicer, by the
Trust prior to payments to Noteholders (or, if the predecessor Master Servicer is the Indenture Trustee,
by the initial Master Servicer), upon presentation of reasonable documentation of such costs and
expenses. If the predecessor Master Servicer is required but fails to pay the amounts specified in the
preceding sentence and such amounts are paid by the Trust, the Securities Administrator shall, at the
direction and expense of the Certificateholders, take appropriate action to enforce such obligation and
recover such amounts on behalf of such Certificateholders.
Notwithstanding any termination of the activities of the Master Servicer hereunder,
the Master Servicer shall continue to be entitled to receive from the Trust, payment of all the accrued
and unpaid portion of the Master Servicing Fees to which the Master Servicer would have been entitled
and reimbursement for all outstanding Monthly Advances which amount shall be remitted by the Successor
Master Servicer to the terminated Master Servicer as permitted under Section 3.01 of the Indenture on a
first-in, first-out basis. The Master Servicer shall continue to be entitled to the benefits of Section
5.03, notwithstanding any termination hereunder, with respect to events occurring prior to such
termination.
Section 6.07. Appointment of Successor Master Servicer.
(a) The Issuer and the Indenture Trustee hereby appoint, and The Bank of New York,
hereby accepts appointment, on behalf of itself or an affiliate, subject to the provisions of Sections
3.40 and 6.07(d) hereof, upon receipt by the Master Servicer of a notice of termination pursuant to
Section 6.06 or upon resignation of the Master Servicer pursuant to Section 3.40, to be the successor
(the "Successor Master Servicer") in all respects to the Master Servicer in its capacity as servicer
under this Agreement and the transactions set forth or provided for herein and shall be subject to all
the responsibilities, duties and liabilities relating thereto placed on the Master Servicer by the terms
and provisions hereof arising on and after its succession; provided, however, that, without affecting
the immediate termination of the rights of the Master Servicer hereunder, it is understood and
acknowledged by the parties hereto that there will be a period of transition not to exceed 90 days (the
"Master Servicer Transition Period") before the master servicing transfer is fully effected.
During the Master Servicer Transition Period, neither the Successor Master Servicer,
the Securities Administrator nor the Indenture Trustee shall be responsible for the lack of information
and documents that it cannot reasonably obtain on a practicable basis under the circumstances.
As compensation therefor, the Successor Master Servicer shall be entitled to such
compensation as the Master Servicer would have been entitled to hereunder if no such notice of
termination had been given. Notwithstanding the above, if the Successor Master Servicer is legally
unable to act as successor servicer, the Indenture Trustee may appoint or petition a court of competent
jurisdiction to appoint, any established housing and home finance institution, bank or other mortgage
loan or home equity loan servicer that is an Approved Servicer (defined for this purpose by (i) striking
the words "the Master Servicer" in clause 1 of the definition thereof and (ii) striking clause 2(a) in
the definition thereof) as the successor to the Master Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Master Servicer hereunder; provided that
the appointment of any such Successor Master Servicer will not result in the qualification, reduction or
withdrawal of the ratings assigned to the Offered Notes by the Rating Agencies. Pending appointment of
a successor to the Master Servicer hereunder, unless the Successor Master Servicer is prohibited by law
from so acting, the Successor Master Servicer shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the successor shall be entitled to receive compensation
out of payments on the Mortgage Loans in an amount equal to the compensation which the Master Servicer
would otherwise have received pursuant to Section 3.37 (or such lesser compensation as the Indenture
Trustee and such successor shall agree). The appointment of a Successor Master Servicer shall not
affect any liability of the predecessor Master Servicer which may have arisen under this Agreement prior
to its termination as Master Servicer to indemnify the Indenture Trustee, the Servicer and the
Securities Administrator pursuant to Section 5.06, nor shall any Successor Master Servicer be liable for
any acts or omissions of the predecessor Master Servicer or for any breach by such Master Servicer of
any of its representations or warranties contained herein or in any related document or agreement. The
Indenture Trustee, the Securities Administrator or a Successor Master Servicer shall have no
responsibility or obligation (i) to repurchase or substitute for any of the Mortgage Loans or (ii) for
any acts or omissions of a predecessor Master Servicer. The Indenture Trustee, the Securities
Administrator and such successor shall take such action, at the expense of the Trust, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
(b) Any successor, including the Successor Master Servicer, to the Master Servicer
as servicer shall during the term of its service as master servicer (i) continue to master service and
administer the Mortgage Loans for the benefit of Noteholders and (ii) maintain in force a policy or
policies of insurance covering errors and omissions in the performance of its obligations as Master
Servicer hereunder and a fidelity bond in respect of its officers, employees and agents to the same
extent as the Master Servicer is so required pursuant to Section 3.32.
(c) In connection with the termination or resignation of the Master Servicer
hereunder, the Successor Master Servicer, including the Indenture Trustee if the Indenture Trustee is
acting as Successor Master Servicer, shall represent and warrant that it is a member of MERS in good
standing and shall agree to comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with MERS.
(d) Notwithstanding the above, the Indenture Trustee may, if it shall be unwilling
to continue to so act, or shall, if it is unable to so act, petition a court of competent jurisdiction
to appoint, or appoint on its own behalf any established housing and home finance institution servicer,
master servicer, servicing or mortgage servicing institution having a net worth of not less than
$25,000,000 and meeting such other standards for a successor master servicer as are set forth in this
Agreement, as the successor to such Master Servicer in the assumption of all of the responsibilities,
duties or liabilities of a master servicer, like the Master Servicer.
Neither the Indenture Trustee nor any other Successor Master Servicer shall be deemed
to be in default hereunder by reason of any failure to make, or any delay in making, any distribution
hereunder or any portion thereof or any failure to perform, or any delay in performing, any duties or
responsibilities hereunder, in either case caused by the failure of the Master Servicer to deliver or
provide, or any delay of the Master Servicer in delivering or providing, any cash, information,
documents or records to it.
Notwithstanding anything herein to the contrary, in no event shall the Indenture
Trustee be liable for any Servicing Fee or Master Servicing Fee or for any differential in the amount of
the Servicing Fee or Master Servicing Fee paid hereunder and the amount necessary to induce any
Successor Servicer or Successor Master Servicer to act as Successor Servicer or Successor Master
Servicer, as applicable, under this Agreement and the transactions set forth or provided for herein.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. Amendment.
This Agreement may be amended from time to time by the parties hereto (with the
consent of the Majority Certificateholder), provided that any amendment be accompanied by (i) a letter
from the Rating Agencies that the amendment will not result in the downgrading or withdrawal of the
rating then assigned to the Notes and (ii) an Officer's Certificate of the Sponsor, that such amendment
will not cause the Trust to fail to qualify as a "qualified special purpose entity" under Financial
Accounting Standards No. 140.
Section 7.02. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE
NEW YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 7.03. Notices.
All demands, notices and communications hereunder shall be in writing and shall be
deemed to have been duly given if when delivered to:
(a) in the case of the Depositor:
Bear ▇▇▇▇▇▇▇ Asset Backed Securities I LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Attention: General Counsel
(b) in the case of the Originator
Fremont Investment & Loan
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Senior Vice President, Capital Markets
Attn: Vice President, Secondary Marketing
(c) in the case of the Servicer:
Nationstar Mortgage LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇
(d) in the case of Rating Agencies:
▇▇▇▇▇'▇ Investors Service, Inc.
4th Floor
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Residential Mortgage Monitoring Unit
Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Asset Backed Surveillance Group
(e) in the case of the Owner Trustee, the Corporate Trust Office:
Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
(f) in the case of the Issuing Entity:
Newcastle Mortgage Securities Trust 2007-1
c/o Newcastle Investment Corp.
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal
with a copy to the Sponsor at the address in (g) below.
(g) in the case of the Indenture Trustee:
The Bank of New York,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Structured Finance - Newcastle Mortgage Securities Trust 2007-1
(h) in the case of the Sponsor:
Newcastle Investment Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
(i) in the case of the Master Servicer:
▇▇▇▇▇ Fargo Bank, N.A,
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attn: Corporate Trust - Newcastle 2007-1
(j) in the case of the Securities Administrator:
▇▇▇▇▇ Fargo Bank, N.A,
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(k) in the case of the Custodian:
▇▇▇▇▇ Fargo Bank, N.A,
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Corporate Trust - Newcastle 2007-01
or, as to each party, at such other address as shall be designated by such party in a written notice to
each other party. Any notice required or permitted to be mailed to a Noteholder shall be given by first
class mail, postage prepaid, at the address of such Noteholder as shown in the Note Register. Any notice
so mailed within the time prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Noteholder receives such notice. Any notice or other document required to be
delivered or mailed by the Securities Administrator to any Rating Agency shall be given on a reasonable
efforts basis and only as a matter of courtesy and accommodation and the Securities Administrator shall
have no liability for failure to deliver such notice or document to any Rating Agency.
Section 7.04. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of this Agreement
shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Notes or the rights of the Noteholders thereof.
Section 7.05. Third-Party Beneficiaries.
This Agreement will inure to the benefit of and be binding upon the parties hereto,
the Noteholders, the Owner Trustee, the Indenture Trustee and their respective successors and permitted
assigns. Except as otherwise provided in this Agreement, no other Person will have any right or
obligation hereunder. The Indenture Trustee shall have the right to exercise all rights of the Issuing
Entity under this Agreement.
Section 7.06. Counterparts.
This instrument may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall together constitute but one
and the same instrument.
Section 7.07. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for convenience
only and shall not affect the construction hereof.
Section 7.08. Termination.
The respective obligations and responsibilities of the Servicer and the Issuing Entity
created hereby shall terminate upon the satisfaction and discharge of the Indenture pursuant to Section
4.10 thereof.
Section 7.09. No Petition.
The Servicer, by entering into this Agreement, hereby covenants and agrees that it
will not at any time institute against the Depositor or the Issuing Entity, or join in any institution
against the Issuing Entity, any bankruptcy proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations of the Depositor or the Issuing Entity.
This section shall survive the termination of this Agreement by one year.
Section 7.10. No Recourse.
The Servicer acknowledges that no recourse may be had against the Depositor or the
Issuing Entity, except as may be expressly set forth in this Agreement.
Section 7.11. Indenture Trustee Rights.
The Indenture Trustee shall be entitled to the same rights, protections, indemnities
and immunities afforded to it under the Indenture as if specifically set forth herein.
Section 7.12. Compliance.
In order to comply with its duties under the U.S.A. Patriot Act, the Indenture Trustee
may obtain and verify certain information and documentation from the Servicer or any other party hereto,
including but not limited to such such party's name, address, and other identifying information.
Section 7.13. Intention of the Parties and Interpretation.
Each of the parties acknowledges and agrees that the purpose of Sections 3.20, 3.21
and 4.02 of this Agreement is to facilitate compliance by the Depositor with the provisions of
Regulation AB promulgated by the Securities and Exchange Commission under the 1934 Act (17 C.F.R. §§
229.1100 - 229.1123), as such may be amended from time to time and subject to clarification and
interpretive advice as may be issued by the staff of the Securities and Exchange Commission from time to
time. Therefore, each of the parties agrees that (a) the obligations of the parties hereunder shall be
interpreted in such a manner as to accomplish that purpose, (b) the parties' obligations hereunder will
be supplemented and modified as necessary to be consistent with any such amendments, interpretive advice
or guidance, convention or consensus among active participants in the asset-backed securities markets,
advice of counsel, or otherwise in respect of the requirements of Regulation AB, (c) the parties shall
comply with reasonable requests made by the Depositor for delivery of additional or different
information as the Depositor may determine in good faith is necessary to comply with the provisions of
Regulation AB, and (d) no amendment of this Agreement shall be required to effect any such changes in
the parties' obligations as are necessary to accommodate evolving interpretations of the provisions of
Regulation AB.
ARTICLE VIII
DUTIES OF THE ADMINISTRATOR
Section 8.01. Administrative Duties.
(a) Duties with Respect to the Indenture. The Administrator shall perform all its
duties and the duties of the Issuing Entity under the Indenture. In addition, the Administrator shall
consult with the Owner Trustee as the Administrator deems appropriate regarding the duties of the
Issuing Entity under the Indenture. The Administrator shall monitor the performance of the Issuing
Entity and shall advise the Owner Trustee when action is necessary to comply with the Issuing Entity's
duties under the Indenture. The Administrator shall prepare for execution by the Issuing Entity or shall
cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments,
Notes and opinions as it shall be the duty of the Issuing Entity to prepare, file or deliver pursuant to
the Indenture. In furtherance of the foregoing, the Administrator shall take all necessary action that
is the duty of the Issuing Entity to take pursuant to the Indenture.
(b) Duties with Respect to the Issuing Entity.
(i) In addition to the duties of the Administrator set forth in this
Agreement or any of the Basic Documents, the Administrator shall perform such calculations and
shall prepare for execution by the Issuing Entity or the Owner Trustee or shall cause the
preparation by other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuing Entity or the Owner Trustee to
prepare, file or deliver pursuant to this Agreement or any of the Basic Documents or under
state and federal tax and securities laws (including, but not limited to, UCC filings in
applicable jurisdictions and annual compliance certificates, if any), and at the request of the
Owner Trustee or the Indenture Trustee shall take all appropriate action that it is the duty of
the Issuing Entity to take pursuant to this Agreement or any of the Basic Documents. In
accordance with the directions of the Issuing Entity or the Owner Trustee, the Administrator
shall administer, perform or supervise the performance of such other activities in connection
with the Notes (including the Basic Documents) as are not covered by any of the foregoing
provisions and as are expressly requested by the Issuing Entity, the Indenture Trustee or the
Owner Trustee.
(ii) Notwithstanding anything in this Agreement or any of the Basic
Documents to the contrary, the Administrator shall be responsible for promptly notifying the
Owner Trustee and Certificate Paying Agent in the event that any withholding tax is imposed on
the Issuing Entity's payments (or allocations of income) to an Owner (as defined in the Trust
Agreement) as contemplated in Section 5.03 of the Trust Agreement. Any such notice shall be in
writing and specify the amount of any withholding tax required to be withheld by the Owner
Trustee or the Certificate Paying Agent pursuant to such provision.
(iii) In carrying out the foregoing duties or any of its other obligations
under this Agreement, the Administrator may enter into transactions with or otherwise deal with
any of its Affiliates; provided, however, that the terms of any such transactions or dealings
shall be in accordance with any directions received from the Issuing Entity and shall be, in
the Administrator's opinion, no less favorable to the Issuing Entity in any material respect
than with terms made available to unrelated third parties.
(c) Tax Matters. The Administrator shall prepare, on behalf of the Owner Trustee,
financial statements and such annual or other reports of the Issuing Entity as are necessary for the
preparation by the Securities Administrator of tax returns and information reports as provided in
Section 5.03 of the Trust Agreement, including, without limitation, Form 1099.
(d) Non-Ministerial Matters. With respect to matters that in the reasonable
judgment of the Administrator are non-ministerial, the Administrator shall not take any action pursuant
to this Article VIII unless within a reasonable time before the taking of such action, the Administrator
shall have notified the Owner Trustee and the Indenture Trustee of the proposed action and the Owner
Trustee and, with respect to items (A), (B), (C) and (D) below, the Indenture Trustee shall not have
withheld consent or provided an alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuing Entity and the
compromise of any action, claim or lawsuit brought by or against the Issuing Entity
(other than in connection with the collection of the Mortgage Loans);
(C) the amendment, change or modification of this Agreement or any of the
Basic Documents to which the Indenture Trustee or the Owner Trustee, as applicable, is
a party;
(D) the appointment of successor Certificate Paying Agents and successor
Indenture Trustees pursuant to the Indenture or the appointment of successor Servicers
or the consent to the assignment by the Certificate Registrar, Certificate Paying
Agent or Indenture Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(e) Sponsor shall act as Administrator. By execution of this Agreement, the
Sponsor agrees to be bound as Administrator and shall perform the obligations of the Administrator as
described herein.
Section 8.02. Records.
The Administrator shall maintain appropriate books of account and records relating to
services performed under this Agreement, which books of account and records shall be accessible for
inspection by the Issuing Entity, the Indenture Trustee, the Securities Administrator, the Depositor and
the Owner Trustee at any time during normal business hours.
Section 8.03. Additional Information to be Furnished.
The Administrator shall furnish to the Issuing Entity, the Indenture Trustee, the
Securities Administrator and the Owner Trustee from time to time such additional information regarding
the Mortgage Loans and the Notes as the Issuing Entity, the Indenture Trustee, the Securities
Administrator or the Owner Trustee shall reasonably request.
Section 8.04. No Recourse to Owner Trustee.
It is expressly understood and agreed by the parties hereto that (a) this Agreement is
executed and delivered by Wilmington Trust Company, not individually or personally, but solely as Owner
Trustee of Newcastle Mortgage Securities Trust 2007-1, in the exercise of the powers and authority
conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on
the part of the Issuing Entity is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose for binding only the
Issuing Entity, (c) nothing herein contained shall be construed as creating any liability of Wilmington
Trust Company, individually or personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties hereto and by any Person
claiming by, through or under the parties hereto and (d) under no circumstances shall Wilmington Trust
Company be personally liable for the payment of any indebtedness or expenses of the Issuing Entity or be
liable for the breach or failure of any obligation, representation, warranty or covenant made or
undertaken by the Issuing Entity under this Agreement or any other related documents.
IN WITNESS WHEREOF, the parties hereto have caused this Sale and Sale and Servicing
Agreement to be duly executed by their respective officers or representatives all as of the day and year
first above written.
BEAR ▇▇▇▇▇▇▇ ASSET BACKED SECURITIES I LLC
as Depositor
By:______________________________________________
Name:
Title:
NATIONSTAR MORTGAGE LLC,
as Servicer
By:______________________________________________
Name:
Title:
NEWCASTLE MORTGAGE SECURITIES TRUST 2007-1, as Issuing Entity
By: Wilmington Trust Company, not in its individual capacity, but
solely as Owner Trustee
By:______________________________________________
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity, but solely as as Indenture Trustee
By:______________________________________________
Name:
Title:
▇▇▇▇▇ FARGO BANK, N.A.
as Master Servicer, Securities Administrator and Custodian
By:______________________________________________
Name:
Title:
For purposes of Article IV and Article VIII:
NEWCASTLE INVESTMENT CORP.,
as Sponsor and Administrator
By:_________________________________________
Name:
Title:
EXHIBIT A
FORM OF ASSIGNMENT AGREEMENT
EXHIBIT B
MORTGAGE LOAN SCHEDULE
EXHIBIT C
FORM OF REQUEST FOR RELEASE
▇▇▇▇▇ Fargo Bank, N.A.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Mortgage Document Custody
Re: Sale and Servicing Agreement, dated as of July 12, 2007, among Bear ▇▇▇▇▇▇▇ Asset
Backed Securities I LLC, Newcastle Mortgage Securities Trust 2007-1, Nationstar
Mortgage LLC, ▇▇▇▇▇ Fargo Bank, N.A and The Bank of New York
In connection with the administration of the Mortgage Loans held by you, as Custodian,
pursuant to the above-captioned Sale and Servicing Agreement, we request the release, and hereby
acknowledge receipt, of the Mortgage File for the Mortgage Loan described below, for the reason
indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
____ 1. Mortgage Paid in Full
____ 2. Foreclosure
____ 3. Substitution
____ 4. Other Liquidation
____ 5. Nonliquidation Reason:______________________
By:__________________________
(authorized signer)
[Servicer] [Master Servicer]:
______________________
Address:_______________________
Date: ______________________
Custodian
▇▇▇▇▇ Fargo Bank, N.A.
Please acknowledge the execution of the above request by your signature and date below:
__________________________ ______________________
Signature Date
Documents returned to Custodian:
__________________________ _____________________
Custodian Date
EXHIBIT D-1
FORM OF CUSTODIAN'S INITIAL CERTIFICATION
[Date]
Newcastle Mortgage Securities Trust 2007-1
c/o Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
The Bank of New York,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Bear ▇▇▇▇▇▇▇ Asset Backed Securities I LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Attention: General Counsel
Nationstar Mortgage LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: Sale and Servicing Agreement, dated as of July 12, 2007, among Bear ▇▇▇▇▇▇▇
Asset Backed Securities I LLC, Newcastle Mortgage Securities Trust 2007-1,
Nationstar Mortgage LLC, ▇▇▇▇▇ Fargo Bank, N.A and The Bank of New York
Ladies and Gentlemen:
In accordance with Section 2.01(i)-(vi) of the Sale and Servicing Agreement, the
undersigned, as Custodian, hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan specifically identified in the
Exception Report annexed hereto as not being covered by such certification) (i) all documents
constituting part of such Mortgage File (other than such documents described in Section 2.01(vi) of the
Sale and Servicing Agreement) required to be delivered to it pursuant to the Agreement are in its
possession, (ii) such documents have been reviewed by it and appear regular on their face and relate to
such Mortgage Loan and (iii) based on its examination and only as to the foregoing, the information set
forth in the Mortgage Loan Schedule that corresponds to items (i), (iii), (x), (xi), (xii), (xviii) and
(xxv) (but only as to Gross Margin and Maximum Mortgage Rate) of the definition of "Mortgage Loan
Schedule" accurately reflects information set forth in the Mortgage File.
The Custodian makes no representations as to: (i) the validity, legality, sufficiency,
enforceability, recordability or genuineness of any of the documents contained in the Mortgage File of
any of the Mortgage Loans identified on the Mortgage Loan Schedule, (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan, or (iii) whether any Mortgage File
included any of the documents specified in clause (vi) of Section 2.01 of the Sale and Servicing
Agreement.
Capitalized words and phrases used herein shall have the respective meanings assigned
to them in the above-captioned Indenture.
▇▇▇▇▇ FARGO BANK, N.A., as Custodian
By:_________________________________
Name:
Title:
EXHIBIT D-2
FORM OF CUSTODIAN'S FINAL CERTIFICATION
[Date]
Newcastle Mortgage Securities Trust 2007-1
c/o Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
The Bank of New York,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Bear ▇▇▇▇▇▇▇ Asset Backed Securities I LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Attention: General Counsel
Nationstar Mortgage LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: Sale and Servicing Agreement, dated as of July 12, 2007, among Bear ▇▇▇▇▇▇▇
Asset Backed Securities I LLC, Newcastle Mortgage Securities Trust 2007-1,
Nationstar Mortgage LLC, ▇▇▇▇▇ Fargo Bank, N.A and The Bank of New York
Ladies and Gentlemen:
In accordance with Section 2.01(i)-(vi) of the Sale and Servicing Agreement, the
undersigned, as Custodian, hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan specifically identified in the
Exception Report annexed hereto as not being covered by such certification) (i) all documents
constituting part of such Mortgage File (other than such documents described in Section 2.01(vi) of the
Sale and Servicing Agreement) required to be delivered to it pursuant to the Sale and Servicing
Agreement are in its possession.
The undersigned hereby certifies that as to each Mortgage Loan identified on the
Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule I hereto, it has reviewed the
documents listed above and has determined that each such document appears to be regular on its face and
relates to such Mortgage Loan and, based on an examination of such documents, the information set forth
in (i) of the definition of Mortgage Loan Schedule accurately reflects information in the Mortgage File.
We have made no independent examination of any documents contained in each Mortgage
File beyond the review specifically required in the Sale and Servicing Agreement. We make no
representations as to (i) the validity, legality, sufficiency, recordability, enforceability or
genuineness of any of the documents contained in the Mortgage File pertaining to the Mortgage Loans
identified on the Mortgage Loan Schedule, (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan or (iii) whether any Mortgage File includes any of the documents
specified in clause (vi) of Section 2.01 of the Sale and Servicing Agreement.
Capitalized words and phrases used herein shall have the respective meanings assigned
to them in the Agreements. This Certificate is qualified in all respects by the terms of said
Agreements.
[CUSTODIAN]
By: ________________________________
Name:
Title:
EXHIBIT E
FORM OF LOST NOTE AFFIDAVIT
Personally appeared before me the undersigned authority to administer oaths,
_______________________________ who first being duly sworn deposes and says: Deponent is
___________________________ of ____________________________, successor by merger to
_________________________ ("Seller") and who has personal knowledge of the facts set out in this
affidavit.
On _________________________________, ______________________________________ did
execute and deliver a promissory note in the principal amount of $____________________.
That said note has been misplaced or lost through causes unknown and is presently lost
and unavailable after diligent search has been made. Seller's records show that an amount of principal
and interest on said note is still presently outstanding, due, and unpaid, and ▇▇▇▇▇▇ is still owner and
holder in due course of said lost note.
Seller executes this Affidavit for the purpose of inducing The Bank of New York, as
indenture trustee on behalf of Newcastle Mortgage Securities Trust 2007-1, Asset-Backed Notes, Series
2007-1, to accept the transfer of the above described loan from Seller.
▇▇▇▇▇▇ agrees to indemnify The Bank of New York harmless for any losses incurred by
such parties resulting from the above described promissory note has been lost or misplaced.
By:
________________________________________
________________________________________
STATE OF )
) SS:
COUNTY OF )
On this ______ day of ______________, 20_, before me, a Notary Public, in and for said
County and State, appeared , who acknowledged the extension of the foregoing and who, having been duly
sworn, states that any representations therein contained are true.
Witness my hand and Notarial Seal this _________ day of 20__.
_________________________________________
_________________________________________
My commission expires __________________________
EXHIBIT F
FORM OF POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that The Bank of New York, a national banking
association, having a place of business at ________________, as Indenture Trustee (and in no personal or
other representative capacity), under the Sale and Servicing Agreement, dated July __, 2007, among Bear
▇▇▇▇▇▇▇ Asset Backed Securities I LLC, Newcastle Mortgage Securities Trust 2007-1, Nationstar Mortgage
LLC, ▇▇▇▇▇ Fargo Bank, N.A and The Bank of New York, as Indenture Trustee (as amended, restated,
supplemented or otherwise modified from time to time, the "Agreement"; capitalized terms not defined
herein have the definitions assigned to such terms in the Agreement), relating to Newcastle Mortgage
Securities 2007-1, hereby appoints ________________________________, in its capacity as the Servicer
under the Agreement as the Indenture Trustee's true and lawful Special Attorney-in-Fact, in the
Indenture Trustee's name, place and stead and for the Indenture Trustee's benefit, but only in its
capacity as Indenture Trustee aforesaid, to perform all acts and execute all documents as may be
customary, necessary and appropriate to effectuate the following enumerated transactions in respect of
any mortgage, deed of trust, promissory note or real estate owned from time to time owned (beneficially
or in title, whether the Indenture Trustee is named therein as mortgagee or beneficiary or has become
mortgagee or beneficiary by virtue of endorsement, assignment or other conveyance) or held by or
registered to the Indenture Trustee (directly or through custodians or nominees), or in respect of which
the Indenture Trustee has a security interest or other lien, all as provided under the Agreement and
only to the extent the Indenture Trustee has an interest therein under the Agreement, and in respect of
which the Servicer is acting as servicer pursuant to the Agreement (collectively the "Mortgage
Documents").
This appointment shall apply to the following enumerated transactions under the
Agreement only:
1. The modification or re-recording of any Mortgage Document for the purpose of
correcting it to conform to the original intent of the parties thereto or to correct title errors
discovered after title insurance was issued and where such modification or re-recording does not
adversely affect the lien under the Mortgage Document as insured.
2. The subordination of the lien under a Mortgage Document to an easement in
favor of a public utility company or a state or federal agency or unit with powers of eminent domain
including, without limitation, the execution of partial satisfactions/releases, partial reconveyances
and the execution of requests to trustees to accomplish same.
3. The conveyance of the properties subject to a Mortgage Document to the
applicable mortgage insurer, or the closing of the title to the property to be acquired as real estate
so owned, or conveyance of title to real estate so owned.
4. The completion of loan assumption and modification agreements in respect of
Mortgage Documents.
5. The full or partial satisfaction/release of a Mortgage Document or full
conveyance upon payment and discharge of all sums secured thereby, including, without limitation,
cancellation of the related note.
6. The assignment of any Mortgage Document, in connection with the repurchase of
the mortgage loan secured and evidenced thereby.
7. The full assignment of a Mortgage Document upon payment and discharge of all
sums secured thereby in conjunction with the refinancing thereof, including, without limitation, the
assignment of the related note.
8. With respect to a Mortgage Document, the foreclosure, the taking of a deed in
lieu of foreclosure, or the completion of judicial or non-judicial foreclosure or termination,
cancellation or rescission of any such foreclosure, including, without limitation, any and all of the
following acts:
a. the substitution of indenture trustee(s) serving under a deed of trust, in
accordance with state law and the deed of trust;
b. the preparation and issuance of statements of breach or non-performance;
c. the preparation and filing of notices of default and/or notices of sale;
d. the cancellation/rescission of notices of default and/or notices of sale;
e. the taking of a deed in lieu of foreclosure; and
f. the preparation and execution of such other documents and performance of such
other actions as may be necessary under the terms of the Mortgage Document or state law to expeditiously
complete said transactions in paragraphs 8(a) through 8(e), above.
9. Demand, sue for, recover, collection and receive each and every sum of money,
debt, account and interest (which now is, or hereafter shall become due and payable) belonging to or
claimed by the Indenture Trustee under the Mortgage Documents, and to use or take any lawful means for
recovery thereof by legal process or otherwise.
10. Endorse on behalf of the Indenture Trustee all checks, drafts and/or
negotiable instruments made payable to the Indenture Trustee in respect of the Mortgage Documents.
The Indenture Trustee gives the Special Attorney-in-Fact full power and authority to
execute such instruments and to do and perform all and every act and thing necessary and proper to carry
into effect the power or powers granted by this Limited Power of Attorney, subject to the terms and
conditions set forth in the Agreement including the standard of care applicable to servicers in the
Agreement, and hereby does ratify and confirm to what such Special Attorney-in-Fact shall lawfully do
or cause to be done by authority hereof.
This Power of Attorney is effective for one (1) year from the date hereof or the
earlier of (i) revocation by the Indenture Trustee, (ii) the Attorney shall no longer be retained on
behalf of the Indenture Trustee or an affiliate of the Indenture Trustee; or (iii) the expiration of one
year from the date of execution.
The authority granted to the attorney-in-fact by the Power of Attorney is not
transferable to any other party or entity.
This Agreement shall be governed by, and construed in accordance with, the laws of the
State of New York without regard to its conflicts of law principles.
IN WITNESS WHEREOF, the Indenture Trustee has caused its corporate name and seal to be
hereto signed and affixed and these presents to be acknowledged by its duly elected and authorized
officer this ______ day of _________, 200___.
THE BANK OF NEW YORK,
as Indenture Trustee
By:_______________________________
Name:
Title:
WITNESS:
By:_______________________________
Name:
Title:
WITNESS:
By:_______________________________
Name:
Title:
STATE OF NEW YORK
ss:
COUNTY OF NEW YORK
On _______________, 2007, before me, the undersigned, a Notary Public in and for said
state, personally appeared _______________________, personally known to me to be the person whose name
is subscribed to the within instrument and to be a duly authorized and acting Senior Vice President of
The Bank of New York and such person acknowledged to me that such person executed the within instrument
in such person's authorized capacity as a Senior Vice President of The Bank of New York, and that by
such signature on the within instrument the entity upon behalf of which such person acted executed the
instrument.
WITNESS my hand and official seal.
______________________________
Notary Public
EXHIBIT G-1
FORM OF CERTIFICATION TO BE PROVIDED BY THE SERVICER TO THE MASTER SERVICER
Certification
Re: Newcastle Mortgage Securities Trust 2007-1 (the "Trust" or the "Issuing Entity")
Asset-Backed Notes, Series 2007-1
I, [identify the certifying individual], certify, that:
(i) 1. I have reviewed the servicer compliance statement of the
Company provided in accordance with Item 1123 of Regulation AB (the "Compliance Statement"),
the report on assessment of the Company's compliance with the servicing criteria set forth in
Item 1122(d) of Regulation AB (the "Servicing Criteria"), provided in accordance with Rules
13a-18 and 15d-18 under Securities Exchange Act of 1934, as amended (the "Exchange Act") and
Item 1122 of Regulation AB (the "Servicing Assessment"), the registered public accounting
firm's attestation report provided in accordance with Rules 13a-18 and 15d-18 under the Exchange
Act and Section 1122(b) of Regulation AB (the "Attestation Report"), and all servicing reports,
officer's certificates and other information relating to the servicing of the Mortgage Loans by
the Company during 200[ ] that were delivered by the Company to the Depositor and the Master
Servicer pursuant to the Agreement (collectively, the "Company Servicing Information");
(ii) Based on my knowledge, the Company Servicing Information, taken as a
whole, does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in the light of the circumstances under which such
statements were made, not misleading with respect to the period of time covered by the Company
Servicing Information;
(iii) Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been provided to the Depositor
and the Master Servicer;
(iv) I am responsible for reviewing the activities performed by the
Company as servicer under the Agreement, and based on my knowledge and the compliance review
conducted in preparing the Compliance Statement and except as disclosed in the Compliance
Statement, the Servicing Assessment or the Attestation Report, the Company has fulfilled its
obligations under the Agreement in all material respects; and
(v) The Compliance Statement required to be delivered by the Company
pursuant to this Agreement, and the Servicing Assessment and Attestation Report required to be
provided by the Company and by any Subservicer and Subcontractor pursuant to the Agreement,
have been provided to the Depositor and the Master Servicer. Any material instances of
noncompliance described in such reports have been disclosed to the Depositor and the Master
Servicer. Any material instance of noncompliance with the Servicing Criteria has been disclosed
in such reports.
Date: ___________________
NATIONSTAR MORTGAGE LLC
By:_________________________________
Name:
Title:
Date:
EXHIBIT G-2
FORM CERTIFICATION TO BE PROVIDED BY THE MASTER SERVICER
WITH FORM 10-K
Newcastle Mortgage Securities Trust 2007-1 (the "Trust" or the "Issuing Entity")
Asset-Backed Notes, Series 2007-1
I, [identify the certifying individual], certify that:
1. I have reviewed this annual report on Form 10-K, and all reports on Form 10-D
required to be filed in respect of the period covered by this report on Form 10-K [identify issuing
entity] (i.e., the name of the specific deal to which this certification relates rather than just the
name of the Depositor)] (the "Exchange Act periodic reports");
2. Based on my knowledge, the Exchange Act periodic reports, taken as a whole,
do not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, all of the distribution, servicing and other
information required to be provided under Form 10-D for the period covered by this report is included in
the Exchange Act periodic reports;
4. I am responsible for reviewing the activities performed by the servicer and
based on my knowledge and the compliance review conducted in preparing the servicer compliance statement
required in this report under Item 1123 of Regulation AB, and except as disclosed in the Exchange Act
periodic reports, the servicer has fulfilled its obligations under the servicing agreement in all
material respects; and
5. All of the reports on assessment of compliance with servicing criteria for
asset-backed securities and their related attestation reports on assessment of compliance with servicing
criteria for asset-backed securities required to be included in this report in accordance with Item 1122
of Regulation AB and Exchange Act Rules 13a-18 and 15d-18 have been included as an exhibit to this
report, except as otherwise disclosed in this report. Any material instances of noncompliance described
in such reports have been disclosed in this report on Form 10-K.
In giving the certifications above, I have reasonably relied on information provided
to me by the following unaffiliated party: Nationstar Mortgage, LLC.
▇▇▇▇▇ FARGO BANK, N.A.
By:____________________________________
Name:
Title:
Date:
EXHIBIT H
SERVICING CRITERIA TO BE ADDRESSED
IN ASSESSMENT OF COMPLIANCE
Definitions
Primary Servicer - transaction party having borrower contact
Master Servicer - aggregator of pool assets
Securities Administrator - waterfall calculator (may be the Master Servicer, or may be the Servicer)
Custodian - safe keeper of pool assets
Paying Agent - distributor of funds to ultimate investor
Indenture Trustee - fiduciary of the transaction
Note: The definitions above describe the essential function that the party performs, rather than the
party's title.
Where there are multiple checks for criteria the attesting party will identify in their management
assertion that they are attesting only to the portion of the distribution chain they are responsible for
in the related transaction agreements.
Key: X - obligation
XX - only needs to be provided if transaction documents require custodial accounts to be
maintained at a federally insured depository institution
XXX - will be provided by entity acting as custodian
[X] - under consideration for obligation
_______________________________________________________________________________________________________________________
Master
Servicer/
Primary Securities Indenture
Reg AB Reference Servicing Criteria Servicer Administrator Trustee Custodian
_______________________________________________________________________________________________________________________
General Servicing Considerations
_______________________________________________________________________________________________________________________
1122(d)(1)(i) Policies and procedures are instituted X X
to monitor any performance or other
triggers and events of default in
accordance with the transaction
agreements.
_______________________________________________________________________________________________________________________
1122(d)(1)(ii) If any material servicing activities X X
are outsourced to third parties,
policies and procedures are instituted
to monitor the third party's
performance and compliance with such
servicing activities.
_______________________________________________________________________________________________________________________
Any requirements in the transaction
agreements to maintain a back-up
servicer for the Pool Assets are
1122(d)(1)(iii) maintained.
_______________________________________________________________________________________________________________________
1122(d)(1)(iv) A fidelity bond and errors and X X
omissions policy is in effect on the
party participating in the servicing
function throughout the reporting
period in the amount of coverage
required by and otherwise in accordance
with the terms of the transaction
agreements.
_______________________________________________________________________________________________________________________
Cash Collection and Administration
_______________________________________________________________________________________________________________________
1122(d)(2)(i) Payments on pool assets are deposited X X
into the appropriate custodial bank
accounts and related bank clearing
accounts no more than two business days
following receipt, or such other number
of days specified in the transaction
agreements.
_______________________________________________________________________________________________________________________
Disbursements made via wire transfer on X X
behalf of an obligor or to an investor
1122(d)(2)(ii) are made only by authorized personnel.
_______________________________________________________________________________________________________________________
Advances of funds or guarantees X X
regarding collections, cash flows or
paymnets, and any interest or other
fees charged for such advances, are
made, reviewed and approved as
specified in the transaction
1122(d)(2)(iii) agreements.
_______________________________________________________________________________________________________________________
The related accounts for the X X
transaction, such as cash reserve
accounts or accounts established as a
form of over collateralization, are
separately maintained (e.g., with
respect to commingling of cash) as set
1122(d)(2)(iv) forth in the transaction agreements.
_______________________________________________________________________________________________________________________
Each custodial account is maintained at X X
a federally insured depository
institution as set forth in the
transaction agreements. For purposes of
this criterion, "federally insured
depository institution" with respect to
a foreign financial institution means a
foreign financial institution that
meets the requirements of Rule
13k-1(b)(1) of the Securities Exchange
1122(d)(2)(v) Act.
_______________________________________________________________________________________________________________________
Unissued checks are safeguarded so as X
1122(d)(2)(vi) to prevent unauthorized access.
_______________________________________________________________________________________________________________________
1122(d)(2)(vii) Reconciliations are prepared on a X X
monthly basis for all asset-backed
securities related bank accounts,
including custodial accounts and
related bank clearing accounts. These
reconciliations are (A) mathematically
accurate; (B) prepared within 30
calendar days after the bank statement
cutoff date, or such other number of
days specified in the transaction
agreements; (C) reviewed and approved
by someone other than the person who
prepared the reconciliation; and (D)
contain explanations for reconciling
items. These reconciling items are
resolved within 90 calendar days of
their original identification, or such
other number of days specified in the
transaction agreements.
_______________________________________________________________________________________________________________________
Investor Remittances and Reporting
_______________________________________________________________________________________________________________________
1122(d)(3)(i) Reports to investors, including those X X
to be filed with the Commission, are
maintained in accordance with the
transaction agreements and applicable
Commission requirements. Specifically,
such reports (A) are prepared in
accordance with timeframes and other
terms set forth in the transaction
agreements; (B) provide information
calculated in accordance with the terms
specified in the transaction
agreements; (C) are filed with the
Commission as required by its rules and
regulations; and (D) agree with
investors' or the indenture trustee's
records as to the total unpaid
principal balance and number of Pool
Assets serviced by the Servicer.
_______________________________________________________________________________________________________________________
Amounts due to investors are allocated X X
and remitted in accordance with
timeframes, distribution priority and
other terms set forth in the
1122(d)(3)(ii) transaction agreements.
_______________________________________________________________________________________________________________________
Disbursements made to an investor are X X
posted within two business days to the
Servicer's investor records, or such
other number of days specified in the
1122(d)(3)(iii) transaction agreements.
_______________________________________________________________________________________________________________________
Amounts remitted to investors per the X X
investor reports agree with cancelled
checks, or other form of payment, or
1122(d)(3)(iv) custodial bank statements.
_______________________________________________________________________________________________________________________
Pool Asset Administration
_______________________________________________________________________________________________________________________
1122(d)(4)(i) Collateral or security on pool assets X X
is maintained as required by the
transaction agreements or related pool
asset documents.
_______________________________________________________________________________________________________________________
1122(d)(4)(ii) Pool assets and related documents are X X
safeguarded as required by the
transaction agreements
_______________________________________________________________________________________________________________________
1122(d)(4)(iii) Any additions, removals or X
substitutions to the asset pool are
made, reviewed and approved in
accordance with any conditions or
requirements in the transaction
agreements.
_______________________________________________________________________________________________________________________
1122(d)(4)(iv) Payments on pool assets, including any X
payoffs, made in accordance with the
related pool asset documents are posted
to the Servicer's obligor records
maintained no more than two business
days after receipt, or such other
number of days specified in the
transaction agreements, and allocated
to principal, interest or other items
(e.g., escrow) in accordance with the
related pool asset documents.
_______________________________________________________________________________________________________________________
The Servicer's records regarding the X
pool assets agree with the Servicer's
records with respect to an obligor's
1122(d)(4)(v) unpaid principal balance.
_______________________________________________________________________________________________________________________
Changes with respect to the terms or X
status of an obligor's pool assets
(e.g., loan modifications or re-agings)
are made, reviewed and approved by
authorized personnel in accordance with
the transaction agreements and related
1122(d)(4)(vi) pool asset documents.
_______________________________________________________________________________________________________________________
Loss mitigation or recovery actions X
(e.g., forbearance plans, modifications
and deeds in lieu of foreclosure,
foreclosures and repossessions, as
applicable) are initiated, conducted
and concluded in accordance with the
timeframes or other requirements
established by the transaction
1122(d)(4)(vii) agreements.
_______________________________________________________________________________________________________________________
1122(d)(4)(viii) Records documenting collection efforts X
are maintained during the period a pool
asset is delinquent in accordance with
the transaction agreements. Such
records are maintained on at least a
monthly basis, or such other period
specified in the transaction
agreements, and describe the entity's
activities in monitoring delinquent
pool assets including, for example,
phone calls, letters and payment
rescheduling plans in cases where
delinquency is deemed temporary (e.g.,
illness or unemployment).
_______________________________________________________________________________________________________________________
1122(d)(4)(ix) Adjustments to interest rates or rates X
of return for pool assets with variable
rates are computed based on the related
pool asset documents.
_______________________________________________________________________________________________________________________
1122(d)(4)(x) Regarding any funds held in trust for X
an obligor (such as escrow accounts):
(A) such funds are analyzed, in
accordance with the obligor's pool
asset documents, on at least an annual
basis, or such other period specified
in the transaction agreements; (B)
interest on such funds is paid, or
credited, to obligors in accordance
with applicable pool asset documents
and state laws; and (C) such funds are
returned to the obligor within 30
calendar days of full repayment of the
related pool assets, or such other
number of days specified in the
transaction agreements.
_______________________________________________________________________________________________________________________
Payments made on behalf of an obligor X
(such as tax or insurance payments) are
made on or before the related penalty
or expiration dates, as indicated on
the appropriate bills or notices for
such payments, provided that such
support has been received by the
servicer at least 30 calendar days
prior to these dates, or such other
number of days specified in the
1122(d)(4)(xi) transaction agreements.
_______________________________________________________________________________________________________________________
Any late payment penalties in X
connection with any payment to be made
on behalf of an obligor are paid from
the Servicer's funds and not charged to
the obligor, unless the late payment
was due to the obligor's error or
1122(d)(4)(xii) omission.
_______________________________________________________________________________________________________________________
Disbursements made on behalf of an X
obligor are posted within two business
days to the obligor's records
maintained by the servicer, or such
other number of days specified in the
1122(d)(4)(xiii) transaction agreements.
_______________________________________________________________________________________________________________________
Delinquencies, charge-offs and X X
uncollectible accounts are recognized
and recorded in accordance with the
1122(d)(4)(xiv) transaction agreements.
_______________________________________________________________________________________________________________________
Any external enhancement or other X
support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation
AB, is maintained as set forth in the
1122(d)(4)(xv) transaction agreements.
_______________________________________________________________________________________________________________________
EXHIBIT I
FORM 10-D, FORM 8-K AND FORM 10-K
REPORTING RESPONSIBILITY
As to each item described below, the entity indicated as the Responsible Entity shall be primarily
responsible for reporting the information to the Securities Administrator pursuant to Section 4.02(b).
If the Securities Administrator is indicated below as to any item, then the Securities Administrator is
primarily responsible for obtaining that information.
Under Item 1 of Form 10-D: a) items marked "7.05 statement" are satisfied by the provision of the
periodic Payment Date statement under Section 7.05 of the Indenture, provided by the Securities
Administrator based on information received from the Servicer; and b) items marked "Form 10-D report"
are required to be in the Form 10-D report but not the 7.05 statement, provided by the party indicated.
Information under all other Items of Form 10-D is to be included in the Form 10-D report.
Form Item Description Responsible Entity
_______________________________________________________________________________________________________________________
10-D Must be filed within 15 days of the Payment Date.
_______________________________________________________________________________________________________________________
1 Distribution and Pool Performance Information
_______________________________________________________________________________________________________________________
Item 1121(a) - Distribution and Pool Performance
Information
_______________________________________________________________________________________________________________________
(1) Any applicable record dates, accrual dates, 7.05 statement
determination dates for calculating payments and
actual payment dates for the payment period.
_______________________________________________________________________________________________________________________
(2) Cash flows received and the sources thereof 7.05 statement
for payments, fees and expenses.
_______________________________________________________________________________________________________________________
(3) Calculated amounts and distribution of the 7.05 statement
flow of funds for the period itemized by type and
priority of payment, including:
_______________________________________________________________________________________________________________________
(i) Fees or expenses accrued and paid, 7.05 statement
with an identification of the general purpose of
such fees and the party receiving such fees or
expenses.
_______________________________________________________________________________________________________________________
(ii) Payments accrued or paid with 7.05 statement
respect to enhancement or other support
identified in Item 1114 of Regulation AB (such as
insurance premiums or other enhancement
maintenance fees), with an identification of the
general purpose of such payments and the party
receiving such payments.
_______________________________________________________________________________________________________________________
(iii) Principal, interest and other 7.05 statement
distributions accrued and paid on the
asset-backed securities by type and by class or
series and any principal or interest shortfalls
or carryovers.
_______________________________________________________________________________________________________________________
(iv) The amount of excess cash flow or 7.05 statement
excess spread and the disposition of excess cash
flow.
_______________________________________________________________________________________________________________________
(4) Beginning and ending principal balances of 7.05 statement
the asset-backed securities.
_______________________________________________________________________________________________________________________
(5) Interest rates applicable to the pool assets 7.05 statement
and the asset-backed securities, as applicable.
Consider providing interest rate information for
pool assets in appropriate distributional groups
or incremental ranges.
_______________________________________________________________________________________________________________________
(6) Beginning and ending balances of transaction 7.05 statement
accounts, such as reserve accounts, and material
account activity during the period.
_______________________________________________________________________________________________________________________
(7) Any amounts drawn on any credit enhancement 7.05 statement
or other support identified in Item 1114 of
Regulation AB, as applicable, and the amount of
coverage remaining under any such enhancement, if
known and applicable.
_______________________________________________________________________________________________________________________
(8) Number and amount of pool assets at the 7.05 statement
beginning and ending of each period, and updated
pool composition information, such as weighted Updated pool composition
average coupon, weighted average life, weighted information fields to be as
average remaining term, pool factors and specified by Servicer from time to
prepayment amounts. time
_______________________________________________________________________________________________________________________
(9) Delinquency and loss information for the 7.05 statement.
period.
In addition, describe any material changes to the Form 10-D report: Servicer
information specified in Item 1100(b)(5) of
Regulation AB regarding the pool assets.
_______________________________________________________________________________________________________________________
(10) Information on the amount, terms and general 7.05 statement
purpose of any advances made or reimbursed during
the period, including the general use of funds
advanced and the general source of funds for
reimbursements.
_______________________________________________________________________________________________________________________
(11) Any material modifications, extensions or Form 10-D report; Servicer
waivers to pool asset terms, fees, penalties or
payments during the distribution period or that
have cumulatively become material over time.
_______________________________________________________________________________________________________________________
(12) Material breaches of pool asset Form 10-D report: Servicer, Master
representations or warranties or transaction Servicer
covenants.
_______________________________________________________________________________________________________________________
(13) Information on ratio, coverage or other 7.05 statement
tests used for determining any early
amortization, liquidation or other performance
trigger and whether the trigger was met.
_______________________________________________________________________________________________________________________
(14) Information regarding any new issuance of Form 10-D report: Sponsor
asset-backed securities backed by the same asset
pool, Form 10-D report: Seller
[information regarding] any pool asset changes
(other than in connection with a pool asset
converting into cash in accordance with its
terms), such as additions or removals in
connection with a prefunding or revolving period
and pool asset substitutions and repurchases (and
purchase rates, if applicable), and cash flows
available for future purchases, such as the
balances of any prefunding or revolving accounts,
if applicable. Form 10-D report: Seller
Disclose any material changes in the
solicitation, credit-granting, underwriting,
origination, acquisition or pool selection
criteria or procedures, as applicable, used to
originate, acquire or select the new pool assets.
_______________________________________________________________________________________________________________________
Item 1121(b) - Pre-Funding or Revolving Period N/A
Information
Updated pool information as required under Item
1121(b).
_______________________________________________________________________________________________________________________
2 Legal Proceedings
_______________________________________________________________________________________________________________________
Item 1117 - Legal proceedings pending against the
following entities, or their respective property,
that is material to Noteholders, including
proceedings known to be contemplated by
governmental authorities:
Seller
Depositor Seller
Indenture Trustee Depositor
Issuing entity Indenture Trustee
Master Servicer Sponsor
Securities Administrator Master Servicer
Servicer Securities Administrator
Originator Servicer
Custodian Originator
Custodian
_______________________________________________________________________________________________________________________
3 Sales of Securities and Use of Proceeds
_______________________________________________________________________________________________________________________
Information from Item 2(a) of Part II of Form
10-Q:
With respect to any sale of securities by the Depositor, Sponsor, Issuing
sponsor, depositor or issuing entity, that are Entity, as applicable
backed by the same asset pool or are otherwise
issued by the issuing entity, whether or not
registered, provide the sales and use of proceeds
information in Item 701 of Regulation S-K.
Pricing information can be omitted if securities
were not registered.
_______________________________________________________________________________________________________________________
4 Defaults Upon Senior Securities
_______________________________________________________________________________________________________________________
Information from Item 3 of Part II of Form 10-Q:
Report the occurrence of any Event of Default
(after expiration of any grace period and Securities Administrator
provision of any required notice)
_______________________________________________________________________________________________________________________
5 Submission of Matters to a Vote of Security
Holders
_______________________________________________________________________________________________________________________
Information from Item 4 of Part II of Form 10-Q Securities Administrator
Indenture Trustee
_______________________________________________________________________________________________________________________
6 Significant Obligors of Pool Assets
_______________________________________________________________________________________________________________________
Item 1112(b) - Significant Obligor Financial N/A
Information*
_______________________________________________________________________________________________________________________
*This information need only be reported on the
Form 10-D for the distribution period in which
updated information is required pursuant to the
Item.
_______________________________________________________________________________________________________________________
7 Significant Enhancement Provider Information
_______________________________________________________________________________________________________________________
Item 1114(b)(2) - Credit Enhancement Provider
Financial Information*
Determining applicable disclosure threshold N/A
Obtaining required financial information or
effecting incorporation by reference N/A
_______________________________________________________________________________________________________________________
Item 1115(b) - Derivative Counterparty Financial
Information*
Determining current maximum probable exposure Depositor
Determining current significance percentage Securities Administrator
Obtaining required financial information or
effecting incorporation by reference Depositor Depositor
_______________________________________________________________________________________________________________________
*This information need only be reported on the
Form 10-D for the distribution period in which
updated information is required pursuant to the
Items.
_______________________________________________________________________________________________________________________
8 Other Information
_______________________________________________________________________________________________________________________
Disclose any information required to be reported The Responsible Entity for the
on Form 8-K during the period covered by the Form applicable Form 8-K item as
10-D but not reported indicated below
_______________________________________________________________________________________________________________________
9 Exhibits
_______________________________________________________________________________________________________________________
Distribution report Securities Administrator
_______________________________________________________________________________________________________________________
Exhibits required by Item 601 of Regulation S-K, All parties that are a party to
such as material agreements such exhibit and if none, Sponsor
_______________________________________________________________________________________________________________________
8-K Must be filed within four business days of an event reportable on Form 8-K.
_______________________________________________________________________________________________________________________
1.01 Entry into a Material Definitive Agreement
_______________________________________________________________________________________________________________________
Disclosure is required regarding entry into or All parties
amendment of any definitive agreement that is
material to the securitization, even if depositor
is not a party.
Examples: Sale and Servicing Agreement, custodial
agreement.
Note: disclosure not required as to definitive
agreements that are fully disclosed in the
prospectus
_______________________________________________________________________________________________________________________
1.02 Termination of a Material Definitive Agreement
_______________________________________________________________________________________________________________________
Disclosure is required regarding termination of All parties
any definitive agreement that is material to the
securitization (other than expiration in
accordance with its terms), even if depositor is
not a party.
Examples: Sale and Servicing Agreement, custodial
agreement.
_______________________________________________________________________________________________________________________
1.03 Bankruptcy or Receivership
_______________________________________________________________________________________________________________________
Disclosure is required regarding the bankruptcy Sponsor (Seller), Depositor,
or receivership, if known to the Depositor or Servicer, Master Servicer,
Servicer, with respect to any of the following: Securities Administrator,
Sponsor (Seller), Depositor, Servicer, Master Indenture Trustee, Custodian
Servicer, Securities Administrator, Indenture
Trustee, Swap Provider, Cap Provider, Custodian
_______________________________________________________________________________________________________________________
2.04 Triggering Events that Accelerate or Increase a
Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement
_______________________________________________________________________________________________________________________
Includes an early amortization, performance Master Servicer
trigger or other event, including event of Securities Administrator
default, that would materially alter the payment
priority/distribution of cash flows/amortization
schedule.
Disclosure will be made of events other than
waterfall triggers which are disclosed in the
7.05 statement
_______________________________________________________________________________________________________________________
3.03 Material Modification to Rights of Security
Holders
_______________________________________________________________________________________________________________________
Disclosure is required of any material Party requesting material
modification to documents defining the rights of modification
Noteholders, including the Pooling and Sale and
Servicing Agreement
_______________________________________________________________________________________________________________________
5.03 Amendments to Articles of Incorporation or
Bylaws; Change in Fiscal Year
_______________________________________________________________________________________________________________________
Disclosure is required of any amendment "to the Sponsor
governing documents of the issuing entity"
_______________________________________________________________________________________________________________________
5.06 Change in Shell Company Status
_______________________________________________________________________________________________________________________
[Not applicable to ABS Issuing Entitys] N/A
_______________________________________________________________________________________________________________________
6.01 ABS Informational and Computational Material
_______________________________________________________________________________________________________________________
[Not included in reports to be filed under N/A
Section 4.07]
_______________________________________________________________________________________________________________________
6.02 Change of Master Servicer, Servicer, Securities
Administrator or Indenture Trustee
_______________________________________________________________________________________________________________________
Requires disclosure of any removal, replacement, Indenture Trustee, Securities
substitution or addition of any master servicer, Administrator, Servicer or Master
affiliated servicer, other servicer servicing 10% Servicer
or more of pool assets at time of report, other
material servicers or indenture trustee (in the
case of the Indenture Trustee, only with respect
to itself). Reg AB disclosure about any new
servicer or indenture trustee is also required.
_______________________________________________________________________________________________________________________
6.03 Change in Credit Enhancement or Other External
Support
_______________________________________________________________________________________________________________________
Covers termination of any enhancement in manner Depositor/Securities
other than by its terms, the addition of an Administrator/Indenture Trustee
enhancement, or a material change in the
enhancement provided. Applies to external credit
enhancements as well as derivatives. Reg AB
disclosure about any new enhancement provider is
also required.
_______________________________________________________________________________________________________________________
6.04 Failure to Make a Required Payment Securities Administrator
_______________________________________________________________________________________________________________________
6.05 Securities Act Updating Disclosure
_______________________________________________________________________________________________________________________
If any material pool characteristic differs by 5% Sponsor
or more at the time of issuance of the securities
from the description in the final prospectus,
provide updated Reg AB disclosure about the
actual asset pool.
_______________________________________________________________________________________________________________________
If there are any new servicers or originators Sponsor
required to be disclosed under Regulation AB as a
result of the foregoing, provide the information
called for in Items 1108 and 1110 respectively.
_______________________________________________________________________________________________________________________
7.01 Regulation FD Disclosure All parties
_______________________________________________________________________________________________________________________
8.01 Other Events
_______________________________________________________________________________________________________________________
Any event, with respect to which information is Depositor, Sponsor
not otherwise called for in Form 8-K, that the
registrant deems of importance to security
holders.
_______________________________________________________________________________________________________________________
9.01 Financial Statements and Exhibits The Responsible Entity applicable
to reportable event
_______________________________________________________________________________________________________________________
10-K Must be filed within 90 days of the fiscal year end for the registrant.
_______________________________________________________________________________________________________________________
9B Other Information
_______________________________________________________________________________________________________________________
Disclose any information required to be reported The Responsible Entity for the
on Form 8-K during the fourth quarter covered by applicable Form 8-K item as
the Form 10-K but not reported indicated above
_______________________________________________________________________________________________________________________
15 Exhibits and Financial Statement Schedules
_______________________________________________________________________________________________________________________
Item 1112(b) - Significant Obligor Financial N/A
Information
_______________________________________________________________________________________________________________________
Item 1114(b)(2) - Credit Enhancement Provider
Financial Information
Determining applicable disclosure threshold N/A
Obtaining required financial information or
effecting incorporation by reference N/A
_______________________________________________________________________________________________________________________
Item 1115(b) - Derivative Counterparty Financial
Information
Determining current maximum probable exposure Securities Administrator
Determining current significance percentage
Obtaining required financial information or Securities Administrator
effecting incorporation by reference
Depositor
_______________________________________________________________________________________________________________________
Item 1117 - Legal proceedings pending against the
following entities, or their respective property,
that is material to Noteholders, including
proceedings known to be contemplated by
governmental authorities:
Seller
Depositor Seller
Indenture Trustee Depositor
Issuing entity Indenture Trustee
Master Servicer Sponsor
Securities Administrator Master Servicer
Servicer Securities Administrator
Originator Servicer
Custodian Originator
Custodian
_______________________________________________________________________________________________________________________
Item 1119 - Affiliations and relationships
between the following entities, or their
respective affiliates, that are material to
Noteholders:
Seller
Depositor Seller
Indenture Trustee Depositor
Issuing entity Indenture Trustee
Master Servicer Issuing entity
Securities Administrator Master Servicer
Servicer Securities Administrator
Originator Servicer
Custodian Originator
Credit Enhancer/Support Provider, if any Custodian
Significant Obligor, if any Depositor
Sponsor
_______________________________________________________________________________________________________________________
Item 1122 - Assessment of Compliance with Each Party participating in the
Servicing Criteria servicing function
_______________________________________________________________________________________________________________________
Item 1123 - Servicer Compliance Statement Servicer, Master Servicer
_______________________________________________________________________________________________________________________
EXHIBIT J
STANDARD FILE LAYOUT—SCHEDULED/SCHEDULED
_____________________________________________________________________________________________________________________________
Standard Loan Level File Layout - Master
Servicing
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
Exhibit 1: Layout
_____________________________________________________________________________________________________________________________
Column Name Description Decimal Format Comment
Max
Size
_____________________________________________________________________________________________________________________________
Each file requires the following fields:
_____________________________________________________________________________________________________________________________
SER_INVESTOR_NBR A value assigned by the Servicer to define a Text up to 20 digits
group of loans. 20
_____________________________________________________________________________________________________________________________
LOAN_NBR A unique identifier assigned to each loan by Text up to 10 digits
the investor. 10
_____________________________________________________________________________________________________________________________
SERVICER_LOAN_NBR A unique number assigned to a loan by the Text up to 10 digits
Servicer. This may be different than the 10
LOAN_NBR.
_____________________________________________________________________________________________________________________________
SCHED_PAY_AMT Scheduled monthly principal and scheduled 2 No commas(,) or
interest payment that a borrower is expected to dollar signs ($) 11
pay, P&I constant.
_____________________________________________________________________________________________________________________________
NOTE_INT_RATE The loan interest rate as reported by the 4 Max length of 6
Servicer. 6
_____________________________________________________________________________________________________________________________
NET_INT_RATE The loan gross interest rate less the service 4 Max length of 6
fee rate as reported by the Servicer. 6
_____________________________________________________________________________________________________________________________
SERV_FEE_RATE The servicer's fee rate for a loan as reported 4 Max length of 6
by the Servicer. 6
_____________________________________________________________________________________________________________________________
SERV_FEE_AMT The servicer's fee amount for a loan as 2 No commas(,) or
reported by the Servicer. dollar signs ($) 11
_____________________________________________________________________________________________________________________________
NEW_PAY_AMT The new loan payment amount as reported by the 2 No commas(,) or
Servicer. dollar signs ($) 11
_____________________________________________________________________________________________________________________________
NEW_LOAN_RATE The new loan rate as reported by the Servicer. 4 Max length of 6
6
_____________________________________________________________________________________________________________________________
ARM_INDEX_RATE The index the Servicer is using to calculate a 4 Max length of 6
forecasted rate. 6
_____________________________________________________________________________________________________________________________
ACTL_BEG_PRIN_BAL The borrower's actual principal balance at the 2 No commas(,) or
beginning of the processing cycle. dollar signs ($) 11
_____________________________________________________________________________________________________________________________
ACTL_END_PRIN_BAL The borrower's actual principal balance at the 2 No commas(,) or
end of the processing cycle. dollar signs ($) 11
_____________________________________________________________________________________________________________________________
BORR_NEXT_PAY_DUE_DATE The date at the end of processing cycle that MM/DD/YYYY
the borrower's next payment is due to the 10
Servicer, as reported by Servicer.
_____________________________________________________________________________________________________________________________
SERV_CURT_AMT_1 The first curtailment amount to be applied. 2 No commas(,) or
dollar signs ($) 11
_____________________________________________________________________________________________________________________________
SERV_CURT_DATE_1 The curtailment date associated with the first MM/DD/YYYY
curtailment amount. 10
_____________________________________________________________________________________________________________________________
CURT_ADJ_ AMT_1 The curtailment interest on the first 2 No commas(,) or
curtailment amount, if applicable. dollar signs ($) 11
_____________________________________________________________________________________________________________________________
SERV_CURT_AMT_2 The second curtailment amount to be applied. 2 No commas(,) or
dollar signs ($) 11
_____________________________________________________________________________________________________________________________
SERV_CURT_DATE_2 The curtailment date associated with the second MM/DD/YYYY
curtailment amount. 10
_____________________________________________________________________________________________________________________________
CURT_ADJ_ AMT_2 The curtailment interest on the second 2 No commas(,) or
curtailment amount, if applicable. dollar signs ($) 11
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
Exhibit 1: Continued Standard Loan Level File Layout
_____________________________________________________________________________________________________________________________
Column Name Description Decimal Format Comment
Max
Size
_____________________________________________________________________________________________________________________________
SERV_CURT_AMT_3 The third curtailment amount to be applied. 2 No commas(,) or
dollar signs ($) 11
_____________________________________________________________________________________________________________________________
SERV_CURT_DATE_3 The curtailment date associated with the third MM/DD/YYYY
curtailment amount. 10
_____________________________________________________________________________________________________________________________
CURT_ADJ_AMT_3 The curtailment interest on the third 2 No commas(,) or
curtailment amount, if applicable. dollar signs ($) 11
_____________________________________________________________________________________________________________________________
PIF_AMT The loan "paid in full" amount as reported by 2 No commas(,) or
the Servicer. dollar signs ($) 11
_____________________________________________________________________________________________________________________________
PIF_DATE The paid in full date as reported by the MM/DD/YYYY
Servicer. 10
_____________________________________________________________________________________________________________________________
Action Code Key:
ACTION_CODE The standard FNMA numeric code used to indicate 15=Bankruptcy, 2
the default/delinquent status of a particular 30=Foreclosure, ,
loan. 60=PIF,
63=Substitution,
65=Repurchase,70=REO
_____________________________________________________________________________________________________________________________
INT_ADJ_AMT The amount of the interest adjustment as 2 No commas(,) or
reported by the Servicer. dollar signs ($) 11
_____________________________________________________________________________________________________________________________
SOLDIER_SAILOR_ADJ_AMT The Soldier and Sailor Adjustment amount, if 2 No commas(,) or
applicable. dollar signs ($) 11
_____________________________________________________________________________________________________________________________
NON_ADV_LOAN_AMT The Non Recoverable Loan Amount, if applicable. 2 No commas(,) or
dollar signs ($) 11
_____________________________________________________________________________________________________________________________
LOAN_LOSS_AMT The amount the Servicer is passing as a loss, 2 No commas(,) or
if applicable. dollar signs ($) 11
_____________________________________________________________________________________________________________________________
Plus the following applicable fields:
_____________________________________________________________________________________________________________________________
SCHED_BEG_PRIN_BAL The scheduled outstanding principal amount due 2 No commas(,) or
at the beginning of the cycle date to be passed dollar signs ($) 11
through to investors.
_____________________________________________________________________________________________________________________________
SCHED_END_PRIN_BAL The scheduled principal balance due to 2 No commas(,) or
investors at the end of a processing cycle. dollar signs ($) 11
_____________________________________________________________________________________________________________________________
SCHED_PRIN_AMT The scheduled principal amount as reported by 2 No commas(,) or
the Servicer for the current cycle -- only dollar signs ($) 11
applicable for Scheduled/Scheduled Loans.
_____________________________________________________________________________________________________________________________
SCHED_NET_INT The scheduled gross interest amount less the 2 No commas(,) or
service fee amount for the current cycle as dollar signs ($) 11
reported by the Servicer -- only applicable for
Scheduled/Scheduled Loans.
_____________________________________________________________________________________________________________________________
ACTL_PRIN_AMT The actual principal amount collected by the 2 No commas(,) or
Servicer for the current reporting cycle -- dollar signs ($) 11
only applicable for Actual/Actual Loans.
_____________________________________________________________________________________________________________________________
ACTL_NET_INT The actual gross interest amount less the 2 No commas(,) or
service fee amount for the current reporting dollar signs ($) 11
cycle as reported by the Servicer -- only
applicable for Actual/Actual Loans.
_____________________________________________________________________________________________________________________________
PREPAY_PENALTY_ AMT The penalty amount received when a borrower 2 No commas(,) or
prepays on his loan as reported by the dollar signs ($) 11
Servicer.
_____________________________________________________________________________________________________________________________
PREPAY_PENALTY_ WAIVED The prepayment penalty amount for the loan 2 No commas(,) or
waived by the servicer. dollar signs ($) 11
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
Exhibit 1: Continued Standard Loan Level File Layout
_____________________________________________________________________________________________________________________________
Column Name Description Decimal Format Comment
Max
Size
_____________________________________________________________________________________________________________________________
MOD_DATE The Effective Payment Date of the Modification MM/DD/YYYY
for the loan. 10
_____________________________________________________________________________________________________________________________
MOD_TYPE The Modification Type. Varchar - value can
be alpha or numeric 30
_____________________________________________________________________________________________________________________________
DELINQ_P&I_ADVANCE_AMT The current outstanding principal and interest 2 No commas(,) or
advances made by Servicer. dollar signs ($) 11
_____________________________________________________________________________________________________________________________
Flag to indicate if the repurchase of a loan is Y=Breach
BREACH_FLAG due to a breach of Representations and N=NO Breach 1
Warranties Let blank if N/A
_____________________________________________________________________________________________________________________________
EXHIBIT K
STANDARD FILE LAYOUT—DELINQUENCY REPORTING
_________________________________________________________________________________________________________________________________________
Column/Header Name Description Decimal Format Comment
_________________________________________________________________________________________________________________________________________
SERVICER_LOAN_NBR A unique number assigned to a loan by the Servicer. This
may be different than the LOAN_NBR
_________________________________________________________________________________________________________________________________________
LOAN_NBR A unique identifier assigned to each loan by the originator.
_________________________________________________________________________________________________________________________________________
CLIENT_NBR Servicer Client Number
_________________________________________________________________________________________________________________________________________
SERV_INVESTOR_NBR Contains a unique number as assigned by an external servicer
to identify a group of loans in their system.
_________________________________________________________________________________________________________________________________________
BORROWER_FIRST_NAME First Name of the Borrower.
_________________________________________________________________________________________________________________________________________
BORROWER_LAST_NAME Last name of the borrower.
_________________________________________________________________________________________________________________________________________
PROP_ADDRESS Street Name and Number of Property
_________________________________________________________________________________________________________________________________________
PROP_STATE The state where the property located.
_________________________________________________________________________________________________________________________________________
PROP_ZIP Zip code where the property is located.
_________________________________________________________________________________________________________________________________________
BORR_NEXT_PAY_DUE_DATE The date that the borrower's next payment is due to the MM/DD/YYYY
servicer at the end of processing cycle, as reported by
Servicer.
_________________________________________________________________________________________________________________________________________
LOAN_TYPE Loan Type (i.e. FHA, VA, Conv)
_________________________________________________________________________________________________________________________________________
BANKRUPTCY_FILED_DATE The date a particular bankruptcy claim was filed. MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
BANKRUPTCY_CHAPTER_CODE The chapter under which the bankruptcy was filed.
_________________________________________________________________________________________________________________________________________
BANKRUPTCY_CASE_NBR The case number assigned by the court to the bankruptcy
filing.
_________________________________________________________________________________________________________________________________________
POST_PETITION_DUE_DATE The payment due date once the bankruptcy has been approved MM/DD/YYYY
by the courts
_________________________________________________________________________________________________________________________________________
BANKRUPTCY_DCHRG_DISM_DATE The Date The Loan Is Removed From Bankruptcy. Either by MM/DD/YYYY
Dismissal, Discharged and/or a Motion For Relief Was
Granted.
_________________________________________________________________________________________________________________________________________
LOSS_MIT_APPR_DATE The Date The Loss Mitigation Was Approved By The Servicer MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
LOSS_MIT_TYPE The Type Of Loss Mitigation Approved For A Loan Such As;
_________________________________________________________________________________________________________________________________________
LOSS_MIT_EST_COMP_DATE The Date The Loss Mitigation /Plan Is Scheduled To End/Close MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
LOSS_MIT_ACT_COMP_DATE The Date The Loss Mitigation Is Actually Completed MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
FRCLSR_APPROVED_DATE The date DA Admin sends a letter to the servicer with MM/DD/YYYY
instructions to begin foreclosure proceedings.
_________________________________________________________________________________________________________________________________________
ATTORNEY_REFERRAL_DATE Date File Was Referred To Attorney to Pursue Foreclosure MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
FIRST_LEGAL_DATE Notice of 1st legal filed by an Attorney in a Foreclosure MM/DD/YYYY
Action
_________________________________________________________________________________________________________________________________________
FRCLSR_SALE_EXPECTED_DATE The date by which a foreclosure sale is expected to occur. MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
FRCLSR_SALE_DATE The actual date of the foreclosure sale. MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
FRCLSR_SALE_AMT The amount a property sold for at the foreclosure sale. 2 No commas(,)
or dollar
signs ($)
_________________________________________________________________________________________________________________________________________
EVICTION_START_DATE The date the servicer initiates eviction of the borrower. MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
EVICTION_COMPLETED_DATE The date the court revokes legal possession of the property MM/DD/YYYY
from the borrower.
_________________________________________________________________________________________________________________________________________
LIST_PRICE The price at which an REO property is marketed. 2 No commas(,)
or dollar
signs ($)
_________________________________________________________________________________________________________________________________________
LIST_DATE The date an REO property is listed at a particular price. MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
OFFER_AMT The dollar value of an offer for an REO property. 2 No commas(,)
or dollar
signs ($)
_________________________________________________________________________________________________________________________________________
OFFER_DATE_TIME The date an offer is received by DA Admin or by the Servicer. MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
REO_CLOSING_DATE The date the REO sale of the property is scheduled to close. MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
REO_ACTUAL_CLOSING_DATE Actual Date Of REO Sale MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
OCCUPANT_CODE Classification of how the property is occupied.
_________________________________________________________________________________________________________________________________________
PROP_CONDITION_CODE A code that indicates the condition of the property.
_________________________________________________________________________________________________________________________________________
PROP_INSPECTION_DATE The date a property inspection is performed. MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
APPRAISAL_DATE The date the appraisal was done. MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
CURR_PROP_VAL The current "as is" value of the property based on brokers 2
price opinion or appraisal.
_________________________________________________________________________________________________________________________________________
REPAIRED_PROP_VAL The amount the property would be worth if repairs are 2
completed pursuant to a broker's price opinion or appraisal.
_________________________________________________________________________________________________________________________________________
If applicable:
_________________________________________________________________________________________________________________________________________
DELINQ_STATUS_CODE FNMA Code Describing Status of Loan
_________________________________________________________________________________________________________________________________________
DELINQ_REASON_CODE The circumstances which caused a borrower to stop paying on
a loan. Code indicates the reason why the loan is in
default for this cycle.
_________________________________________________________________________________________________________________________________________
MI_CLAIM_FILED_DATE Date Mortgage Insurance Claim Was Filed With Mortgage MM/DD/YYYY
Insurance Company.
_________________________________________________________________________________________________________________________________________
MI_CLAIM_AMT Amount of Mortgage Insurance Claim Filed No commas(,)
or dollar
signs ($)
_________________________________________________________________________________________________________________________________________
MI_CLAIM_PAID_DATE Date Mortgage Insurance Company Disbursed Claim Payment MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
MI_CLAIM_AMT_PAID Amount Mortgage Insurance Company Paid On Claim 2 No commas(,)
or dollar
signs ($)
_________________________________________________________________________________________________________________________________________
POOL_CLAIM_FILED_DATE Date Claim Was Filed With Pool Insurance Company MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
POOL_CLAIM_AMT Amount of Claim Filed With Pool Insurance Company 2 No commas(,)
or dollar
signs ($)
_________________________________________________________________________________________________________________________________________
POOL_CLAIM_PAID_DATE Date Claim Was Settled and The Check Was Issued By The Pool MM/DD/YYYY
Insurer
_________________________________________________________________________________________________________________________________________
POOL_CLAIM_AMT_PAID Amount Paid On Claim By Pool Insurance Company 2 No commas(,)
or dollar
signs ($)
_________________________________________________________________________________________________________________________________________
FHA_PART_A_CLAIM_FILED_DATE Date FHA Part A Claim Was Filed With HUD MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
FHA_PART_A_CLAIM_AMT Amount of FHA Part A Claim Filed 2 No commas(,)
or dollar
signs ($)
_________________________________________________________________________________________________________________________________________
FHA_PART_A_CLAIM_PAID_DATE Date HUD Disbursed Part A Claim Payment MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
FHA_PART_A_CLAIM_PAID_AMT Amount HUD Paid on Part A Claim 2 No commas(,)
or dollar
signs ($)
_________________________________________________________________________________________________________________________________________
FHA_PART_B_CLAIM_FILED_DATE Date FHA Part B Claim Was Filed With HUD MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
FHA_PART_B_CLAIM_AMT Amount of FHA Part B Claim Filed 2 No commas(,)
or dollar
signs ($)
_________________________________________________________________________________________________________________________________________
FHA_PART_B_CLAIM_PAID_DATE Date HUD Disbursed Part B Claim Payment MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
FHA_PART_B_CLAIM_PAID_AMT Amount HUD Paid on Part B Claim 2 No commas(,)
or dollar
signs ($)
_________________________________________________________________________________________________________________________________________
VA_CLAIM_FILED_DATE Date VA Claim Was Filed With the Veterans Admin MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
VA_CLAIM_PAID_DATE Date Veterans Admin. Disbursed VA Claim Payment MM/DD/YYYY
_________________________________________________________________________________________________________________________________________
VA_CLAIM_PAID_AMT Amount Veterans Admin. Paid on VA Claim 2 No commas(,)
or dollar
signs ($)
_________________________________________________________________________________________________________________________________________
Exhibit 2: Standard File Codes - Delinquency Reporting
The Loss Mit Type field should show the approved Loss Mitigation Code as follows:
o ASUM- Approved Assumption
o BAP- Borrower Assistance Program
o CO- Charge Off
o DIL- Deed-in-Lieu
o FFA- Formal Forbearance Agreement
o MOD- Loan Modification
o PRE- Pre-Sale
o SS- Short Sale
o MISC- Anything else approved by the PMI or Pool Insurer
NOTE: ▇▇▇▇▇ Fargo Bank will accept alternative Loss Mitigation Types to those above, provided that they
are consistent with industry standards. If Loss Mitigation Types other than those above are used, the
Servicer must supply ▇▇▇▇▇ Fargo Bank with a description of each of the Loss Mitigation Types prior to
sending the file.
The Occupant Code field should show the current status of the property code as follows:
o Mortgagor
o Tenant
o Unknown
o Vacant
The Property Condition field should show the last reported condition of the property as follows:
o Damaged
o Excellent
o Fair
o Gone
o Good
o Poor
o Special Hazard
o Unknown
Exhibit 2: Standard File Codes - Delinquency Reporting, Continued
The FNMA Delinquent Reason Code field should show the Reason for Delinquency as follows:
__________________________________________________________________________________
Delinquency Code Delinquency Description
__________________________________________________________________________________
001 FNMA-Death of principal mortgagor
__________________________________________________________________________________
002 FNMA-Illness of principal mortgagor
__________________________________________________________________________________
003 FNMA-Illness of mortgagor's family member
__________________________________________________________________________________
004 FNMA-Death of mortgagor's family member
__________________________________________________________________________________
005 FNMA-Marital difficulties
__________________________________________________________________________________
006 FNMA-Curtailment of income
__________________________________________________________________________________
007 FNMA-Excessive Obligation
__________________________________________________________________________________
008 FNMA-Abandonment of property
__________________________________________________________________________________
009 FNMA-Distant employee transfer
__________________________________________________________________________________
011 FNMA-Property problem
__________________________________________________________________________________
012 FNMA-Inability to sell property
__________________________________________________________________________________
013 FNMA-Inability to rent property
__________________________________________________________________________________
014 FNMA-Military Service
__________________________________________________________________________________
015 FNMA-Other
__________________________________________________________________________________
016 FNMA-Unemployment
__________________________________________________________________________________
017 FNMA-Business failure
__________________________________________________________________________________
019 FNMA-Casualty loss
__________________________________________________________________________________
022 FNMA-Energy environment costs
__________________________________________________________________________________
023 FNMA-Servicing problems
__________________________________________________________________________________
026 FNMA-Payment adjustment
__________________________________________________________________________________
027 FNMA-Payment dispute
__________________________________________________________________________________
029 FNMA-Transfer of ownership pending
__________________________________________________________________________________
030 FNMA-Fraud
__________________________________________________________________________________
031 FNMA-Unable to contact borrower
__________________________________________________________________________________
INC FNMA-Incarceration
__________________________________________________________________________________
Exhibit 2: Standard File Codes - Delinquency Reporting, Continued
The FNMA Delinquent Status Code field should show the Status of Default as follows:
__________________________________________________________________________________
Status Code Status Description
__________________________________________________________________________________
09 Forbearance
__________________________________________________________________________________
17 Pre-foreclosure Sale Closing Plan Accepted
__________________________________________________________________________________
24 Government Seizure
__________________________________________________________________________________
26 Refinance
__________________________________________________________________________________
27 Assumption
__________________________________________________________________________________
28 Modification
__________________________________________________________________________________
29 Charge-Off
__________________________________________________________________________________
30 Third Party Sale
__________________________________________________________________________________
31 Probate
__________________________________________________________________________________
32 Military Indulgence
__________________________________________________________________________________
43 Foreclosure Started
__________________________________________________________________________________
44 Deed-in-Lieu Started
__________________________________________________________________________________
49 Assignment Completed
__________________________________________________________________________________
61 Second Lien Considerations
__________________________________________________________________________________
62 Veteran's Affairs-No Bid
__________________________________________________________________________________
63 Veteran's Affairs-Refund
__________________________________________________________________________________
64 Veteran's Affairs-Buydown
__________________________________________________________________________________
65 Chapter 7 Bankruptcy
__________________________________________________________________________________
66 Chapter 11 Bankruptcy
__________________________________________________________________________________
67 Chapter 13 Bankruptcy
__________________________________________________________________________________
EXHIBIT L
CALCULATION OF REALIZED LOSS/GAIN FORM 332
▇▇▇▇▇ FARGO BANK, N.A. - Calculation of Realized Loss/Gain Form 332
Prepared by: __________________ Date: _______________
Phone: ______________________ Email Address:_____________________
__________________________________ _________________________________________ ____________________________________________
Servicer Loan No. Servicer Name Servicer Address
__________________________________ _________________________________________ ____________________________________________
▇▇▇▇▇ FARGO BANK, N.A. Loan No._____________________________
Borrower's Name: _________________________________________________________
Property Address: _________________________________________________________
Liquidation Type: REO Sale 3rd Party Sale Short Sale Charge Off
Was this loan granted a Bankruptcy deficiency or cramdown Yes No
If "Yes", provide deficiency or cramdown amount _______________________________
Liquidation and Acquisition Expenses:
(1) Actual Unpaid Principal Balance of Mortgage Loan $ ________________(1)
(2) Interest accrued at Net Rate ________________(2)
(3) Accrued Servicing Fees ________________(3)
(4) Attorney's Fees ________________(4)
(5) Taxes (see page 2) ________________(5)
(6) Property Maintenance ________________(6)
(7) MI/Hazard Insurance Premiums (see page 2) ________________(7)
(8) Utility Expenses ________________(8)
(9) Appraisal/BPO ________________(9)
(10) Property Inspections _______________(10)
(11) FC Costs/Other Legal Expenses _______________(11)
(12) Other (itemize) _______________(12)
Cash for Keys__________________________ _______________(12)
HOA/Condo Fees_______________________ _______________(12)
______________________________________ _______________(12)
Total Expenses $ ______________(13)
Credits:
(14) Escrow Balance $ ______________(14)
(15) HIP Refund ________________(15)
(16) Rental Receipts ________________(16)
(17) Hazard Loss Proceeds ________________(17)
(18) Primary Mortgage Insurance / Gov't Insurance ________________(18a)
HUD Part A
________________(18b)
HUD Part B
(19) Pool Insurance Proceeds ________________(19)
(20) Proceeds from Sale of Acquired Property ________________(20)
(21) Other (itemize) ________________(21)
_________________________________________ ________________(21)
Total Credits $_______________(22)
Total Realized Loss (or Amount of Gain) $_______________(23)
Escrow Disbursement Detail
______________________________________________________________________________________________________________________
Type Date Paid Period of Total Paid Base Amount Penalties Interest
(Tax /Ins.) Coverage
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
▇▇▇▇▇ FARGO BANK, N.A.
Calculation of Realized Loss/Gain Form 332- Instruction Sheet
NOTE: Do not net or combine items. Show all expenses individually and all credits as separate
line items. Claim packages are due on the remittance report date. Late submissions may result
in claims not being passed until the following month.
(b) The numbers on the 332 form correspond with the numbers listed below.
Liquidation and Acquisition Expenses:
1. The Actual Unpaid Principal Balance of the Mortgage Loan. For documentation, an
Amortization Schedule from date of default through liquidation breaking out the net
interest and servicing fees advanced is required.
2. The Total Interest Due less the aggregate amount of servicing fee that would have been
earned if all delinquent payments had been made as agreed. For documentation, an
Amortization Schedule from date of default through liquidation breaking out the net
interest and servicing fees advanced is required.
3. Accrued Servicing Fees based upon the Scheduled Principal Balance of the Mortgage Loan
as calculated on a monthly basis. For documentation, an Amortization Schedule from date
of default through liquidation breaking out the net interest and servicing fees
advanced is required.
4-12. Complete as applicable. Required documentation:
* For interest advances - an amortization schedule (evidencing calculation of
interest advances)
* For taxes and insurance advances - see page 2 of 332 form - breakdown required
showing period
of coverage, base tax, interest, penalty. Advances prior to default require
evidence of servicer efforts to recover advances.
* For escrow advances - complete payment history
(to calculate advances from last positive escrow balance forward)
* Other expenses - copies of corporate advance history showing all payments
* REO repairs > $1500 require explanation
* REO repairs >$3000 require evidence of at least 2 bids.
* Short Sale or Charge Off require P&L supporting the decision and WFB's approved
officer cert
* Unusual or extraordinary items may require further documentation.
13. The total of lines 1 through 12.
(c) Credits:
14-21. Complete as applicable. Required documentation:
* Copy of the HUD 1 from the REO sale. If a 3rd Party Sale bid instructions, copy of
attorney letter of Foreclosure proceeds.
* Copy of EOB for any MI or gov't guarantee
* All other credits need to be clearly defined on the 332 form
22. The total of lines 14 through 21.
Please Note: For HUD/VA loans, use line (18a) for Part A/Initial proceeds and line (18b)
for Part B/Supplemental proceeds.
Total Realized Loss (or Amount of Any Gain)
23. The total derived from subtracting line 22 from 13. If the amount represents a realized gain,
show the amount in parenthesis ( ).
EXHIBIT M
ADDITIONAL DISCLOSURE NOTIFICATION
▇▇▇▇▇ Fargo Bank, N.A. as Securities Administrator
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇.▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
Attn: Corporate Trust Services - Newcastle 2007-1-SEC REPORT PROCESSING
RE: **Additional Form [ ] Disclosure**Required
Ladies and Gentlemen:
In accordance with Section 4.02 of the Sale and Servicing Agreement, dated as of July 12, 2007,
among Bear ▇▇▇▇▇▇▇ Asset Backed Securities I LLC, Newcastle Mortgage Securities Trust 2007-1, Nationstar
Mortgage LLC, ▇▇▇▇▇ Fargo Bank, N.A and The Bank of New York, the undersigned hereby notifies you that
certain events have come to our attention that [shall][may] need to be disclosed on Form [ ].
Description of Additional Form [ ] Disclosure:
List of Any Attachments hereto to be included in the Additional Form [ ] Disclosure:
Any inquiries related to this notification should be directed to [ ], phone number: [ ];
email address: [ ].
[NAME OF PARTY]
as [role]
By: ________________________________
Name:
Title: