Exhibit 99.9
EXECUTION COPY
================================================================================
SERVICING AGREEMENT
BY AND BETWEEN
WASHINGTON MUTUAL BANK
(SERVICER)
AND
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE LENDING INC.
(OWNER)
DATED AS OF NOVEMBER 1, 2005
RESIDENTIAL FIRST LIEN MORTGAGE LOANS
SCHEDULE/SCHEDULE FLOW DELIVERY PROGRAM
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE 1. DEFINITIONS................................................... 1
ARTICLE 2. ADMINISTRATION AND SERVICING OF MORTGAGE LOANS................ 10
Section 2.1. Identification of Mortgage Loans; Servicer to Act as
Servicer................................................ 10
Section 2.2. Liquidation of Mortgage Loans........................... 11
Section 2.3. Collection of Mortgage Loan Payments.................... 12
Section 2.4. Establishment of Account; Deposits in Account........... 13
Section 2.5. Permitted Withdrawals from the Account.................. 14
Section 2.6. Establishment of Escrow Account; Deposits in Escrow
Account; Escrow Analysis................................ 15
Section 2.7. Permitted Withdrawals from the Escrow Account........... 15
Section 2.8. Payment of Taxes, Insurance and Other Charges........... 16
Section 2.9. Transfer of Accounts.................................... 16
Section 2.10. Maintenance of Hazard Insurance......................... 16
Section 2.11. Fidelity Bond; Errors and Omissions Insurance........... 18
Section 2.12. Title, Management and Disposition of Real Estate Owned.. 18
Section 2.13. Application of Proceeds of Insurance to Repair or
Restoration............................................. 20
Section 2.14. Inspections............................................. 20
Section 2.15. Maintenance of Primary Mortgage Insurance Policies and
LPMI Policies; Collections Thereunder................... 21
Section 2.16. Monthly Advances by the Servicer........................ 21
Section 2.17. Compliance With REMIC Provisions........................ 22
Section 2.18. Owner to Cooperate; Release of Collateral Files......... 22
ARTICLE 3. PAYMENTS TO THE OWNER......................................... 23
Section 3.1. Distributions........................................... 23
Section 3.2. Reports................................................. 24
Section 3.3. Delinquency and Foreclosure Statements.................. 25
ARTICLE 4. GENERAL SERVICING PROCEDURE; COVENANTS; REPRESENTATIONS AND
WARRANTIES.................................................... 26
Section 4.1. Assumption Agreements................................... 26
Section 4.2. Satisfaction of Mortgages and Release of Collateral
Files................................................... 26
Section 4.3. Servicing Compensation.................................. 27
Section 4.4. Statements as to Compliance............................. 28
Section 4.5. Annual Independent Public Accountants' Servicing
Report.................................................. 29
Section 4.6. Owner's Right to Examine Servicer Records, etc.......... 29
Section 4.7. Cooperation............................................. 30
i
Section 4.8. Consents and Approvals.................................. 30
ARTICLE 5. THE SERVICER.................................................. 30
Section 5.1. Indemnification; Third Party Claims..................... 30
Section 5.2. Servicer Covenants; Merger or Consolidation of the
Servicer................................................ 31
Section 5.3. Limitation on Liability of the Servicer and Others...... 31
Section 5.4. Servicer Not to Resign.................................. 32
Section 5.5. Transfer of Servicing................................... 32
Section 5.6. Transfer of Mortgage Loans.............................. 32
Section 5.7. Representations and Warranties of the Servicer.......... 33
ARTICLE 6. DEFAULT....................................................... 34
Section 6.1. Events of Default....................................... 34
Section 6.2. Waiver of Defaults...................................... 36
Section 6.3. Survival of Certain Obligations and Liabilities of the
Defaulted Servicer...................................... 36
ARTICLE 7. TERMINATION................................................... 36
Section 7.1. Termination of Agreement................................ 36
Section 7.2. Termination of the Servicer Upon Unremedied Event of
Default................................................. 36
ARTICLE 8. WHOLE LOAN TRANSFERS AND PASS-THROUGH TRANSFERS............... 37
Section 8.1. Whole-Loan Transfers or Pass-Through Transfers.......... 37
Section 8.2. Designation of a Master Servicer........................ 39
Section 8.3. Servicer's Purchase Right............................... 40
ARTICLE 9. MISCELLANEOUS PROVISIONS...................................... 41
Section 9.1. Successor to the Servicer............................... 41
Section 9.2. Amendment............................................... 41
Section 9.3. Recordation of Agreement; Perfection of Security
Interest; Further Assurances............................ 42
Section 9.4. Duration of Agreement................................... 42
Section 9.5. Governing Law........................................... 42
Section 9.6. General Interpretive Principles......................... 42
Section 9.7. Reproduction of Documents............................... 43
Section 9.8. Notices................................................. 43
Section 9.9. Severability of Provisions.............................. 44
Section 9.10. Exhibits and Schedules.................................. 44
Section 9.11. Counterparts; Successors and Assigns.................... 44
Section 9.12. Effect of Headings...................................... 44
Section 9.13. Other Agreements Superseded; Entire Agreement........... 44
Section 9.14. Attorneys' Fees......................................... 45
Section 9.15. Confidential Information................................ 45
ii
Section 9.16. Nonsolicitation......................................... 45
iii
DESCRIPTION OF ATTACHMENTS
Exhibit A FORM OF REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
Exhibit B ACCOUNT LETTER AGREEMENT
Exhibit C ESCROW ACCOUNT LETTER AGREEMENT
Exhibit D FORM OF OFFICER'S CERTIFICATE
Exhibit E CONTENTS OF CREDIT FILE
Exhibit F FORM OF CONFIRMATION AGREEMENT
Schedule 1 MORTGAGE LOAN SCHEDULE
iv
SERVICING AGREEMENT
This SERVICING AGREEMENT (this "Agreement") dated as of November 1, 2005,
is between Washington Mutual Bank (formerly known as Washington Mutual Bank,
FA), a savings bank organized under the laws of the United States, in its
capacity as servicer (the "Servicer"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Lending Inc.,
a Delaware corporation, and its successors and assigns, in its capacity as owner
(the "Owner").
PRELIMINARY STATEMENT
WHEREAS, the Owner owns certain residential, first lien mortgage loans;
WHEREAS, the Servicer holds the servicing rights related to the Mortgage
Loans and has agreed to service such Mortgage Loans for the Owner;
WHEREAS, the Servicer and the Owner desire to prescribe the terms and
conditions regarding the management, servicing, and control of the Mortgage
Loans; and
WHEREAS, the Servicer and the Owner intend that, with respect to each
Mortgage Loan serviced hereunder, the terms and conditions of this Agreement
replace and supercede, as of the related Closing Date (as defined herein), all
of the terms and conditions of any other servicing agreement to which the
Servicer is bound that purports to govern the servicing of such Mortgage Loan;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Servicer and the Owner agree
as follows:
ARTICLE 1.
DEFINITIONS
Capitalized terms used in this Agreement shall have the following meanings,
unless the context otherwise requires:
Acceptable Servicing Procedures: The procedures, including prudent
collection and loan administration procedures, and the standard of care employed
by prudent mortgage servicers that service mortgage loans of the same type as
the Mortgage Loans in the jurisdictions in which the related Mortgaged
Properties are located. Such standard of care shall not be lower than that the
Servicer customarily employs and exercises in servicing and administering
similar mortgage loans for its own account and shall be in full compliance with
all applicable federal, state and local laws, ordinances, rules and regulations
and the terms of the Mortgage and Mortgage Note.
Account: The account or accounts created and maintained pursuant to Section
2.4 of this Agreement.
1
Agreement: This Servicing Agreement, including all exhibits and schedules
hereto, and all amendments hereof and supplements hereto.
Applicable Requirements: With respect to each Mortgage Loan, (i) the terms
of the related Mortgage and Mortgage Note, (ii) the federal, state and local
laws, statutes, rules, regulations, ordinances, standards, requirements,
administrative rulings, orders and processes pertaining to such Mortgage Loan,
including but not limited to those pertaining to the processing, origination and
servicing of the Mortgage Loan, (iii) the requirements of the Owner as set forth
in this Agreement and (iv) Acceptable Servicing Procedures.
ARM Loan: A Mortgage Loan as to which the related Mortgage Note provides
that the Mortgage Interest Rate may be adjusted periodically.
BIF: The Bank Insurance Fund.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day on
which banking or savings and loan institutions are authorized or obligated by
law or executive order to be closed in the State of New York, the State of
Washington or any state in which the Servicer operates.
Certification Cure Deadline: The date occurring ten (10) days after the
date on which written notice of the Servicer's failure to duly perform its
obligations under Sections 4.4 and 4.5 shall have been given to the Servicer by
the Owner, or if the related Mortgage Loans are subject to securitization and
the registrant (or its agent) has obtained an extension to the Securities and
Exchange Commission filing deadline for the related 10-K, the date occurring
five (5) days prior to the extended filing deadline.
Closing Date: With respect to each Mortgage Loan in a Pool of Mortgage
Loans, the date on which such Mortgage Loan becomes subject to this Agreement,
as specified in the related Confirmation Agreement.
Code: The Internal Revenue Code of 1986, as amended from time to time, or
any successor statute thereto.
Collateral Documents: With respect to any Mortgage Loan, the mortgage loan
documents pertaining to such Mortgage Loan delivered to and held by the
Custodian from time to time in connection with the purchase and sale of such
Mortgage Loan.
Collateral File: With respect to any Mortgage Loan, a file pertaining to
such Mortgage Loan that contains each of the related Collateral Documents.
Compensating Interest Cap: An amount equal to 1/12 of the sum of:
(i) the aggregate Unpaid Principal Balance of all (A) fixed rate
Mortgage Loans and (B) Hybrid ARM Loans that bear interest at the initial fixed
rate (other than 3/1 Hybrid ARM Loans), multiplied by 0.25%, and
2
(ii) the aggregate Unpaid Principal Balance of all (A) ARM Loans, (B)
Hybrid ARM Loans that bear interest at an adjustable rate and (C) 3/1 Hybrid ARM
Loans, multiplied by 0.375%.
Condemnation Proceeds: All awards or settlements in respect of a taking of
all or part of a Mortgaged Property by exercise of the power of eminent domain
or condemnation.
Confirmation Agreement: An agreement substantially in the form of EXHIBIT F
attached hereto, executed by the Owner and the Servicer, which agreement shall
confirm the addition of a Pool of Mortgage Loans subject to the terms and
conditions of this Agreement.
Credit File: With respect to any Mortgage Loan, a file pertaining to such
Mortgage Loan which may contain the mortgage loan documents described on EXHIBIT
E attached hereto, which file shall be retained by the Servicer and may be
maintained on microfilm or any other comparable medium.
Custodian: With respect to any Mortgage Loan, ▇▇▇▇▇ Fargo Bank N.A., any
successor custodian, or any other custodian designated by the Owner from time to
time.
Cut-off Date: With respect to any Mortgage Loan, the first day of the month
in which the related Closing Date occurs, except as otherwise specified in the
related Confirmation Agreement.
Cut-off Date Principal Balance: As to each Mortgage Loan, the outstanding
principal balance of such Mortgage Loan as of the close of business on the
related Cut-off Date, after deduction and application of all payments of
principal due on or before such Cut-off Date, whether or not received.
Defaulted Servicer: As defined in Section 6.1.
Determination Date: The thirteenth (13th) day of each month (or if such day
is not a Business Day, the next Business Day), commencing in the month following
the end of the calendar month in which the related Closing Date occurs. A
Determination Date is related to a Monthly Remittance Date if such Determination
Date and such Monthly Remittance Date occur in the same calendar month.
Disclosure Document: As defined in Section 8.1(d).
Due Date: With respect to any Mortgage Loan, the day of the month on which
Monthly Payments on such Mortgage Loan are due, exclusive of any days of grace,
which day shall be the first day of the month unless otherwise specified on the
related Mortgage Loan Schedule.
Due Period: With respect to any Mortgage Loan, the period beginning on the
first day of any month and ending on the last day of such month.
Eligible Account: An account or accounts maintained with a Qualified
Depository.
3
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 2.6.
Escrow Payments: The amounts constituting ground rents, taxes, assessments,
water rates, sewer rents, municipal charges, Primary Mortgage Insurance Policy
premiums, if any, fire and hazard insurance premiums, condominium charges and
other payments required to be escrowed by the Mortgagor with the mortgagee
pursuant to any Mortgage Loan.
Event of Default: Any one of the conditions or circumstances enumerated in
Section 6.1.
▇▇▇▇▇▇ ▇▇▇: ▇▇▇▇▇▇ ▇▇▇ (formerly known as the Federal National Mortgage
Association) and any successor thereto.
▇▇▇▇▇▇ Mae Selling Guide: The ▇▇▇▇▇▇ ▇▇▇ Selling Guide as in effect from
time to time, subject to such waivers, variances and modifications as have been
and may be agreed to between ▇▇▇▇▇▇ Mae and the applicable Seller or Sellers.
▇▇▇▇▇▇ ▇▇▇ Servicing Guide: The ▇▇▇▇▇▇ Mae Servicing Guide as in effect
from time to time, subject to such waivers, variances and modifications as have
been and may be agreed to between ▇▇▇▇▇▇ ▇▇▇ and the Servicer and/or any of the
Sellers.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
Fidelity Bond: A fidelity bond to be obtained by the Servicer pursuant to
Section 2.11.
Final Recovery Determination: With respect to any defaulted Mortgage Loan
or any REO Property, a determination made by the Servicer that all related
Condemnation Proceeds, Insurance Proceeds, Liquidation Proceeds and other
payments or recoveries that the Servicer, in its good faith judgment, expects to
be finally recoverable have been so recovered. The Servicer shall maintain
records, prepared by a servicing officer of the Servicer, of each Final Recovery
Determination.
▇▇▇▇▇▇▇ Mac: ▇▇▇▇▇▇▇ Mac (formerly known as The Federal Home Loan Mortgage
Corporation) and any successor thereto.
▇▇▇▇▇▇▇ Mac Guide: The ▇▇▇▇▇▇▇ Mac Single-Family Seller/Servicer Guide as
in effect from time to time, subject to such waivers, variances and
modifications as have been and may be agreed to between ▇▇▇▇▇▇▇ Mac and the
applicable Seller or Sellers.
GAAP: Generally Accepted Accounting Principles, as promulgated by the
Financial Accounting Standards Board from time to time.
Gross Margin: With respect to any ARM Loan, the fixed percentage amount set
forth in the related Mortgage Note and described in the related Mortgage Loan
Schedule, which amount is added to the Index in accordance with the terms of the
related Mortgage Note to determine on each Interest Rate Adjustment Date the
Mortgage Interest Rate for such Mortgage Loan.
4
Indemnitee: As defined in Section 4.4(c).
Index: With respect to any ARM Loan, the index set forth in each adjustable
rate Mortgage Note, which index is added to the Gross Margin to determine the
Mortgage Interest Rate on each Interest Rate Adjustment Date.
Insurance Proceeds: Proceeds of any Primary Mortgage Insurance Policy,
title policy, hazard insurance policy or any other insurance policy covering a
Mortgage Loan or the related Mortgaged Property, including any amounts required
to be deposited in the Account pursuant to Section 2.10, to the extent such
proceeds are not to be applied to the restoration of the Mortgaged Property or
released to the Mortgagor in accordance with Applicable Requirements.
Interest Rate Adjustment Date: With respect to any ARM Loan, the date
specified in the related Mortgage Note as the date on which the Mortgage
Interest Rate for the related Mortgage Loan is subject to adjustment.
Late Collections: With respect to any Mortgage Loan, all amounts received
during any Due Period, whether as late payments of Monthly Payments, or as
Insurance Proceeds, Liquidation Proceeds, Condemnation Proceeds or otherwise,
which amounts represent late payments or collections of Monthly Payments due but
delinquent for a previous Due Period and not previously recovered.
Liquidation Proceeds: Cash received in connection with (i) the liquidation
of a defaulted Mortgage Loan (whether through the sale or assignment of the
Mortgage Loan, trustee's sale, foreclosure sale or otherwise) or (ii) the sale
of the Mortgaged Property, if the Mortgaged Property is acquired in satisfaction
of the Mortgage.
LPMI Policy: A policy of mortgage guaranty insurance issued by an insurer
which meets the requirements of ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac in which the owner or
servicer of the Mortgage Loan is responsible for the premiums associated with
such mortgage insurance policy.
Management Assertion: As defined in Section 4.5.
Master Servicer: As defined in Section 8.2(a).
Maturity Date: With respect to each Mortgage Loan, the maturity date of the
related Mortgage Note, as specified therein.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, and any successor thereto.
MERS Loan: Any Mortgage Loan registered on the MERS(R) System and for which
MERS is listed as the record mortgagee or beneficiary on the related Mortgage or
assignment thereof.
MERS(R) System: The system of electronically recording transfers of
mortgage loans maintained by MERS.
5
Monthly Advance: The aggregate of the advances made by the Servicer on any
Monthly Remittance Date pursuant to Section 2.16(a).
Monthly Payment: The scheduled monthly payment of principal and interest on
a Mortgage Loan which is payable by a Mortgagor from time to time under the
related Mortgage Note.
Monthly Remittance Date: The eighteenth (18th) day of each month (or if
such day is not a Business Day, the next Business Day) commencing in the month
following the end of the calendar month in which the related Closing Date
occurs. A Determination Date is related to a Monthly Remittance Date if such
Determination Date and such Monthly Remittance Date occur in the same calendar
month.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or any successor thereto.
Mortgage: The mortgage, deed of trust, or other instrument creating a first
lien on or first priority ownership interest in real property, including any
riders, addenda, assumption agreements, or modifications relating thereto.
Mortgage Interest Rate: With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan.
Mortgage Loan: An individual mortgage loan subject to this Agreement, each
as identified on the related Mortgage Loan Schedule.
Mortgage Loan Schedule: With respect to the Mortgage Loans, the schedule or
schedules of Mortgage Loans attached hereto as SCHEDULE I, or to any
Confirmation Agreement.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage, including any riders or addenda thereto.
Mortgaged Property: The property securing a Mortgage Note pursuant to the
related Mortgage.
Mortgagor: The obligor(s) on a Mortgage Note.
Net Rate: With respect to each Mortgage Loan, the annual rate at which
interest thereon shall be remitted to the Owner (in each case computed on the
basis of a 360-day year consisting of twelve 30-day months), which annual rate
shall be equal to the Mortgage Interest Rate less the Servicing Fee Rate.
Nonrecoverable Advance: Any portion of any Servicing Advance or Monthly
Advance previously made or proposed to be made in respect of a Mortgage Loan by
the Servicer hereunder that the Servicer determines in its good faith judgment
will not be ultimately recoverable from Late Collections.
6
Officer's Certificate: A certificate signed by a Vice President or other
authorized officer and delivered to the Owner as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an employee of
the Servicer, reasonably acceptable to the Owner.
OTS: The Office of Thrift Supervision, or any successor thereto.
Owner: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Lending Inc., a Delaware corporation, and any
successor owner of any of the Mortgage Loans.
Pass-Through Transfer: The sale or transfer of some or all of the Mortgage
Loans by the Owner to a trust to be formed as part of a publicly issued or
privately placed mortgage backed securities transaction.
Permitted Investments: Any one or more of the following obligations or
securities:
(i) direct obligations of, or obligations fully guaranteed as to
principal and interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and credit of
the United States;
(ii) repurchase obligations with respect to any security described in
clause (i) above, provided that the unsecured long-term obligations of the party
agreeing to repurchase such obligations are at the time rated by S&P or Moody's
in one of its two highest rating categories;
(iii) federal funds, certificates of deposit, time deposits, and
bankers' acceptances of any bank or trust company incorporated under the laws of
the United States or any state, provided that the long-term debt obligations of
such bank or trust company (or, in the case of the principal bank in a bank
holding company system, the long-term debt obligations of the bank holding
company) at the date of acquisition thereof have been rated by S&P or Moody's in
one of its two highest rating categories; and
(iv) commercial paper of any corporation incorporated under the laws
of the United States or any state thereof that on the date of acquisition has
been rated by S&P or Moody's in its highest short-term rating category.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
Pool of Mortgage Loans: A pool of Mortgage Loans made subject to this
Agreement pursuant to a Confirmation Agreement.
Pool Policy Fee: The fee charged to the Mortgage Loan that is covered by a
LPMI Policy and which fee is used to pay the premium on the related LPMI Policy.
7
Portfolio Loans: As defined in Section 8.3.
Prepayment Charge: With respect to any Mortgage Loan, the prepayment
premium or charge, if any, required under the terms of the related Mortgage Note
to be paid in connection with a Principal Prepayment in Full or a Principal
Prepayment in Part, to the extent permitted by applicable law.
Primary Mortgage Insurance Policy: With respect to each Mortgage Loan, the
policy of primary mortgage insurance (including all endorsements thereto) issued
with respect to such Mortgage Loan, if any, or any replacement policy.
Prime: As of any date of determination, the annual interest rate, adjusted
daily, published from time to time in The Wall Street Journal (Western Edition)
as the "PRIME RATE" in the "MONEY RATES" section. In the event that more than
one such rate is specified, "Prime" shall mean the greatest of such rates.
Principal Prepayment: Any payment or other recovery of principal in full (
a "Principal Prepayment in Full") or in part (a "Principal Prepayment in Part")
of the then-outstanding principal on a Mortgage Loan (other than Condemnation
Proceeds, Insurance Proceeds, and Liquidation Proceeds) that is received in
advance of its scheduled Due Date and not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment. The term "Principal Prepayment" shall not
refer to any related Prepayment Charge.
Qualified Depository: Any of the following: (i) a depository, the long-term
unsecured debt obligations of which are rated by Moody's or S&P (or a comparable
rating agency) in one of its two highest rating categories, (ii) the corporate
trust department of a national bank, (iii) a depository that fully insures the
Account and the Escrow Account with insurance provided by the FDIC, or (iv) the
Servicer, unless and until the Servicer's ratings for short-term unsecured debt
obligations are less than A-2 by S&P or A- by Moody's.
Reconstituted Servicing Agreement: As defined in Section 8.2(a).
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to
REMICs, which appear at Section 860G of Subchapter M of Chapter 1 of the Code
and related provisions, and regulations promulgated thereunder, as in effect
from time to time.
REO Management Fee: With respect to each REO Property, an amount equal to
the lesser of (i) $1,000 and (ii) 1.5% of the net cash proceeds of the sale of
such REO Property.
REO Property: A Mortgaged Property acquired in foreclosure or by deed in
lieu of foreclosure, as described in Section 2.12.
SAIF: The Savings Association Insurance Fund.
8
S&P: Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., or its successor in interest.
Servicer: Washington Mutual Bank, a savings bank organized under the laws
of the United States, or its permitted successor in interest, or any successor
to the Servicer under this Agreement appointed as herein provided.
Servicer's Information: As defined in Section 8.1(d).
Servicing Advances: All customary, reasonable, and necessary "out of
pocket" costs and expenses, including reasonable attorneys' fees and
disbursements, incurred by the Servicer in the performance of its servicing
obligations hereunder, including, without limitation, costs related to (i) the
preservation, restoration, and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the Mortgaged Property if the Mortgaged Property
is acquired in satisfaction of the Mortgage and (iv) Servicer's compliance with
the obligations set forth in Sections 2.2, 2.3, 2.8, 2.10, 2.12 and 2.15 of this
Agreement.
Servicing Fee: With respect to each Mortgage Loan, the amount of the annual
fee payable to the Servicer pursuant to Section 4.3 as compensation for
servicing and administering such Mortgage Loan. Such fee shall, for a period of
one full month, be equal to one-twelfth of the product of (i) the related
Servicing Fee Rate, multiplied by (ii) the outstanding Unpaid Principal Balance
of such Mortgage Loan. Such fee shall be payable monthly and shall be computed
on the basis of the same principal amount and period respecting which any
related interest payment on such Mortgage Loan is computed.
Servicing Fee Rate: With respect to each Mortgage Loan, the annual rate at
which the Servicing Fee shall be calculated, which annual rate is set forth in
the related Confirmation Agreement. In the event that the Index and Gross Margin
of an ARM Loan are adjusted pursuant to the terms of the related Mortgage Note,
the Servicing Fee Rate for such ARM Loan shall be the annual rate of the
Servicing Fee in effect immediately prior to such adjustment.
Unpaid Principal Balance: With respect to each Mortgage Loan, as of any
date of determination, (i) the Cut-off Date Principal Balance, minus (ii) the
principal portion of all payments made by or on behalf of the Mortgagor after
the related Cut-off Date and received by the Owner.
USAP: As defined in Section 4.5.
Whole Loan Transfer: Any sale or transfer of some or all of the Mortgage
Loans by the Owner to a third party, which sale or transfer is not a
Pass-Through Transfer.
9
ARTICLE 2.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
SECTION 2.1. IDENTIFICATION OF MORTGAGE LOANS; SERVICER TO ACT AS SERVICER
(a) As of the related Closing Date, the Servicer, as independent
contract servicer, shall commence servicing and administering the Mortgage Loans
purchased by the Owner on such Closing Date. Such servicing shall be in
accordance with this Agreement and Acceptable Servicing Procedures, and, except
as otherwise expressly provided in this Agreement, the Servicer shall have full
power and authority, acting alone, to do any and all things in connection with
such servicing and administration that the Servicer may deem necessary or
desirable and consistent with the terms of this Agreement, including, without
limitation, all action permitted or required to be taken under any related
Primary Mortgage Insurance Policy or LPMI Policy. In servicing and administering
the Mortgage Loans, the Servicer shall employ Acceptable Servicing Procedures,
except that the Servicer shall employ the procedures set forth in this Agreement
whenever the Acceptable Servicing Procedures conflict with the requirements
under this Agreement (provided that in no event shall the Servicer act in
conflict with any applicable federal, state and local laws, ordinances, rules or
regulations). The Servicer shall at all times act in the best interests of the
Owner in performing hereunder.
(b) The documents comprising the Collateral File and the Credit File
with respect to each Mortgage Loan serviced hereunder and that are delivered to
the Servicer, together with all other documents with respect to each such
Mortgage Loan that are prepared by or that come into the possession of the
Servicer, shall immediately vest in the Owner and shall be held and maintained
in trust by the Servicer at the will of the Owner and in a custodial capacity
only for the sole purpose of servicing or supervising the servicing of the
related Mortgage Loans. The documents comprising each Collateral File and each
Credit File and all related documents that come into the possession of the
Servicer and are so held by the Servicer shall be appropriately marked to
clearly reflect the ownership interest of the Owner in such Collateral File and
Credit File and related documents. The Servicer shall release its custody of any
such documents only in accordance with written instructions from the Owner,
unless such release is required as incidental to the Servicer's servicing of the
Mortgage Loans or is in connection with a repurchase or substitution of any
Mortgage Loan.
(c) Subject to Section 2.17 of this Agreement and consistent with
Acceptable Servicing Procedures, the Servicer may waive, modify or vary any term
of any Mortgage Loan or consent to the postponement of strict compliance with
any such term or in any manner grant indulgence to any Mortgagor if, in the
Servicer's reasonable and prudent determination, such waiver, modification,
variation, postponement or indulgence is in the best interests of the Owner;
provided, however, that the Servicer shall not permit any modification with
respect to any Mortgage Loan that would change the Mortgage Interest Rate, defer
or forgive the payment of any principal or interest payments, reduce the
outstanding principal amount (except for actual payments of principal) or extend
the related Maturity Date (unless the Mortgagor is in default with respect to
the Mortgage Loan or such default is, in the judgment of the Servicer,
imminent). Without limiting the generality of the foregoing, the Servicer is
hereby authorized and empowered to execute and deliver on behalf of itself and
the Owner all instruments of satisfaction, cancellation, full release, or
partial
10
release or discharge, and all other comparable instruments with respect to the
Mortgage Loans and the Mortgaged Properties. If reasonably required by the
Servicer, the Owner shall furnish the Servicer with any powers of attorney and
other documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
(d) As to each ARM Loan, the Servicer shall make periodic Mortgage
Interest Rate and Monthly Payment adjustments, as applicable, and execute and
deliver all appropriate notices regarding the same, in strict compliance with
Applicable Requirements. The Servicer shall establish procedures to monitor the
Index in order to ensure that it uses the appropriate value for the Index in
determining an interest rate change. If the Servicer fails to make a timely and
correct Mortgage Interest Rate adjustment or Monthly Payment adjustment, the
Servicer shall use its own funds, without any right of reimbursement therefore,
to satisfy any shortage in the Mortgagor's Monthly Payment for so long as such
shortage continues. In the event the Index, as specified in the related Mortgage
Note, becomes unavailable for any reason, the Servicer shall select an
alternative index based on comparable information, in accordance with the terms
of the Mortgage Note, and such alternative index shall thereafter be the Index
for such Mortgage Loan. In such event, the Servicer shall also determine a new
Gross Margin. The new Gross Margin shall be the difference between (x) the
average of the original Index for the most recent three-year period that ends on
the last date the original Index was available plus the Gross Margin on the last
date the original Index was available and (y) the average of the new Index for
the most recent three-year period that ends on that date (or if not available
for such three-year period, for such time as it is available), rounded as
provided in the Mortgage Note.
(e) In connection with the servicing and administration of the
Mortgage Loans and consistent with Acceptable Servicing Procedures and this
Agreement, the Servicer shall have full power and authority to execute and
deliver or cause to be executed and delivered on behalf of the Owner such
instruments of assignment or other comparable instruments as the Servicer shall
deem appropriate in order to register any Mortgage Loan on the MERS(R) System or
cause the removal of any Mortgage Loan from registration on the MERS(R) System.
SECTION 2.2. LIQUIDATION OF MORTGAGE LOANS
(a) In the event that any payment due under any Mortgage Loan is not
paid when the same becomes due and payable, or in the event the Mortgagor fails
to perform any other covenant or obligation under the Mortgage Loan and such
failure continues beyond any applicable grace period, the Servicer shall proceed
diligently to collect all payments due and shall take such action, including
commencing foreclosure, as it shall reasonably deem to be in the best interests
of the Owner.
(b) Notwithstanding the foregoing provisions of this Section 2.2, 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 neither (i) obtain title
to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, (ii) acquire possession of, nor (iii) take any other action with
respect to, such Mortgaged Property if, as a result of any such action, the
Owner 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
11
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 either (x) obtained the written consent of the Owner, or (y)
previously determined, based on its reasonable judgment and a prudent 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 Owner 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 Owner
to take such actions with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this Section 2.2(b)
shall be advanced by the Servicer as a Servicing Advance, subject to the
Servicer's right to be reimbursed therefor from the Account and the Servicer's
right to make a judgment about whether any such advance would be a
Nonrecoverable Advance.
(c) If the Servicer has (i) determined that it is in the best economic
interest of the Owner 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, or (ii) obtained the written
consent of the Owner, in each case as described above, then the Servicer shall
take such action as it deems to be in the best economic interest of the Owner
(or as otherwise directed by the Owner). The cost of any such compliance,
containment, clean-up or remediation shall be advanced by the Servicer as a
Servicing Advance, subject to the Servicer's right to be reimbursed therefor
from the Account and the Servicer's right to make a judgment about whether any
such advance would be a Nonrecoverable Advance.
SECTION 2.3. COLLECTION OF MORTGAGE LOAN PAYMENTS
Continuously from the related Closing Date until the principal and interest
on all of the Mortgage Loans are paid in full, the Servicer shall proceed
diligently to collect all payments due under each of the Mortgage Loans when the
same shall become due and payable. With respect to those Mortgage Loans, if any,
as to which the Servicer collects Escrow Payments, the Servicer shall ascertain
or estimate annual ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, fire and hazard insurance premiums, condominium charges,
Primary Mortgage Insurance Policy premiums and all other charges that, as
provided in any Mortgage, shall become due and payable, to the end that the
Escrow Payments payable by the Mortgagors shall be sufficient to pay such
charges as and when they become due and payable. The Servicer
12
shall not be required to institute or join in litigation with respect to
collection of any payment (whether under a Mortgage, Mortgage Note, Primary
Mortgage Insurance Policy or otherwise or against any public or governmental
authority with respect to a taking or condemnation) if in the Servicer's
reasonable judgment the Servicer believes that the costs and expenses relating
thereto would be Nonrecoverable Advances. The Servicer shall be entitled to be
reimbursed from the Account for any costs, expenses or other liabilities
incurred by the Servicer in connection with any such litigation. The Servicer's
right to such reimbursement shall be prior to the Owner's right to such
proceeds.
SECTION 2.4. ESTABLISHMENT OF ACCOUNT; DEPOSITS IN ACCOUNT
(a) The Servicer shall establish and maintain one or more Accounts
(collectively, the "Account") entitled "Washington Mutual Bank, in trust for
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Lending Inc., as Owner, and any successor Owner." The
Account shall be an Eligible Account, established with an institution that is a
Qualified Depository and maintained as a segregated account separate and apart
from any of the Servicer's own funds and general assets. If the Account is
established with an institution other than the Servicer, (i) the Account shall
be evidenced by a letter agreement substantially in the form of EXHIBIT B
attached hereto and (ii) the Servicer shall deliver a copy of such letter
agreement to the Owner on or prior to the Closing Date.
(b) The Servicer shall, upon receipt (and in all events by not later
than the end of the second Business Day following receipt thereof), deposit in
the Account and retain therein, the following payments and collections either
received or made by the Servicer subsequent to the related Cut-off Date (other
than payments due on or before such Cut-off Date), or otherwise allocable to a
period subsequent to such Cut-off Date:
(i) the principal portion of all Monthly Payments on the Mortgage
Loans;
(ii) the interest portion of all Monthly Payments on the Mortgage
Loans less the Servicing Fee;
(iii) all Principal Prepayments in Part and Principal Prepayments
in Full;
(iv) all Liquidation Proceeds;
(v) all Insurance Proceeds, other than Insurance Proceeds to be
held in the Escrow Account and applied to the restoration and repair of the
Mortgaged Property or released to the Mortgagor in accordance with Applicable
Requirements;
(vi) all Condemnation Proceeds that are not released to the
Mortgagor in accordance with the Owner's written consent or Applicable
Requirements;
(vii) any amount required to be deposited in the Account pursuant
to Sections 2.4(d), 2.10, 2.12(c), 2.12(e) or 4.2(b);
13
(viii) any amounts payable in connection with the repurchase of
any Mortgage Loan and all amounts required to be deposited in connection with
the substitution of any Mortgage Loan; and
(ix) with respect to each Principal Prepayment in Full, an amount
(to be paid by the Servicer out of its own funds without reimbursement therefor)
that, when added to all amounts allocable to interest received in connection
with such Principal Prepayment in Full, equals one month's interest on the
amount of principal so prepaid at the Net Rate, provided, however, that the
aggregate of deposits made by the Servicer pursuant to this clause (ix) in
respect of any Monthly Remittance Date shall not exceed the Compensating
Interest Cap.
(c) The Servicer shall, no later than 24 hours prior to each Monthly
Remittance Date, deposit in the Account all Monthly Advances.
(d) The Servicer may cause the funds on deposit from time to time in
the Account to be invested in Permitted Investments, which Permitted Investments
shall mature not later than the Business Day immediately preceding the next
Monthly Remittance Date following the date such funds are invested. All
Permitted Investments shall be made in the name of the Servicer or its nominee.
All income and gain realized from any Permitted Investment shall be for the
benefit of the Servicer and shall be subject to its withdrawal or order from
time to time. The Servicer shall indemnify the Owner for any loss incurred in
respect of any Permitted Investment by such Servicer, and the amount of such
loss shall be deposited in the Account by the Servicer out if its own funds,
without reimbursement therefor, no later than 72 hours after the Servicer has
determined that a loss has been incurred in respect of any Permitted Investment.
SECTION 2.5. PERMITTED WITHDRAWALS FROM THE ACCOUNT
The Servicer may, from time to time, withdraw funds from the Account for
the following purposes:
(i) to make payments and distributions to the Owner in the
amounts and in the manner provided for in Section 3.1, and to pay itself any
unpaid Servicing Fees, unpaid REO Management Fees and other servicing
compensation in accordance with Section 4.3;
(ii) to reimburse itself for any unreimbursed Servicing Advances
or Monthly Advances made with respect to any Mortgage Loan; provided that the
Servicer's right to reimburse itself pursuant to this clause (ii) is limited to
any Late Collections received by the Servicer with respect to such Mortgage
Loan;
(iii) to pay to itself any interest earned on funds deposited in
the Account;
(iv) to make any payment or reimburse itself for any amount
pursuant to Sections 2.12(c), 2.12(e), 5.1(a) or 5.3;
(v) to reimburse itself for any Monthly Advance or Servicing
Advance previously made that it has determined to be a Nonrecoverable Advance;
14
(vi) if there shall be amounts deposited in error or there shall
be amounts deposited in the Account not required to be deposited therein,
including the Servicing Fee and other servicing compensation, to withdraw such
amount from the Account any provision herein to the contrary notwithstanding;
(vii) to transfer funds to another Qualified Depository in
accordance with Section 2.9; and
(viii) to clear and terminate the Account upon the termination of
this Agreement in accordance with Article 7.
SECTION 2.6. ESTABLISHMENT OF ESCROW ACCOUNT; DEPOSITS IN ESCROW ACCOUNT;
ESCROW ANALYSIS
(a) The Servicer shall segregate and hold separate and apart from any
of its own funds and general assets all Escrow Payments collected and received
pursuant to the Mortgage Loans and shall establish and maintain one or more
Escrow Accounts (collectively, the "Escrow Account"), in the form of time
deposit or demand accounts, which may be interest bearing, entitled "Washington
Mutual Bank, in trust for ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Lending Inc., as Owner, and any
successor Owner, and certain Mortgagors." The Escrow Account shall be an
Eligible Account established with a Qualified Depository. If the Escrow Account
is established with an institution other than the Servicer,(i) the Escrow
Account shall be evidenced by a letter agreement substantially in the form of
EXHIBIT C attached hereto and (ii) the Servicer shall deliver a copy of such
letter agreement to the Owner on or prior to the Closing Date.
(b) The Servicer shall, upon receipt (and in all events by not later
than the end of the second Business Day following receipt thereof, or sooner if
required by applicable law), deposit in the Escrow Account and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans for the
purpose of effecting timely payment of escrow items as required under the terms
of this Agreement and (ii) all amounts representing proceeds of any hazard
insurance policy that are to be applied to the restoration or repair of the
related Mortgaged Property. The Servicer shall make withdrawals from the Escrow
Account only in accordance with Section 2.7. The Servicer shall be entitled to
retain any interest earned on funds deposited in the Escrow Account other than
interest on escrowed funds required by law to be paid to the Mortgagor and, to
the extent required by law, the Servicer shall pay interest on escrowed funds to
the Mortgagor without right of reimbursement therefor notwithstanding that the
Escrow Account maintained by the Servicer may not bear interest or that the
interest earned on such escrowed funds is insufficient for such purpose.
SECTION 2.7. PERMITTED WITHDRAWALS FROM THE ESCROW ACCOUNT
Withdrawals from the Escrow Account maintained by the Servicer may be made
by the Servicer only (i) to effect timely payments of ground rents, taxes,
assessments, sewer rents, municipal charges, water rates, insurance premiums,
condominium charges, fire and hazard insurance premiums or other items
constituting Escrow Payments for the related Mortgage, (ii) to reimburse the
Servicer for any Servicing Advance made by the Servicer pursuant to Sections 2.8
and 2.10 with respect to a related Mortgage Loan, (iii) to refund to any
Mortgagor any funds found
15
to be in excess of the amounts required under the terms of the related Mortgage
Loan, (iv) for transfer to the Account in accordance with the terms of this
Agreement, (v) for restoration or repair of a Mortgaged Property, provided the
provisions of Section 2.13 have been complied with, (vi) to pay to the
Mortgagor, to the extent required by Applicable Requirements, interest on the
funds deposited in the Escrow Account, (vii) to pay to itself any interest
earned on funds deposited in the Escrow Account (and not required to be paid to
the Mortgagor), (viii) to remove funds inadvertently placed in the Escrow
Account by the Servicer, or (ix) to clear and terminate the Escrow Account upon
the termination of this Agreement, in accordance with Article 7.
SECTION 2.8. PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES
With respect to each Mortgage Loan, the Servicer shall maintain accurate
records reflecting the status of property taxes, assessments and other charges
that are or may become a lien upon the related Mortgaged Property, the status of
Primary Mortgage Insurance and LPMI Policy premiums, if any, and the status of
fire and hazard insurance coverage and flood insurance, all as required
hereunder. If a Mortgage Loan requires Escrow Payments, the Servicer shall
obtain, from time to time, all bills for the payment of such charges (including
renewal premiums) and shall effect payment thereof prior to the applicable
penalty or termination date in a manner consistent with Acceptable Servicing
Procedures, employing for such purpose deposits of the Mortgagor in the Escrow
Account that shall have been estimated and accumulated by the Servicer in
amounts sufficient for such purposes, as allowed under the terms of the
Mortgage. If a Mortgage Loan does not require Escrow Payments, or if there are
insufficient funds in the related Escrow Account, the Servicer shall cause all
such bills to be paid on a timely basis and shall from its own funds (if
necessary) make a Servicing Advance for timely payment of all such bills. The
Servicer shall monitor the payment status of such charges (including renewal
premiums) by the related Mortgagor. The Servicer shall effect payment of such
charges in a manner consistent with Acceptable Servicing Procedures and, in all
events, prior to the foreclosure of any lien against the Mortgaged Property
resulting from non-payment of such property taxes, assessments and other charges
and prior to the termination of any such insurance coverage; provided that, the
Servicer shall pay any late fee or penalty (without reimbursement therefore),
which is payable due to any delay by the Servicer in paying any such property
taxes, assessments and other charges; provided, further, that to the extent that
the funds were not escrowed by the Servicer, if the Servicer is unable to
recover such late fees or penalties from the Mortgagor, the Servicer shall be
entitled to be reimbursed for all such late fees or penalties as a
Nonrecoverable Advance pursuant to Section 2.5(v) of this Agreement.
SECTION 2.9. TRANSFER OF ACCOUNTS
The Servicer may, from time to time, transfer the Account or the Escrow
Account to a different Qualified Depository. The Servicer shall notify the Owner
of any such transfer ten (10) Business Days prior to transfer of such Account or
Escrow Account.
SECTION 2.10. MAINTENANCE OF HAZARD INSURANCE
(a) The Servicer shall cause to be maintained for each Mortgage Loan
serviced by it fire and hazard insurance with extended coverage customary in the
area where the related
16
Mortgaged Property is located, in an amount that is at least equal to the lesser
of (i) 100% of the replacement value of the improvements securing the Mortgage
Loan, or (ii) the Unpaid Principal Balance of the Mortgage Loan (so long as it
equals 80% of the insurable value of the improvements); provided that in any
case such amount shall be sufficient to prevent either the Mortgagor or the
mortgagee from becoming a co-insurer. If the Mortgaged Property is in an area
that is identified on a flood hazard boundary map or flood insurance rate map
issued by the Federal Emergency Management Agency as having special flood
hazards (and such flood insurance was then available), the Servicer shall cause
to be maintained a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration with a generally
acceptable insurance carrier, if such insurance is available. Such flood
insurance shall be in an amount representing coverage not less than the least of
(i) the Unpaid Principal Balance of the Mortgage Loan, (ii) the full insurable
value of the improvements securing such Mortgage Loan and (iii) the maximum
amount of insurance available under the National Flood Insurance Act of 1968 and
the Flood Disaster Protection Act of 1973, each as amended. The Servicer shall
also maintain on each REO Property (x) fire and hazard insurance with extended
coverage in an amount that is at least equal to the maximum insurable value of
the improvements that are a part of such property, (y) liability insurance and
(z) to the extent required and available under the National Flood Insurance Act
of 1968 and the Flood Disaster Protection Act of 1973, each as amended, flood
insurance in an amount as provided above. Any amounts collected by the Servicer
under any such policies shall be paid over or applied by the Servicer in
accordance with Applicable Requirements whether (i) for the restoration or
repair of the Mortgaged Property, subject to the related Mortgage, (ii) for
release to the Mortgagor, or (iii) for application in reduction of the Mortgage
Loan, in which event such amounts shall be deposited in the Account, as provided
in Section 2.4. It is understood and agreed that no earthquake or other
additional insurance need be maintained by the Servicer on any Mortgage Loan or
property acquired in respect of a Mortgage Loan, other than as required under
applicable laws and regulations as shall at any time be in force. All policies
required hereunder shall be endorsed with standard mortgagee clauses with loss
payable to the Servicer and shall provide for at least thirty (30) days prior
written notice to the Servicer of any cancellation, reduction in amount, or
material change in coverage. The Servicer shall not interfere with the
Mortgagor's freedom of choice in selecting either the Mortgagor's insurance
carrier or agent upon any policy renewal; provided, however, that upon any such
policy renewal, the Servicer shall accept such insurance policies only from
insurance companies that (A) have a rating of B:III or better in Best's Key
Rating Guide or a financial performance index rating of 6 or better in Best's
Insurance Reports and (B) are licensed to do business in the jurisdiction in
which the related Mortgaged Property is located.
(b) If the Servicer, as servicer for the benefit of the Owner, shall
obtain and maintain a blanket policy that would meet the requirements of ▇▇▇▇▇▇
Mae or ▇▇▇▇▇▇▇ Mac if ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac were the purchaser of the
Mortgage Loans, insuring against loss to the Owner as mortgagee from damage to
any or all of the Mortgaged Properties, then, to the extent such blanket policy
(i) provides coverage, without coinsurance, in an amount equal to the aggregate
outstanding Unpaid Principal Balance of the Mortgage Loans, (ii) otherwise
complies with the requirements of Section 2.10(a) and (iii) contains a
deductible not greater than $10,000, the Servicer shall be deemed conclusively
to have satisfied its obligations under Section 2.10(a); provided, however, that
if there shall have been one or more of such losses the Servicer shall
17
deposit in the Account, as provided in Section 2.4, out of the Servicer's own
funds and without reimbursement therefor, the difference, if any, between the
amount that would have been payable under a policy complying with Section
2.10(a) and the amount paid under the blanket policy permitted under this
Section 2.10(b). At the request of the Owner, the Servicer shall cause to be
delivered to the Owner a certified true copy of such policy and a statement from
the insurer thereunder that such policy shall not be terminated or materially
modified without thirty (30) days' prior written notice to the Owner.
SECTION 2.11. FIDELITY BOND; ERRORS AND OMISSIONS INSURANCE
The Servicer shall maintain, at its own expense, with companies that meet
the requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, a blanket fidelity bond and an
errors and omissions insurance policy, with broad coverage on all officers,
employees, agents and other persons acting in any capacity that would require
such persons to handle funds, money, documents or papers relating to the
Mortgage Loans (collectively, the "Servicer Employees"). Any such fidelity bond
and errors and omissions insurance shall be in the form of the Mortgage Banker's
Blanket Bond and shall protect and insure the Servicer against losses relating
to forgery, theft, embezzlement, fraud, errors and omissions, failure to
maintain any insurance policies required under this Agreement and negligent acts
of Servicer Employees. Such fidelity bond shall also protect and insure the
Servicer against losses relating to the release or satisfaction of a Mortgage
without having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 2.11 requiring such fidelity bond and errors and
omissions insurance shall diminish or relieve the Servicer from its duties and
obligations as set forth in this Agreement. The terms of any such fidelity bond
and errors and omissions insurance policy shall be at least equal to the
corresponding amounts required by ▇▇▇▇▇▇ Mae in the ▇▇▇▇▇▇ ▇▇▇ MBS Selling and
Servicing Guide or by ▇▇▇▇▇▇▇ Mac in the ▇▇▇▇▇▇▇ Mac Seller's and Servicer's
Guide, as amended or restated from time to time. At the request of the Owner,
the Servicer shall cause to be delivered to the Owner a certified true copy of
such fidelity bond and errors and omissions insurance policy and a statement
from the surety and the insurer that such fidelity bond and errors and omissions
insurance policy shall not be terminated or materially modified without thirty
(30) days' prior written notice to the Owner.
SECTION 2.12. TITLE, MANAGEMENT AND DISPOSITION OF REAL ESTATE OWNED
(a) If title to any Mortgaged Property is acquired in foreclosure or
by deed in lieu of foreclosure ("REO Property"), the deed or certificate of sale
shall be taken in the name of the Servicer as nominee for the Owner, or in the
name of such Person or Persons designated by the Owner; provided, however, that
(i) the Owner shall not designate the Servicer as holder without the Servicer's
prior written consent and (ii) such designated Person or Persons shall
acknowledge in writing that such title is to be held as nominee for the Owner;
provided, further, that in the event that, with respect to any Mortgaged
Property, the taking of such deed or certificate of sale in the name of the
Servicer as nominee for the Owner will invalidate any foreclosure action in any
jurisdiction in which such Mortgaged Property is located, then such deed or
certificate of sale shall be taken in the name of the Owner. The Servicer shall
notify the Owner in the event that the Servicer shall take the deed or
certificate of sale in the name of the Owner. The Owner shall indemnify and hold
harmless the Servicer against any and all losses, penalties, fines, forfeitures,
legal fees and related costs, judgments and any other costs, fees and expenses
(collectively, the
18
"Losses") resulting from the defense of any claim against Servicer in any way
related to the taking of such deed or certificate of sale in the name of the
Servicer as nominee for the Owner; provided, however, that the Owner shall not
be obligated to indemnify for Losses resulting from the Servicer's willful
misconduct, bad faith or gross negligence in taking the deed or certificate of
sale in the name of the Servicer as nominee for the Owner. The Servicer shall
provide written notice to the Owner after any REO Property is acquired in
foreclosure or by deed in lieu of foreclosure.
(b) Subject to Section 2.17, the Servicer, shall manage, conserve,
protect, and operate each REO Property solely for the purpose of its prompt
disposition and sale. The Servicer shall either itself, or through an agent
selected by the Servicer, manage, conserve, protect and operate the REO Property
in accordance with Acceptable Servicing Procedures. The Servicer shall attempt
to sell the same (and may temporarily rent the same) on such terms and
conditions as the Servicer deems to be in the best interests of the Owner. If a
REMIC election has been made with respect to the arrangement under which the
related Mortgage Loan is held and the Servicer has been provided with reasonable
advance notice of such REMIC election, the Servicer shall use commercially
reasonable efforts to dispose of the REO Property as soon as practicable and
shall sell such REO Property, in any event, within three (3) years after title
has been taken to such REO Property (unless the Servicer determines, and gives
the Owner appropriate notice that a longer period is necessary for the orderly
liquidation of such REO Property). Notwithstanding any other provision of this
Agreement, no Mortgaged Property acquired by the Owner shall be rented (or
allowed to continue to be rented) or otherwise used for the production of income
by or on behalf of the Owner in such a manner or pursuant to any terms that
would (i) cause such Mortgaged Property to fail to qualify as "foreclosure
property" within the meaning of section 860G(a)(8) of the Code or (ii) subject
any REMIC of the Owner to the imposition of any federal, state or local income
taxes on the income earned from such Mortgaged Property under Section 860G(c) of
the Code or otherwise, unless the Servicer has agreed to indemnify and hold
harmless the Owner with respect to the imposition of any such taxes.
(c) The Servicer shall collect all revenues arising from the operation
of REO Property. The Servicer shall deposit, or cause to be deposited, all such
revenues in the Account in accordance with Section 2.4. The Servicer may use all
such revenues and, if any thereof have been deposited in the Account, withdraw
such revenues therefrom as is necessary for the proper operation, management and
maintenance of any REO Property, including, but not limited to, the cost of
maintaining any hazard insurance pursuant to Section 2.10 and the fees of any
managing agent acting on behalf of the Servicer.
(d) The Servicer shall also maintain on each REO Property fire and
hazard insurance with extended coverage, liability insurance, and flood
insurance in accordance with the provisions of Section 2.10.
(e) The proceeds of sale of an REO Property shall be deposited in the
Account in accordance with Section 2.4. The Servicer shall apply the sale
proceeds of any REO Property (i) first to pay the expenses of such sale, (ii)
second to reimburse itself for any related unpaid Servicing Fees, unpaid REO
Management Fees and unreimbursed Servicing Advances and Monthly Advances with
respect to that Mortgage Loan, and (iii) the balance to be distributed to the
Owner.
19
If the sale proceeds have been deposited in the Account, the Servicer may
withdraw from the Account the amounts necessary to make such payments and
reimbursements.
(f) Upon request, with respect to any REO Property, the Servicer shall
furnish to the Owner a statement covering the Servicer's efforts in connection
with the sale of that REO Property and any rental of the REO Property incidental
to the sale thereof for the previous month (together with an operating statement
for such REO Property). Such statement shall be accompanied by such other
information as the Owner shall reasonably request. The Servicer shall maintain
separate accounting for each REO Property.
(g) The Owner hereby constitutes and appoints the Servicer as its true
and lawful attorney-in-fact, with full power and authority to sign, execute,
acknowledge, deliver, file for record and record any instrument on its behalf
and to perform such other act or acts as may be customarily and reasonably
necessary and appropriate to effectuate the transactions contemplated by this
Section 2.12, in each case as fully as the Owner might or could do. The Owner
ratifies and confirms each action that the Servicer, as such attorney-in-fact,
shall lawfully take or cause to be taken by authority hereof. Third parties
without actual notice may rely upon the exercise of the power granted under this
power of attorney, and may be satisfied that this power of attorney shall
continue in full force and effect and has not been revoked unless this Agreement
is terminated as provided herein. If requested by the Servicer, the Owner shall
furnish the Servicer with any instrument or document necessary or appropriate to
evidence or confirm the power of attorney granted in this Section 2.12(g),
including one (1) or more separate instruments or documents in recordable form
for recordation in any jurisdiction in which any Mortgaged Property is located.
(h) Notwithstanding anything to the contrary contained in this
Agreement, the Owner may, at the Owner's sole option, terminate the Servicer as
servicer of any REO Property without payment of any termination fee, provided
that the Servicer shall on the date said termination takes effect be reimbursed
for any unreimbursed advances of the Servicer's funds made pursuant to Section
2.16 and any unreimbursed Servicing Advances and Servicing Fees in each case
relating to the Mortgage Loan underlying such REO Property. In the event of any
such termination, the provisions of Section 9.1 shall apply to said termination
and the transfer of servicing responsibilities with respect to such REO Property
to the Owner or its designees.
SECTION 2.13. APPLICATION OF PROCEEDS OF INSURANCE TO REPAIR OR RESTORATION
The Servicer shall collect the proceeds from all policies of insurance
required to be maintained pursuant to Section 2.10 with respect to all losses
that may occur. The Servicer may remit such proceeds to the Mortgagor for the
restoration or repair of the related property and shall otherwise take such
actions in connection with such restoration and repair in a manner consistent
with Acceptable Servicing Procedures.
SECTION 2.14. INSPECTIONS
The Servicer shall conduct inspections of the Mortgaged Properties at such
times and in a manner consistent with Acceptable Servicing Procedures and shall
maintain a written report of all such inspections. In addition, the Servicer
shall conduct an inspection of Mortgaged Property if
20
the related Mortgage Loan is delinquent, in accordance with Acceptable Servicing
Procedures or as may be required by any related insurer.
SECTION 2.15. MAINTENANCE OF PRIMARY MORTGAGE INSURANCE POLICIES AND LPMI
POLICIES; COLLECTIONS THEREUNDER
The parties acknowledge that, as of the Closing Date, not all Mortgage
Loans purchased on such Closing Date are covered by Primary Mortgage Insurance
or LPMI Policy. In the event that any Mortgage Loans are covered by a Primary
Mortgage Insurance Policy or LPMI Policy on the related Closing Date or
subsequently become covered by a Primary Mortgage Insurance Policy or LPMI
Policy, the provisions set forth below shall apply.
(a) The Servicer shall maintain in full force and effect any Primary
Mortgage Insurance Policy or LPMI Policy covering a Mortgage Loan serviced by
the Servicer and shall withdraw the Pool Policy Fee with respect to such
Mortgage Loan from the Custodial Account in order to pay the premium thereon on
a timely basis. The Servicer shall cause the premium for any such Primary
Mortgage Insurance Policy or LPMI Policy to be paid on a timely basis and shall
from its own funds, if necessary, make a Servicing Advance to pay the premium on
a timely basis. Any such Servicing Advance shall be subject to reimbursement
pursuant to the provisions of Section 2.5. The Servicer shall not cancel or
refuse to renew any such Primary Mortgage Insurance Policy or LPMI Policy in
effect on the related Closing Date, unless cancellation or non-renewal is
required by applicable law or regulation. The Servicer shall not take any action
or fail to take any action that would result in non-coverage under any
applicable Primary Mortgage Insurance Policy or LPMI Policy of any loss that,
but for the actions of the Servicer, would have been covered thereunder. In
connection with any assumption or substitution agreement entered into or to be
entered into pursuant to Section 4.1, the Servicer shall promptly notify the
insurer under the related Primary Mortgage Insurance Policy or LPMI Policy, if
any, of such assumption or substitution of liability in accordance with the
terms of such policy and shall take all actions that may be required by such
insurer as a condition to the continuation of coverage under such Primary
Mortgage Insurance Policy or LPMI Policy. If such Primary Mortgage Insurance
Policy or LPMI Policy is terminated as a result of such assumption or
substitution of liability, the Servicer shall obtain a replacement Primary
Mortgage Insurance Policy or LPMI Policy as provided above.
(b) As part of its activities as servicer of the Mortgage Loans, the
Servicer agrees to prepare and present, on behalf of itself and the Owner,
claims under any Primary Mortgage Insurance Policy or LPMI Policy in a timely
fashion in accordance with the terms thereof and, in this regard, to take such
reasonable action as shall be necessary to permit recovery under any Primary
Mortgage Insurance Policy or LPMI Policy respecting a defaulted Mortgage Loan.
SECTION 2.16. MONTHLY ADVANCES BY THE SERVICER
(a) Not later than the close of business on the Business Day preceding
each Monthly Remittance Date, the Servicer shall deposit in the Account an
amount equal to all payments not previously advanced by the Servicer of
principal and interest at the Net Rate that were due on the Mortgage Loan and
(i) not received as of the close of business on the related Determination Date
(whether or not deferred) and (ii) not due on or prior to the related Cut-off
Date (the aggregate of all
21
such amounts, the "Monthly Advance"). In lieu of making all or a portion of any
Monthly Advance, the Servicer may cause to be made an appropriate entry in its
records relating to the Account that funds in such account, including but not
limited to any amounts received in respect of scheduled principal and interest
on any Mortgage Loan due after the related Due Period for the related Monthly
Remittance Date, have been used by the Servicer in discharge of its obligation
to make any such Monthly Advance. Any funds so applied shall be replaced by the
Servicer by deposit, in the manner set forth above, in the Account no later than
the close of business on the Business Day immediately preceding the next Monthly
Remittance Date to the extent that funds in the Account on such date are less
than the amounts required to be distributed on such Monthly Remittance Date. The
Servicer shall be entitled to be reimbursed from the Account for all Monthly
Advances of its own funds made pursuant to this Section as provided in Section
2.5.
(b) The obligation of the Servicer to make such Monthly Advances is
mandatory, and, with respect to any Mortgage Loan or REO Property, shall
continue through the earlier of (i) the date on which a Final Recovery
Determination in connection with such Mortgage Loan is made and (ii) the due
date of the last Monthly Payment due prior to the payment in full of such
Mortgage Loan.
(c) Notwithstanding anything herein to the contrary, no Monthly
Advance shall be required to be made hereunder by the Servicer if such Monthly
Advance would, if made, constitute a Nonrecoverable Advance. The determination
by the Servicer that it has made a Nonrecoverable Advance or that any proposed
Monthly Advance, if made, would constitute a Nonrecoverable Advance, shall be
evidenced by an Officer's Certificate delivered to the Owner.
SECTION 2.17. COMPLIANCE WITH REMIC PROVISIONS
If the Servicer has received written notice from the Owner that a REMIC
election has been made with respect to the arrangement under which any Mortgage
Loans and REO Property are held, the Servicer shall not take any action, cause
the REMIC to take any action or fail to take (or fail to cause to be taken) any
action that, under the REMIC Provisions, if taken or not taken, as the case may
be, could (i) endanger the status of the REMIC as a REMIC, or (ii) result in the
imposition of a tax upon the REMIC (including but not limited to the tax on
"prohibited transactions" as defined in Section 860F(a)(2) of the Code and the
tax on "contributions" to a REMIC set forth in Section 860G(d) of the Code)
unless the Servicer has received an Opinion of Counsel (at the expense of the
party seeking to take such action) to the effect that the contemplated action
will not endanger such REMIC status or result in the imposition of any such tax.
SECTION 2.18. OWNER TO COOPERATE; RELEASE OF COLLATERAL FILES
If, at any time prior to termination of this Agreement, the Servicer shall
require the use of any Collateral File (or any portion thereof) to perform its
servicing activities as set forth in this Agreement, the Owner, within five (5)
Business Days following the receipt of the written request of the Servicer in
the form of EXHIBIT A hereto (or within such shorter period as may be necessary
for the Servicer to perform its obligations hereunder in compliance with all
Acceptable Servicing Procedures), shall release or shall cause the Custodian to
release such Collateral File,
22
or portion thereof, to the Servicer. Within five (5) Business Days following the
receipt of the Servicer's request therefor (or, within such shorter period as
may be necessary for the Servicer to perform obligations hereunder in compliance
with all Acceptable Servicing Procedures), the Owner shall execute and deliver
to the Servicer, in the form supplied to the Owner by the Servicer, any court
pleadings, requests for trustee's sale or other documents reasonably necessary
to perform the servicing activities with respect to any Mortgage Loan, including
the foreclosure or sale in respect of any Mortgaged Property, the commencement
and prosecution of any legal action to enforce the related Mortgage Note and
Mortgage and the defense of any legal action or counterclaim filed against the
Owner or the Servicer. The Servicer may execute and deliver any or all of such
pleadings or documents on behalf of the Owner pursuant to the power of attorney
granted pursuant to Section 2.12(g).
ARTICLE 3.
PAYMENTS TO THE OWNER
SECTION 3.1. DISTRIBUTIONS
(a) On each Monthly Remittance Date, the Servicer shall distribute to
the Owner all amounts credited to the Account as of the close of business on the
preceding Determination Date, net of charges against or withdrawals from the
Account pursuant to Section 2.5, plus all Monthly Advances deposited in the
Account prior to such Monthly Remittance Date pursuant to Section 2.4, minus (i)
any amounts attributable to Principal Prepayments received after the last day of
the Due Period immediately preceding the related Monthly Remittance Date and
(ii) any amounts attributable to Monthly Payments collected but due on a Due
Date(s) subsequent to the preceding Determination Date.
(b) All distributions made to the Owner on each Monthly Remittance
Date shall be made to the Owner of record, based on the Mortgage Loans owned and
held by the Owner. All distributions shall be made by wire transfer of
immediately available funds to the account of the Owner at a bank or other
entity having appropriate facilities therefor, if the Owner shall have so
notified the Servicer, or by check mailed to the address of the Owner.
Distributions on each Monthly Remittance Date may be made by more than one (1)
wire transfer or check, as the case may be.
(c) With respect to any remittance received by the Owner on or after
the second Business Day following the Business Day on which such payment was
due, the Owner shall send written notice thereof to the Servicer. The Servicer
shall pay to the Owner interest on any such late payment at an annual rate equal
to Prime plus one percentage point, but in no event greater than the maximum
amount permitted by applicable law. Such interest shall be paid by the Servicer
to the Owner on the date such late payment is made and shall cover the period
commencing with the day following the Business Day on which such payment was due
and ending with the Business Day on which such payment is made, both inclusive.
The payment by the Servicer of any such interest, or the failure of the Owner to
notify the Servicer of such interest, shall not be deemed an extension of time
for payment or a waiver of any Event of Default by the Servicer.
23
SECTION 3.2. REPORTS
(a) On or before each Monthly Remittance Date, the Servicer shall
provide to the Owner or its designee by means of an electronic or other agreed
upon medium, with respect to the Due Period immediately preceding such Monthly
Remittance Date, the data set forth below on an individual loan basis:
(i) mortgage loan number;
(ii) interest rate;
(iii) pending rate;
(iv) scheduled principal and interest payment;
(v) scheduled principal;
(vi) gross interest;
(vii) curtailment collected;
(viii) curtailment adjustment;
(ix) PIF principal;
(x) PIF interest difference;
(xi) ARM Index;
(xii) pending Index;
(xiii) ending scheduled balance;
(xiv) investor loan number;
(xv) Servicing Fee Rate;
(xvi) due date;
(xvii) yield rate;
(xviii) beginning balance;
(xix) ending balance;
(xx) beginning scheduled balance;
(xxi) principal collected;
24
(xxii) scheduled net interest;
(xxiii) scheduled buydown;
(xxiv) Servicing Fee collected; and
(xxv) remittance amount.
The Servicer may submit the foregoing information in more than one (1) report.
The Servicer shall endeavor to accommodate requests for additional data
regarding the Mortgage Loans or alternative means for delivering such reports
provided that the Servicer shall not be obligated to deliver any such data or
reports if, in the Servicer's judgment, it imposes undue expense or is unduly
burdensome to the Servicer; provided further that the Servicer shall agree to
deliver such reports, information or documentation if at Owner's cost and
expense.
(b) Upon reasonable advance notice in writing,and at the Owner's
expense, the Servicer shall provide to any Owner that is a savings and loan
association, a bank, an insurance company or other regulated or supervised
entity reports and access to information and documentation regarding the
Mortgage Loans and the transactions contemplated hereby sufficient to permit the
Owner to comply with the applicable regulations of relevant regulatory or
supervisory authorities with respect to its investment in the Mortgage Loans and
Owner's internal and third-party audit requirements.
(c) The Servicer shall prepare and file any and all information
statements or other filings required to be delivered to any governmental taxing
authority or to Owner pursuant to any applicable law with respect to the
Mortgage Loans and the transactions contemplated hereby. In addition, the
Servicer shall provide Owner with such information concerning the Mortgage Loans
as is necessary for Owner to prepare its federal income tax return as Owner may
reasonably request from time to time. In addition, not more than 120 days after
the end of each calendar year, the Servicer shall furnish to each Person who was
an Owner at any time during such calendar year an annual statement in accordance
with the requirement of applicable federal income tax law as to the aggregate of
remittances for the applicable portion of such year.
SECTION 3.3. DELINQUENCY AND FORECLOSURE STATEMENTS
The Servicer shall provide a monthly statement of delinquents and a
delinquency report on all Mortgage Loans more than 30 days delinquent. The
Servicer shall also provide a monthly statement regarding foreclosure status.
25
ARTICLE 4.
GENERAL SERVICING PROCEDURE; COVENANTS;
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. ASSUMPTION AGREEMENTS
(a) The Servicer shall use Acceptable Servicing Procedures to enforce
any "due-on-sale" provision contained in any Mortgage or Mortgage Note and to
deny assumption by the person to whom the Mortgaged Property has been or is
about to be sold, whether by absolute conveyance or by contract of sale and
whether or not the Mortgagor remains liable on the Mortgage and the Mortgage
Note, provided that in accordance with the terms of the Mortgage Note, the
Servicer may permit an assumption (i) if the Servicer reasonably believes it is
unable under Applicable Requirements to enforce such "due-on-sale" clause, or
(ii) if the enforcement of such rights would impair or threaten to impair any
recovery under the related Primary Mortgage Insurance Policy or LPMI Policy, if
any. In connection with any such assumption, the related Mortgage Interest Rate,
the Unpaid Principal Balance and the term of the Mortgage Loan may not be
changed. If an assumption is allowed pursuant to this Section 4.1(a), the
Servicer is authorized, at the Servicer's discretion, to prepare a substitution
of liability agreement to be entered into by the Owner and the purchaser of the
Mortgaged Property pursuant to which the original Mortgagor is released from
liability and the purchaser of the Mortgaged Property is substituted as
Mortgagor and becomes liable under the Mortgage Note. Any such substitution of
liability agreement shall be in lieu of an assumption agreement. If an
assumption fee is collected by the Servicer for entering into an assumption
agreement the entire amount of such fee may be retained by the Servicer as
additional servicing compensation.
(b) The Servicer shall follow Acceptable Servicing Procedures with
respect to any such assumption or substitution of liability (taking into account
the Servicer's then current underwriting guidelines applicable to mortgage loans
of the same type as the related Mortgage Loan). The Servicer shall notify the
Owner that any such substitution of liability or assumption agreement has been
completed by forwarding to the Owner a copy of any such substitution of
liability or assumption agreement, which document shall be added to the related
Collateral File and shall for all purposes be considered a part of such
Collateral File to the same extent as all other documents and instruments
constituting a part thereof.
SECTION 4.2. SATISFACTION OF MORTGAGES AND RELEASE OF COLLATERAL FILES
(a) Upon the payment in full of any Mortgage Loan or the receipt by
the Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer shall prepare the appropriate
documents and instruments required to satisfy or release the lien of the
Mortgage in accordance with applicable state law requirements. The Servicer,
promptly and within the applicable legal deadlines appropriate to process the
satisfaction or release, shall notify the Custodian of such event.
(b) The Servicer shall not grant a satisfaction or release of a
Mortgage without having obtained payment in full of the indebtedness secured by
the Mortgage. In the event the
26
Servicer grants a satisfaction or release of a Mortgage without having obtained
payment in full of the indebtedness secured by the Mortgage, the Servicer, upon
becoming aware of the foregoing, shall remit to the Owner the Unpaid Principal
Balance of the related Mortgage Loan plus accrued and unpaid interest by deposit
thereof in the Account pursuant to Section 2.4. The Owner shall assign the
related Mortgage and endorse the related Mortgage Note to the Servicer and shall
do all things necessary to transfer ownership of the Mortgage Loan to the
Servicer. The Servicer shall maintain the Fidelity Bond as provided for in
Section 2.11 protecting and insuring the Servicer against, losses sustained with
respect to any Mortgage Loan satisfied or released other than in accordance with
the procedures set forth herein.
(c) The Owner shall, within five (5) Business Days following receipt
of any request from the Servicer (or within such shorter period as is necessary
for the Servicer to perform its obligations hereunder in compliance with all
Acceptable Servicing Procedures) deliver or cause the Custodian to deliver to
the Servicer the Collateral File (or any portion thereof) required by the
Servicer to process any satisfaction or release of any Mortgage pursuant to this
Section 4.2. In addition, if any Mortgage Loan has been paid in full and the
Owner has recorded the related Assignment of Mortgage designating the Owner as
the holder of record of the Mortgage, the Servicer shall prepare and deliver to
the Owner, together with a request for execution, the documents and instruments
necessary to satisfy or release the lien of the Mortgage. The Owner shall,
within five (5) Business Days following its receipt of any such request, send to
the Servicer the fully-executed documents that were prepared and requested by
the Servicer. In the event that applicable state law requires that a
satisfaction or release be recorded within a shorter time period than the
foregoing procedure permits, the Servicer shall advise the Owner accordingly and
shall use commercially reasonable efforts to ensure that the lien of the
Mortgage is released or satisfied in accordance with applicable state law
requirements, and the Owner shall assist therewith by, to the extent reasonably
practicable, returning to the Servicer the required portion of the Collateral
File and, if applicable, the executed satisfaction and release documents and
instruments within the time periods reasonably specified by the Servicer.
(d) If a Mortgage Loan that has been paid in full is a MERS Loan, the
Servicer may cause the removal of such Mortgage Loan from registration on the
MERS(R) System and execute and deliver, on behalf of the Owner, any and all
related instruments of satisfaction or release. No expense incurred in
connection with the delivery of any instrument of satisfaction or deed or
reconveyance shall be chargeable to the Account or the Owner.
SECTION 4.3. SERVICING COMPENSATION
The Servicer shall be entitled to pay itself a Servicing Fee for each
Mortgage Loan serviced hereunder. The obligation of the Owner to pay such
Servicing Fee is limited to, and payable solely from, the interest portion of
the Monthly Payments and Late Collections collected by the Servicer with respect
to the related Mortgage Loan. Additional servicing compensation in the form of
non-sufficient funds check fees, assumption fees, conversion fees, other related
administrative fees, late payment charges, Prepayment Charges and other similar
types of ancillary fees and charges that are actually received by the Servicer
may be retained by the Servicer to the extent not required to be deposited into
the Account pursuant to the terms of this Agreement. In addition to the
Servicing Fee payable hereunder, the Servicer shall be entitled to
27
pay itself an REO Management Fee for each REO Property managed by the Servicer
or its agent. The Servicer shall be required to pay all expenses incurred by it
in connection with its servicing activities hereunder and shall not be entitled
to reimbursement therefor except as specifically provided for in this Agreement.
Any Late Collections shall be applied by the Servicer in the following order of
priority: (i) first to pay the expenses incurred in connection with collection
of such Late Collections, (ii) second to reimburse itself for any related unpaid
Servicing Fees, unpaid REO Management Fees and unreimbursed Servicing Advances
and Monthly Advances and (iii) the balance to be distributed to the Owner.
SECTION 4.4. STATEMENTS AS TO COMPLIANCE
(a) Not later than March 15 of each year (or if such day is not a
Business Day, the next succeeding Business Day), the Servicer will deliver to
the Owner and, with respect to any Mortgage Loans subject to a Pass-Through
Transfer, each other Person entitled to receive servicing reports provided
pursuant to Section 3.2(a) an Officer's Certificate for the prior calendar year,
beginning with the calendar year ending December 31, 2005, stating (i) a review
of the activities of the Servicer during the preceding year and of performance
under this Agreement has been made under such officer's supervision, and (ii) to
the best of such officer's knowledge, based on such review, the Servicer has
fulfilled all of its obligations under this Agreement throughout such year or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof.
(b) Not later than March 15 of each year (or if such day is not a
Business Day, the next succeeding Business Day), with respect to any Mortgage
Loans subject to a Pass-Through Transfer, the Servicer will deliver to the Owner
and each other Person entitled to receive servicing reports provided pursuant to
Section 3.2(a) an Officer's Certificate for the prior calendar year, beginning
with the calendar year ending December 31, 2005, in substantially the form of
EXHIBIT D to this Agreement.
(c) The Servicer agrees to indemnify and hold harmless each of the
Owner, each other Person entitled to receive servicing reports provided pursuant
to Section 3.2(a), each Person, if any, who "controls" the Owner or such other
Person within the meaning of the Securities Act of 1933, as amended, and their
respective officers, directors and employees against any and all losses,
penalties, fines, forfeitures, legal fees and related costs, judgments and any
other costs, fees and expenses that such Person may sustain arising out of third
party claims based on (i) the failure of the Servicer to deliver or cause to be
delivered when required any Officer's Certificate required pursuant to Section
4.4(a) or Section 4.4(b), or the accountants' statement and copy of the
Management Assertion required pursuant to Section 4.5, or (ii) any material
misstatement or omission in any certification pursuant to Section 302(a) of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and Rules 13a-14 and 15d-14 promulgated by the
Securities and Exchange Commission thereunder made in reliance on any material
misstatement or omission contained in any Officer's Certificate provided
pursuant to Section 4.4(a) or Section 4.4(b) or (iii) any material misstatement
or omission contained in the Management Assertion delivered in accordance with
Section 4.5. If the indemnification provided for herein is unavailable or
insufficient to hold harmless any person indemnified pursuant to this Section
4.4(c) ("Indemnitee"), then the Servicer agrees that it shall contribute to the
amount paid or payable by the Indemnitee as a result of the losses, claims,
28
damages or liabilities of the Indemnitee arising out of clause (i), (ii) or
(iii) of the preceding sentence in such proportion as is appropriate to reflect
the relative fault of the Indemnitee on the one hand and the Servicer on the
other.
(d) For purposes of paragraph (c), "third party claims" shall include
claims brought against an Indemnitee by any agent or affiliate of such
Indemnitee where such claims arise out of, or are based on, (A) the failure of
the Servicer to deliver or cause to be delivered when required any Officer's
Certificate required pursuant to Section 4.4(a) or Section 4.4(b) or the
accountant's statement and Management Assertion when required pursuant to
Section 4.5 or (B) any material misstatement or omission in any certification
pursuant to Section 302(a) of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and Rules 13a-14
and 15d-14 promulgated by the Securities and Exchange Commission thereunder made
in reliance on any material misstatement or omission contained in any Officer's
Certificate provided pursuant to Section 4.4(a) or Section 4.4(b), or (C) any
material misstatement or omission contained in the Management Assertion
delivered in accordance with Section 4.5.
SECTION 4.5. ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT
Not later than March 15 of each year (or if such day is not a Business Day,
the next succeeding Business Day), the Servicer will (i) at its expense, cause a
firm of independent public accountants that is a member of the American
Institute of Certified Public Accountants to furnish to the Owner and, with
respect to any Mortgage Loans subject to a Pass-Through Transfer, each other
Person entitled to receive servicing reports provided pursuant to Section
3.2(a), a statement to the effect that, based on an examination conducted by
such firm in compliance with the Uniform Single Attestation Program for Mortgage
Bankers ("USAP"), the assertion of management of the Servicer regarding
compliance with the minimum servicing standards identified in the USAP (the
"Management Assertion") is fairly stated in all material respects, except for
(A) such exceptions as such firm shall believe to be immaterial, and (B) such
other exceptions as shall be set forth in such statement or such Management
Assertion, and (ii) furnish to the Owner and each other Person entitled to
receive servicing reports provided pursuant to Section 3.2(a) a separate copy of
the related Management Assertion, which shall be in the same form as provided to
the firm of independent public accountants referred to in clause (i) of this
paragraph.
SECTION 4.6. OWNER'S RIGHT TO EXAMINE SERVICER RECORDS, ETC.
(a) The Owner shall have the right, at its expense, to (i) examine and
audit the Servicer's books of account, records, reports and other papers
relating to (x) the performance by the Servicer of its obligations and duties
under this Agreement, or (y) the Mortgage Loans, (ii) make copies and extracts
therefrom and (iii) discuss the affairs, finances, and accounts of the Servicer
relating to such performance with the Servicer's officers and employees, all at
such times and places, and with such frequency, as may be reasonably requested.
(b) The Servicer shall provide to the Owner and any supervisory agents
or examiners representing a state or federal governmental agency having
jurisdiction over the Owner, including without limitation the OTS, the FDIC and
other similar entities, access to any
29
documentation regarding the Mortgage Loans in the possession of the Servicer
that is required by any applicable regulations. Such access shall be afforded
without charge, upon reasonable request, during normal business hours, at the
offices of the Servicer and in accordance with any applicable regulations.
SECTION 4.7. COOPERATION
The Servicer and the Owner shall cooperate fully with one another and their
respective counsel and other representatives and advisors in connection with the
steps required to be taken as part of their respective obligations under this
Agreement.
SECTION 4.8. CONSENTS AND APPROVALS
The Servicer shall timely obtain, at its sole cost and expense, the
consents and approvals required by law or pursuant to contract to consummate the
transactions contemplated hereby. All such consents shall be obtained without
any cost or expense to the Owner and shall be obtained without any adverse
modification in the terms of any of the agreements relating to the Mortgage
Loans or the imposition of any burdensome provisions or conditions on the Owner.
ARTICLE 5.
THE SERVICER
SECTION 5.1. INDEMNIFICATION; THIRD PARTY CLAIMS
(a) (i) The Servicer agrees to indemnify and hold harmless the Owner
against any and all losses, penalties, fines, forfeitures, legal fees and
related costs, judgments and any other costs, fees and expenses resulting from
the defense of any claim against the Owner by a third party in any way related
to the failure of the Servicer to service the Mortgage Loans in compliance with
the terms of this Agreement; provided, however, the Servicer shall not be liable
hereunder with respect to (A) any action or inaction resulting from the written
direction or consent of the Owner, (B) any action or inaction resulting from the
Owner's failure to cause any Collateral File (or portion thereof) to be released
to the Servicer pursuant to Sections 2.18 or 4.2(c), or (C) any action or
inaction resulting from the Owner's failure to comply with Section 5.1(b) or
Section 5.6, or (D) any indirect, special or consequential damages, losses,
costs or expenses incurred by Owner. (ii) The Servicer shall notify the Owner if
a claim is made by a third party with respect to this Agreement or the Mortgage
Loans that the Servicer determines in its good faith judgment will materially
affect the Owner's interest in such Mortgage Loans. The Servicer shall assume
(with the written consent of the Owner) the defense of any such claim and,
subject to clause (iii) of this Section 5.1, pay all reasonable expenses in
connection therewith, including counsel fees, and promptly pay, discharge and
satisfy any judgment or decree that may be entered against the Servicer or the
Owner in respect of such claim. The Servicer shall follow any written
instructions received from the Owner in connection with any such claim. The
Servicer shall have the right to reimburse itself from the Account for all
expenses, advances and liabilities incurred by the Servicer in respect of any
such claim (whether or not the Servicer has assumed the defense thereof), except
when the claim (x) is related to the Servicer's obligations to indemnify the
Owner pursuant hereto, (y) results from the
30
failure of the Servicer to service the Mortgage Loans in compliance with the
terms of this Agreement, or (z) results from the Servicer's willful misconduct,
bad faith or negligence in performing its duties under this Agreement. (iii) If
the Owner receives service of a summons or other first legal process, the
Servicer shall not be liable for any costs or expenses pursuant to the indemnity
in this Section 5.1 unless the Owner provides written notice to the Servicer
that describes the nature of the claim within a reasonable time after service of
such summons or other first legal process upon the Owner; provided, however,
that the Owner's failure to notify the Servicer pursuant to this paragraph shall
not relieve the Servicer from any liability that the Servicer may have to the
Owner otherwise than on account of this indemnity. The Servicer shall not be
required to indemnify any person for any settlement of any claim effected
without the Servicer's consent, which consent shall not be unreasonably
withheld.
(b) With respect to any Mortgage Loan, if the Owner records or causes
to be recorded the related Assignment of Mortgage designating the Owner as the
holder of record of the Mortgage in the appropriate public recording office of
the jurisdiction in which the related Mortgaged Property is located, and the
Owner, in its capacity as the holder of record, receives written notice of any
action with respect to the related Mortgage or Mortgaged Property, the Owner
shall promptly send a copy of such notice to the Servicer in accordance with
Section 9.8. The Servicer shall have no liability to the Owner for claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
or any other costs or expenses, that result from the Owner's failure to comply
with the provisions set forth in this paragraph.
SECTION 5.2. SERVICER COVENANTS; MERGER OR CONSOLIDATION OF THE SERVICER
(a) The Servicer covenants that, subject to Section 5.2(b), it shall
keep in full force and effect its existence, rights and franchises as a
corporation and its status as a ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac approved servicer in
good standing.
(b) Any Person into which the Servicer may be merged or consolidated,
or any Person resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to all, or substantially
all, of the business or assets of the Servicer (whether or not related to loan
servicing), shall be the successor of the 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 Servicer shall not be a party to any such merger,
consolidation or conversion, or sell or otherwise dispose of all, or
substantially all, of its business or assets, unless the successor or surviving
Person shall be an institution that is a ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac approved
servicer in good standing and a member of MERS in good standing. In addition,
the successor or surviving Person shall be an institution (i) having a GAAP net
worth of not less than $25,000,000 and (ii) the deposits of which are insured by
the FDIC, SAIF and/or BIF, or which is a HUD-approved mortgagee whose primary
business is in origination and servicing of first lien mortgage loans.
SECTION 5.3. LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS
The Servicer and the directors, officers, employees or agents of the
Servicer shall not be under any liability to the Owner (i) for any action taken,
or for refraining from the taking of any
31
action, in good faith pursuant to this Agreement, (ii) for errors in judgment
made in good faith, (iii) for any action or inaction in accordance with the
written direction or consent of the Owner, (iv) for any action or inaction
resulting from the Owner's failure to cause any Collateral File (or portion
thereof) to be released to the Servicer pursuant to Sections 2.18 or 4.2(c), or
(v) for any action or inaction resulting from the Owner's failure to comply with
Section 5.1(b) or Section 5.6; provided, however, this provision shall not
protect the Servicer against any breach of warranties or representations made
herein, any failure to perform its obligations in accordance with any standard
of care set forth in this Agreement (unless in accordance with the written
direction or consent of the Owner) or any liability that would otherwise be
imposed by reason of willful misconduct, bad faith or negligence in the
performance of duties. The Servicer and any officer, employee or agent of the
Servicer may rely in good faith on any document of any kind that appears, on its
face, to be properly executed and submitted by any Person respecting any matters
arising hereunder. Subject to Section 5.1(a), the Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action that is not
incidental to its duties under this Agreement and that may result in any expense
or liability to the Servicer; provided, however, that the Servicer may, with the
written consent of the Owner, undertake any such action that it may deem
necessary or desirable with respect to this Agreement and the rights, duties,
and the interests of the parties hereto. In such event, the legal expenses and
costs of such action and any liability resulting therefrom shall be expenses,
costs, and liabilities for which the Owner shall be liable and the Servicer
shall be entitled to be reimbursed therefor from the Account, unless any such
costs or liabilities shall result from the negligence, bad faith or willful
misfeasance of the Servicer in performing such action.
SECTION 5.4. SERVICER NOT TO RESIGN
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon the determination that such Servicer's duties
hereunder are no longer permissible under Applicable Requirements and such
incapacity cannot be cured by such Servicer. Any such determination permitting
the resignation of the Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Owner. No such resignation shall become effective
until a successor that satisfies the requirements set forth in Section 9.1 has
assumed the Servicer's responsibilities and obligations hereunder in accordance
with such Section.
SECTION 5.5. TRANSFER OF SERVICING
The Servicer acknowledges that the Owner has entered into this Agreement in
reliance upon the adequacy of the Servicer's servicing facilities, plan,
personnel, records and procedures, its integrity, reputation and financial
standing and the continuance thereof. Without in any way limiting the generality
of this Section 5.5, the Servicer shall not either assign this Agreement or any
of the servicing rights or obligations hereunder except (i) in connection with a
merger or consolidation permitted under Section 5.2(b), or (ii) with the prior
written consent of the Owner, which consent shall not be unreasonably withheld
or delayed.
SECTION 5.6. TRANSFER OF MORTGAGE LOANS
(a) The Owner shall have the right, without the consent of the
Servicer, to assign its interest under this Agreement with respect to any
Mortgage Loans; provided, however, that (i) the
32
Owner shall give the Servicer written notice fifteen (15) days (unless otherwise
mutually agreed) prior to any such assignment of its interest under this
Agreement and (ii) in connection with any Pass-Through Transfer or Whole Loan
Transfer, the Owner shall comply with the provisions of Section 8.1(a) hereof.
The Owner shall also have the right to designate any Person to exercise the
rights of Owner hereunder to the extent provided in Section 8.2 of this
Agreement. In any such case, all references to the Owner shall be deemed to
include such assignee.
(b) The Servicer shall keep books and records in which, subject to
such reasonable regulations as it may prescribe, the Servicer shall note
transfers of Mortgage Loans. For the purposes of this Agreement, the Servicer
shall be under no obligation to deal with any Person with respect to this
Agreement or any Mortgage Loan unless the books and records show such person as
the owner of such Mortgage Loan. Upon receipt of a written notice from the Owner
of any assignment of any Mortgage Loan, the Servicer shall ▇▇▇▇ its books and
records to reflect the ownership of such Mortgage Loan by such assignee.
SECTION 5.7. REPRESENTATIONS AND WARRANTIES OF THE SERVICER
The Servicer hereby represents and warrants to the Owner as of the related
Closing Date as follows:
(a) The Servicer is a federally chartered savings bank, duly
organized, validly existing and in good standing under the laws of the United
States and has all licenses necessary to carry on its business as now being
conducted. The Servicer has the corporate power and authority to enter into,
execute and deliver this Agreement and all documents and instruments executed
and delivered pursuant hereto and to perform its obligations in accordance
therewith. The execution, delivery and performance of this Agreement by the
Servicer and the consummation of the transactions contemplated hereby have been
duly and validly authorized. This Agreement evidences the valid, binding and
enforceable obligations of the Servicer, subject as to enforcement, (i) to
bankruptcy, insolvency, receivership, conservatorship, reorganization,
arrangement, moratorium and other laws of general applicability relating to or
affecting creditors' rights and (ii) to general principles of equity, whether
such enforcement is considered in a proceeding in equity or at law. All
requisite corporate action has been taken by the Servicer to make this Agreement
valid and binding upon the Servicer in accordance with its terms.
(b) No consent, approval, authorization, or order of any court or
governmental agency or body relating to the transactions contemplated by this
Agreement is required as to the Servicer or, if required, such consent,
approval, authorization, or order has been obtained.
(c) The consummation of the transactions contemplated by this
Agreement, including without limitation the fulfillment of, or compliance with,
the terms and conditions of this Agreement, are in the ordinary course of
business of the Servicer and shall not (i) result in the breach of any term or
provision of the charter or by-laws of the Servicer, (ii) 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 material agreement,
indenture, loan or credit agreement, or other instrument to which the Servicer
or its property is subject, or (iii) result in the violation of any law, rule,
regulation, order, judgment, or decree to which the Servicer or its property is
subject.
33
(d) There is no action, suit, proceeding or investigation pending or,
to the best of the Servicer's knowledge, threatened against the Servicer that,
either in any one instance or in the aggregate, is likely (in the Servicer's
judgment), to result in any material impairment of the right or ability of the
Servicer to carry on its business substantially as now conducted, or that would
adversely affect the validity of this Agreement, or of any action taken or to be
taken in connection with the obligations of the Servicer contemplated herein, or
that would be likely to materially impair the ability of the Servicer to perform
its obligations hereunder.
(e) The Servicer is an approved servicer of mortgage loans for ▇▇▇▇▇▇
Mae and ▇▇▇▇▇▇▇ Mac, in good standing. No event has occurred, including but not
limited to a change in insurance coverage, that would make the Servicer unable
to comply with ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac eligibility requirements.
(f) The Servicer is a member of MERS in good standing. The Servicer
shall comply in all material respects with the rules and procedures of MERS in
connection with the servicing of each MERS Loan for as long as each such
Mortgage Loan is registered on the MERS(R) System.
ARTICLE 6.
DEFAULT
SECTION 6.1. EVENTS OF DEFAULT
In case one or more of the following Events of Default by the Servicer
shall occur and be continuing:
(i) any failure by the Servicer to remit to the Owner when due
any payment required to be made under the terms of this Agreement, which failure
continues unremedied for a period of three (3) Business Days after the date on
which written notice of such failure, requiring the same to be remedied, shall
have been received by the Servicer, from the Owner; or
(ii) any failure by the Servicer to duly observe or perform, in
any material respect, any other covenant, obligation or agreement of the
Servicer as set forth in this Agreement, which failure 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
Servicer by the Owner; 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, marshaling 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 or unstayed for a period of sixty
(60) days; or
(iv) the Servicer shall consent to the appointment of a
conservator, receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or
34
similar proceedings of or relating to the Servicer or relating to all, or
substantially all, of the Servicer's property; or
(v) the Servicer shall admit in writing its inability to pay its
debts 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 Servicer shall fail to be an approved servicer of
mortgage loans for ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac in good standing; or
(vii) the Servicer shall attempt to assign this Agreement or the
servicing responsibilities hereunder in contravention of this Agreement;
(viii) failure by the Servicer to duly perform within the
required time period, its obligations under Sections 4.4 and 4.5, which failure
continues unremedied after the Certification Cure Deadline;
(ix) failure by the Servicer to be in compliance with the "doing
business" or licensing laws of any jurisdiction where a Mortgaged Property is
located;
then, and in each and every such case, so long as such Event of Default shall
not have been remedied, the Owner, by notice in writing to the Servicer (in each
such instance, the "Defaulted Servicer"), may, in addition to whatever rights
the Owner may have at law or equity, including injunctive relief and specific
performance, commence termination of all of the rights and obligations of the
Defaulted Servicer under this Agreement pursuant to Section 7.2, and may
exercise any and all other remedies available at law or at equity. Upon receipt
by the Defaulted Servicer of such written notice from the Owner stating the
intent to terminate the Defaulted Servicer as servicer under this Agreement as a
result of such Event of Default, all authority and power of the Defaulted
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the successor appointed pursuant to
Section 9.1. Upon written request from the Owner, the Defaulted Servicer shall,
at its sole expense, prepare, execute, and place in such successor's possession
or control all Collateral Files and Credit Files, and do or cause to be done all
other acts or things necessary or appropriate to effect the purposes of such
notice of termination, all of which shall be undertaken immediately and shall be
completed as soon as possible and in all events by not later than forty-five
(45) days following the Owner's request therefor. The Defaulted Servicer agrees
to cooperate with the Owner and such successor in effecting the termination of
the Defaulted Servicer's responsibilities and rights hereunder, including,
without limitation, the transfer to such successor of all cash amounts that have
been credited by the Defaulted Servicer to the Account or the Escrow Account at
the time of transfer, and all other amounts that may thereafter be received with
respect to the Mortgage Loans and to which the Defaulted Servicer is not
entitled pursuant to the terms of this Agreement.
35
SECTION 6.2. WAIVER OF DEFAULTS
The Owner may waive any default by the Defaulted Servicer in the
performance of its obligations hereunder and its consequences. Any such waiver
must be in writing to be effective. Upon any waiver of a past default, such
default shall cease to exist, and any Event of Default arising therefrom shall,
unless otherwise specified in such waiver, be deemed to have been remedied for
every purpose of this Agreement unless the Defaulted Servicer fails to comply
with the terms of such waiver. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived.
SECTION 6.3. SURVIVAL OF CERTAIN OBLIGATIONS AND LIABILITIES OF THE
DEFAULTED SERVICER
The representations, warranties, covenants, indemnities and agreements of
the parties provided in this Agreement and the parties' obligations hereunder
shall survive the execution and delivery and the termination or expiration of
this Agreement. Notwithstanding any termination of the rights and obligations of
the Servicer pursuant to this Article 6, the Defaulted Servicer shall remain
liable for any actions of the Defaulted Servicer taken prior to the effective
time of such termination.
ARTICLE 7.
TERMINATION
SECTION 7.1. TERMINATION OF AGREEMENT
This Agreement shall terminate upon either (i) the later of the
distribution to the Owner of final payment or liquidation with respect to the
last Mortgage Loan subject to this Agreement and each REO Property or the
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure with respect to the last Mortgage Loan subject to this Agreement and
the remittance of all funds due hereunder, or (ii) the mutual written consent of
the parties.
SECTION 7.2. TERMINATION OF THE SERVICER UPON UNREMEDIED EVENT OF DEFAULT
The Owner may, at its sole option, following an unremedied Event of Default
and in accordance with Section 6.1, terminate any rights the Servicer may have
hereunder. The Owner, with full cooperation of the Servicer, shall arrange for
the transfer of servicing, at the Owner's option, to the Owner or a third party
successor servicer pursuant to Section 9.1, and the Servicer shall continue
servicing the Mortgage Loans under this Agreement, for the Servicing Fee
provided herein, until the Owner gives the Servicer notice of such transfer.
36
ARTICLE 8.
WHOLE LOAN TRANSFERS AND PASS-THROUGH TRANSFERS
SECTION 8.1. WHOLE-LOAN TRANSFERS OR PASS-THROUGH TRANSFERS
(a) The Owner and the Servicer agree that in connection with any Whole
Loan Transfer or Pass-Through Transfer, the Owner may, in its sole discretion,
upon fifteen (15) calendar days prior written notice to the Servicer, assign its
rights under this Agreement with respect to some or all of the Mortgage Loans
subject to such Whole Loan Transfer or Pass-Through Transfer provided that no
such Whole Loan Transfer or Pass-Through Transfer may be effected by Owner or
any of its permitted assignees with respect to the Mortgage Loans if, as a
result thereof: (i) more than three (3) investors would own Mortgage Loans in
such Loan Pool at any one time; provided, that the Purchaser's completion of a
Clean-Up Transfer (as defined below) shall not be counted for purposes of this
subclause (i); (ii) the Owner or its designee shall fail to use commercially
reasonable efforts to provide the Servicer with initial drafts of all documents
for which the Servicer is requested to become a party in connection with such
Whole Loan Transfer or Pass-Through Transfer at least ten (10) days prior to the
related settlement date (the "Subsequent Transfer Settlement Date"); (iii) the
Owner or its designee shall fail to use commercially reasonable efforts to
provide the Servicer with a final list of the Mortgage Loans subject to such
Whole Loan Transfer or Pass-Through Transfer at least two (2) Business Days
prior to the related Subsequent Transfer Settlement Date; (iv) no Mortgage Loan
shall be subject to more than one (1) Whole Loan Transfer or Pass-Through
Transfer in any given Due Period; (v) the related Subsequent Transfer Settlement
Date occurs on or prior to the related Servicing Cut-Off Date; or (vi) any
single investor would own Mortgage Loans having an aggregate unpaid principal
balance immediately following such Whole Loan Transfer or Pass-Through Transfer
of less than $5,000,000; provided, that the Purchaser may complete one Whole
Loan Transfer or Pass-Through Transfer with a pool having an aggregate unpaid
principal balance of less than $5,000,000 (such transfer a "Clean-Up Transfer").
(b) The Owner shall reimburse the Servicer for all reasonable
out-of-pocket expenses, including attorneys' fees, incurred by the Servicer in
connection with any Whole Loan Transfer or Pass-Through Transfer.
(c) In connection with each Whole Loan Transfer or Pass-Through
Transfer permitted under Section 8.1(a), the Servicer shall: (i) provide the
Owner with information and appropriate verification of information in its
possession or control as may reasonably be necessary in order to effect such
Whole Loan Transfer or Pass-Through Transfer (and, to the extent any such
information is in the possession or control of any third party, use commercially
reasonable efforts to cause such third party to provide such information); and
(ii) cooperate with all reasonable requests and due diligence procedures not
otherwise addressed herein.
(d) With respect to any Pass-Through Transfer completed prior to
January 1, 2006 and permitted under Section 8.1(a) herein in which a prospectus,
prospectus supplement or other disclosure document (a "Disclosure Document") is
prepared in connection therewith, and in which at least 10% of the mortgage
loans in the related transaction consist of Mortgage Loans, the Servicer shall:
37
(i) provide for inclusion as part of such Disclosure Document (A)
the regulatory status of the Servicer and its affiliates and (B) delinquency and
foreclosure information of the type typically provided by the Servicer in
connection with mortgage loans originated by the Servicer and securitized by
third parties (the information referred to in this sentence, in the form
provided to the Owner, being "Servicer's Information"); and
(ii) (A) indemnify and hold harmless the transferee under any
permitted Pass-Through Transfer, the Owner and each Person, if any, who
"controls" such transferee, if any, or the Owner within the meaning of the
Securities Act of 1933, as amended (an "Owner Indemnified Party"), against any
losses, claims, damages or liabilities to which such Owner Indemnified Party may
become subject, under the Securities Act of 1933, as amended, or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) (x) arise out of or are based upon any untrue statement of any material
fact contained in the Servicer's Information or (y) arise out of or are based
upon the omission to state in such Servicer's Information a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading and
(B) reimburse each Owner Indemnified Party for any legal or other expenses
reasonably incurred by such Owner Indemnified Party in connection with
investigating or defending any such loss, claim, damage, liability or action.
The Servicer agrees to execute an indemnification agreement reasonably
acceptable to Servicer in connection with any Pass-Through Transfer containing
the foregoing indemnity; and
(iii) execute an assignment, assumption and recognition agreement
reasonably acceptable to the Servicer and the Owner; provided, that (A) any
servicing reporting requirements must be consistent with the standard practices
of the Servicer and reasonably acceptable to the Master Servicer, and (B) each
of the parties to such assignment, assumption and recognition agreement
(including the Master Servicer) negotiates in good faith any terms or conditions
in such assignment, assumption and recognition agreement not specifically
referenced or provided for under this Agreement.
(e) With respect to any Pass-Through Transfer completed prior to
January 1, 2006 and permitted under Section 8.1(a) herein in which all or
substantially all of the mortgage loans in the related transaction consist of
Mortgage Loans, the Servicer shall:
(i) execute and deliver a pooling and servicing agreement
containing terms and conditions that are consistent with the terms and
conditions set forth herein and that are customary for public, rated
transactions for the issuance of pass-through certificates backed by mortgage
loans similar to the Mortgage Loans included in such Pass-Through Transfer,
provided, that (A) any servicing reporting requirements must be consistent with
the standard practices of the Servicer and (B) each of the parties to such
pooling and servicing agreement negotiates in good faith any terms or conditions
in such pooling and servicing agreement not specifically referenced or provided
for under this Agreement; and
(ii) provide Owner with opinions of counsel as to the Servicer's
corporate authority and the enforceability of the pooling and servicing
agreement against the Servicer, audit letters addressing the delinquency and
foreclosure statistics of the Servicer and certificates from public officials,
each in a form reasonably acceptable to the Purchaser, it being
38
understood that the cost of any opinions of outside counsel that may be required
herein, shall be the responsibility of the Purchaser.
(f) With respect to any Whole Loan Transfer or Pass-Through Transfer
in which a Disclosure Document is prepared in connection therewith, the Owner
shall:
(i) provide the Servicer with all drafts of the Servicer's
Information when produced and revise the Servicer's Information in accordance
with the Servicer's comments to correct any information therein at the Owner's
cost; and
(ii) (A) indemnify and hold harmless the Servicer against any
losses, claims, damages or liabilities to which the Servicer may become subject,
under the Securities Act of 1933, as amended, or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) (x) arise
out of or are based upon any untrue statement of any material fact contained in
such Disclosure Document (other than an untrue statement of material fact
contained in the Servicer's Information), or (y) arise out of or are based upon
the omission to state in such Disclosure Document a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (unless the material
fact omitted would constitute Servicer's Information) and (B) reimburse the
Servicer for any legal or other expenses reasonably incurred by the Servicer in
connection with investigating or defending any such loss, claim, damage,
liability or action. The Owner agrees to execute an indemnification agreement
reasonably acceptable to Owner in connection with any Pass-Through Transfer
containing the foregoing indemnity.
(g) With respect to any Mortgage Loan that is the subject of a
Pass-Through Transfer on or after January 1, 2006, in connection with the
Owner's preparation of a Disclosure Document, the Servicer shall deliver
disclosures relating to the Servicer, or the Mortgage Loans that the Servicer
reasonably determines, after good faith negotiation with the Purchaser, to be
required to be delivered by the Servicer pursuant to Regulation AB under the
Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended
("Regulation AB"). The Servicer shall indemnify the Owner Indemnified Party for
such disclosure as provided in Section 8.1(d)(ii).
(h) With respect to any Mortgage Loan that is the subject of a
Pass-Through Transfer on or after January 1, 2006, in connection with the
servicing of such Mortgage Loan, the Servicer shall deliver the reports,
statements and certifications required to be delivered by the Servicer under
Regulation AB with respect to such Pass-Through Transfer.
SECTION 8.2. DESIGNATION OF A MASTER SERVICER
(a) Notwithstanding anything to the contrary contained in this
Agreement, the Owner shall have the right, in its sole discretion, upon (i)
thirty (30) days' prior written notice to the Servicer with respect to any
Portfolio Mortgage Loans or (ii) fifteen (15) days' prior written notice to the
Servicer with respect to any permitted Whole Loan Transfer or Pass-Through
Transfer, to appoint and designate a master servicer (the "Master Servicer"), as
master servicer of Mortgage Loans. Upon receipt of written notice of such
appointment, the Servicer shall promptly enter into a servicing agreement (a
"Reconstituted Servicing Agreement") to service the Mortgage Loans for
39
the Master Servicer in accordance with the Master Servicer's requirements;
provided, however, that the Servicer shall be under no obligation to enter into
any Reconstituted Servicing Agreement unless the obligations and duties of the
Servicer as a subservicer thereunder (i) are not materially different from than
those set forth herein, (ii) do not cause undue burden on the Servicer, (iii) do
not expand in any material respect any of the obligations, duties or liabilities
of the Servicer hereunder and (iv) will not result in any increased cost to the
Servicer. If the Servicer and the Master Servicer enter into a Reconstituted
Servicing Agreement, the Servicer shall service the Mortgage Loans, and remit
and report to the Master Servicer, in accordance with the terms of the
Reconstituted Servicing Agreement and, to the extent inconsistent therewith, the
servicing provisions set forth in this Agreement shall be superseded by the
Reconstituted Servicing Agreement. If the Servicer and the Master Servicer do
not enter into a Reconstituted Servicing Agreement, the Servicer shall service
the Mortgage Loans, and remit and report to the Master Servicer, in accordance
with the terms of this Agreement.
(b) Upon appointment of a Master Servicer in accordance with Section
8.2(a), the Servicer shall correspond and communicate solely with the Master
Servicer regarding the servicing of the Mortgage Loans. The Master Servicer
shall have the right as designee of the Owner to enforce the covenants and
conditions set forth in this Agreement, and the Servicer shall follow and shall
be entitled to rely on the instructions of the Master Servicer under this
Agreement as if such instructions were the instructions of the Owner. The Master
Servicer shall have the right to give any waivers or consents required or
allowed under this Agreement on behalf of the Owner, and the Servicer shall be
entitled to rely on such waivers and consents as if such waivers or consents
were the waivers or consents of the Owner. The Master Servicer is empowered to
enter into and execute and deliver any amendments or modifications to this
Agreement as the Owner's designee hereunder, and such amendments or
modifications shall be binding upon the Owner as if the Owner had executed and
delivered the same.
(c) Upon receipt of notice of termination of the Master Servicer, the
Servicer shall no longer deal with the Master Servicer and shall instead deal
directly with the Owner. From and after receipt of such notice of termination of
the Master Servicer, the Servicer shall service the applicable Mortgage Loans in
accordance with the provisions of this Agreement and shall give no effect to any
Master Servicing Agreement entered into with the Master Servicer.
SECTION 8.3. SERVICER'S PURCHASE RIGHT
If, at any time, the aggregate Unpaid Principal Balance of any Mortgage
Loans serviced hereunder and retained by the Owner ("Portfolio Loans") is less
than or equal to one percent (1%) of the Unpaid Principal Balance of such
Portfolio Loans as of the related Closing Date, the Servicer may elect, in its
sole discretion, to purchase such Portfolio Loans. The purchase price of
Mortgage Loans purchased by the Servicer pursuant to this Section 8.3 shall
equal the lesser of (i) the aggregate fair market value of such Mortgage Loans
at the time of purchase by the Servicer and (ii) the aggregate Unpaid Principal
Balance of such Mortgage Loans, plus the amount of interest on such Unpaid
Principal Balance at the applicable Net Rate from the date to which interest has
last been paid and distributed to the Owner to, and including, the last day of
the month in which such purchase occurs.
40
ARTICLE 9.
MISCELLANEOUS PROVISIONS
SECTION 9.1. SUCCESSOR TO THE SERVICER
(a) Prior to termination of the Servicer's responsibilities and duties
under this Agreement pursuant to Sections 5.4, 6.1, 7.1, or 7.2, the Owner shall
either (i) succeed to and assume all of the Servicer's responsibilities, rights,
duties, and obligations under this Agreement from and after the date of such
succession, or (ii) appoint a successor to the Servicer that shall succeed to
all rights and assume all of the responsibilities, duties and liabilities of the
Servicer under this Agreement prior to the termination of the Servicer's
responsibilities, duties, and liabilities under this Agreement. If the
Servicer's duties, responsibilities, and liabilities under this Agreement shall
be terminated pursuant to any of the foregoing Sections, the Servicer shall
discharge such duties and responsibilities with the same degree of diligence and
prudence that it is obligated to exercise under this Agreement, from the date it
acquires knowledge of such termination until the effective date thereof.
(b) The Servicer shall promptly deliver to its successor (i) the funds
in the Account and the Escrow Account to which the Owner is entitled pursuant to
the terms of this Agreement and all other amounts that may thereafter be
received with respect to the Mortgage Loans and to which the Servicer is not
entitled pursuant to the terms of this Agreement and (ii) all Collateral Files
and Credit Files and related documents and statements held by it hereunder. The
Servicer shall account for all funds and shall execute and deliver such
instruments and do such other things as may reasonably be required to more fully
and definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer.
(c) Upon a successor's acceptance of appointment as such, the Owner
shall notify the Servicer of such appointment.
(d) Notwithstanding any termination pursuant to this Agreement, the
Servicer shall continue to be entitled to receive all amounts accrued or owing
to it under this Agreement on or prior to the effective date of such
termination, whether in respect of (i) unreimbursed Servicing Advances or
Monthly Advances, (ii) unpaid Servicing Fees or REO Management Fees, or (iii)
other servicing compensation, and shall continue to be entitled to the benefits
of Section 5.3 notwithstanding any such termination, with respect to events
occurring prior to such termination.
SECTION 9.2. AMENDMENT
This Agreement may be amended from time to time solely by written agreement
signed by each of the parties.
41
SECTION 9.3. RECORDATION OF AGREEMENT; PERFECTION OF SECURITY INTEREST;
FURTHER ASSURANCES
(a) To the extent necessary under applicable law to protect the
interests of the Owner, this Agreement, or a memorandum thereof, is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Servicer at the
Servicer's expense.
(b) The Servicer agrees to execute or cause to be executed such
documents and take or cause to be taken such actions as may be necessary to
effect the intent of this Agreement, including, without limitation, the
execution and delivery of instruments of further assurance and the execution and
delivery of such other documents, and the taking of such other actions, as may
be reasonably requested by the Owner.
SECTION 9.4. DURATION OF AGREEMENT
This Agreement shall continue in existence and effect until terminated as
herein provided.
SECTION 9.5. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York (including Section 5-1401 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 without giving effect
to conflict of laws principles other than Section 5-1401 of the New York General
Obligations Law.
SECTION 9.6. GENERAL INTERPRETIVE PRINCIPLES
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(i) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other
gender;
(ii) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;
(iii) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs, and other subdivisions
of this Agreement;
(iv) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
42
(v) the words "herein," "hereof," "hereunder," and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(vi) the term "include" or "including" shall mean without
limitation by reason of enumeration.
SECTION 9.7. REPRODUCTION OF DOCUMENTS
This Agreement and all documents relating hereto, including, without
limitation, (i) consents, waivers, and modifications that may hereafter be
executed, (ii) documents received by any party on any Closing Date, and (iii)
financial statements, certificates, and other information previously or
hereafter furnished, may be reproduced by any photographic, photostatic,
microfilm, microcard, miniature photographic, or other similar process. Any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business. Any enlargement, facsimile or further reproduction
of such reproduction shall likewise be admissible in evidence.
SECTION 9.8. NOTICES
All demands, notices, consents, waivers and other communications hereunder
shall be in writing and shall be deemed to have been duly given upon receipt (x)
in the case of any notice of an Event of Default, if mailed by registered mail,
postage prepaid and (y) in the case of any other demand, notice, consent, waiver
or other communication, if personally delivered, mailed by registered mail,
postage prepaid, delivered by air courier or sent by facsimile to:
(i) in the case of the Servicer, at the address set forth below
or such other address as may hereafter be furnished to the Owner in writing by
the Servicer:
Washington Mutual Bank
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. (Mail Stop N070205)
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President, Investor Reporting
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) in the case of the Owner, at the address set forth below, or
such other address as may hereafter be furnished to the Servicer by the Owner:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Lending Inc.
4 World Financial ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Asset Management
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
43
and in the case of any subsequent Owner, as set forth in written notice supplied
to the Servicer by such subsequent Owner.
Notwithstanding the foregoing any demand, notice, consent, waiver or
communication (other than those referred to in clause (x) above) may be given by
any other means if the parties hereto agree to such alternative means in
writing.
SECTION 9.9. SEVERABILITY OF PROVISIONS
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason, 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 covenants, agreements,
provisions or terms of this Agreement or the rights of the Owner hereunder. If
the invalidity of any part, provision, representation or warranty of this
Agreement shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate in good faith to
develop a new structure, the economic effect of which is nearly as possible the
same as the economic effect of this Agreement without regard to such invalidity.
SECTION 9.10. EXHIBITS AND SCHEDULES
The exhibits and schedules to this Agreement are hereby incorporated and
made an integral part of this Agreement.
SECTION 9.11. COUNTERPARTS; SUCCESSORS AND ASSIGNS
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Sections 5.4, 5.5, 5.6, 6.1,
7.1 and 8.1, this Agreement shall inure to the benefit of and be binding upon
the Servicer, the Owner and their respective successors and assigns.
SECTION 9.12. EFFECT OF HEADINGS
The headings in this Agreement are for purposes of reference only and shall
not limit or otherwise affect the meaning hereof.
SECTION 9.13. OTHER AGREEMENTS SUPERSEDED; ENTIRE AGREEMENT
This Agreement supersedes all prior agreements and understandings relating
to the subject matter hereof. This Agreement also replaces and supercedes, with
respect to each Mortgage Loan, as of the related Closing Date, all of the terms
and conditions of any other servicing agreement to which the Servicer is bound
that purports to govern the servicing of any such Mortgage Loan. This Agreement
constitutes the entire agreement of the parties with respect to the subject
matter hereof.
44
SECTION 9.14. ATTORNEYS' FEES
If either party retains an attorney to enforce any of the provisions of
this Agreement, the prevailing party shall be entitled to reasonable attorneys'
fees from the other party, including, without limitation, fees incurred in
arbitration and in trial and appellate courts, fees incurred without suit, and
all arbitration, court and accounting costs.
SECTION 9.15. CONFIDENTIAL INFORMATION
Each party understands that certain information that has been furnished and
shall be furnished in connection with the transactions contemplated under this
Agreement is required by applicable law (including, without limitation, the
▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and the regulations promulgated thereunder) to be kept
confidential. Each party shall maintain the confidentiality of such information
and shall not, without the written consent of the party furnishing such
information, disclose it to third parties or use it except in connection with
the transactions contemplated by this Agreement or as permitted by applicable
law.
SECTION 9.16. NONSOLICITATION
The Servicer covenants and agrees that it shall not take any action to
solicit the refinancing of any Mortgage Loan following the date hereof or
provide information to any other entity to solicit the refinancing of any
Mortgage Loan; provided that, the foregoing shall not preclude the Servicer or
any of its affiliates from (a) engaging in general solicitations to its customer
base, including by mass mailing or as part of monthly or periodic statements
mailed to its borrowers or to holders of deposit or other accounts, which are
not specifically directed toward the Mortgagors, (b) engaging in solicitations
to the general public including without limitation by mass mailing, newspaper,
radio, television or other media which are not specifically directed toward the
Mortgagors, (c) engaging in solicitations of optional insurance or other bank
products (not including mortgage loans), (d) refinancing the Mortgage Loan of
any Mortgagor who, without solicitation, contacts the Servicer to request the
refinancing of the related Mortgage Loan, or (e) engaging in any action to
solicit the refinancing of any Mortgage Loan to the extent such action would be
permitted under the ▇▇▇▇▇▇ ▇▇▇ Selling Guide or the ▇▇▇▇▇▇ Mae Servicing Guide.
[signatures follow]
45
TO WITNESS THIS, the Servicer and the Owner have caused their names to be
signed to this Servicing Agreement by their respective officers duly authorized
as of the day and year first written above.
SERVICER:
WASHINGTON MUTUAL BANK
a federally chartered savings bank
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
OWNER:
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE LENDING INC.
a Delaware corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT A
FORM OF REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
To: [Name/Address of Owner]
Attention: _____________________________
Telephone: __________________
Facsimile: __________________
Re: Servicing Agreement dated as of __________, 200_ (the "Servicing
Agreement") between [_______________________________] (the "Owner")
and Washington Mutual Bank (the "Servicer")
In connection with the administration of the Mortgage Loans that we service
on your behalf pursuant to the Servicing Agreement, we request the release, and
acknowledge receipt of the Collateral File/[specify documents]) for the Mortgage
Loan described below, for the reason indicated.
Mortgagor's Name, Address and Zip Code:
Mortgage Loan Number: ______________
Reason for Requesting Documents: (check one)
_____ 1. Mortgage Loan paid in full. (The Servicer hereby certifies that
all amounts received in connection therewith have been credited
to the Account as provided in the Servicing Agreement.)
_____ 2. Mortgage Loan in foreclosure.
_____ 3. Repurchase. (The Servicer hereby certifies that the repurchase
price has been credited to the Account.)
_____ 4. Mortgage Loan liquidated by __________________________. (The
Servicer hereby certifies that all proceeds of the foreclosure,
insurance, condemnation or other liquidation have been finally
received and credited to the Account pursuant to the Servicing
Agreement.)
_____ 5. Other (Explain): _______________________________________________
A-1
If box 1, 2 or 3 above is checked, and if all or part of the Collateral
File was previously released to us, please release to us our previous request
and receipt on file with you, as well as any additional documents in your
possession relating to the specified Mortgage Loan.
If box 4 or 5 above is checked, upon our return of all of the above
documents to you, please acknowledge your reception by signing in the space
indicated below and returning this form.
WASHINGTON MUTUAL BANK
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Acknowledgment of Documents
returned to the Owner:
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE LENDING INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Date:
-------------------------------
A-2
EXHIBIT B
ACCOUNT LETTER AGREEMENT
_______________, ______
To:
_________________________________
_________________________________
_________________________________
_________________________________
(the "Depository")
As the "Servicer" under the Servicing Agreement dated as of
_________________, 200_, between the Servicer and the Owner named therein (the
"Agreement"), we hereby authorize and request you to establish an account, as an
Account pursuant to Section 2.4 of the Agreement, to be designated as
"Washington Mutual Bank, in trust for ______________________, as Owner, and any
successor Owner." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. You may refuse any deposit that would
result in violation of the requirement that the account be fully insured as
described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
----------------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
The undersigned, as the "Depository," hereby certifies that the
above-described account has been established under Account Number
_________________, at the office of the Depository indicated above, and agrees
to honor withdrawals on such account as provided above. The full amount
deposited at any time in the account will be insured by the Federal Deposit
Insurance Corporation.
----------------------------------------
(Name of Depository)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
B-1
EXHIBIT C
ESCROW ACCOUNT LETTER AGREEMENT
_______________, ______
To:
_________________________________
_________________________________
_________________________________
_________________________________
(the "Depository")
As the "Servicer" under the Servicing Agreement dated as of
_________________, 200_, between the Servicer and the Owner named therein (the
"Agreement"), we hereby authorize and request you to establish an account, as an
Escrow Account pursuant to Section 2.6 of the Agreement, to be designated as
"Washington Mutual Bank, FA, in trust for ___________________________, as Owner,
and any successor Owner, and certain Mortgagors." All deposits in the account
pursuant to the Agreement shall be subject to withdrawal therefrom by order
signed by the Servicer. You may refuse any deposit that would result in
violation of the requirement that the account by fully insured as described
below. This letter is submitted to you in duplicate. Please execute and return
one original to us.
----------------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
The undersigned, as the "Depository," hereby certifies that the
above-described account has been established under Account Number
_________________, at the office of the Depository indicated above, and agrees
to honor withdrawals on such account as provided above. The full amount
deposited at any time in the account will be insured by the Federal Deposit
Insurance Corporation.
----------------------------------------
(Name of Depository)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
C-1
EXHIBIT D
FORM OF OFFICER'S CERTIFICATE
I, [name of certifying individual], a duly elected and acting officer of
Washington Mutual Bank (the "Servicer"), certify pursuant to Section 4.4(b) of
the Servicing Agreement dated as of ___________, 200_ (as from time to time
amended or replaced by a reconstituted servicing or other successor servicing
agreement, the "Servicing Agreement") between the Servicer and
[_________________________] (the "Owner") to the Owner and each other Person
entitled to receive servicing reports provided pursuant to Section 3.2(a) of the
Servicing Agreement (the "Servicing Reports"), each Person, if any, who
"controls" the Owner or such other Person within the meaning of the Securities
Act of 1933, as amended, and their respective officers and directors, with
respect to the calendar year immediately preceding the date of this Certificate
(the "Relevant Year"), as follows:
1. For purposes of this Certificate, "Relevant Information" means the
information in the certificate provided pursuant to Section 4.4(a) of the
Servicing Agreement (the "Annual Compliance Certificate") for the Relevant Year
and the information in all Servicing Reports provided by the Servicer during the
Relevant Year. Based on my knowledge, the Relevant Information, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein which is necessary to make the
statements made therein, in light of the circumstances under which such
statements were made, not misleading as of the last day of the Relevant Year.
2. The Relevant Information has been provided to those Persons entitled to
receive it.
3. I am responsible for reviewing the activities performed by the Servicer
under the Servicing Agreement during the Relevant Year. Based upon the review
required by the Servicing Agreement and except as disclosed in the Annual
Compliance Certificate or the accountants' statement provided pursuant to
Section 4.5, to the best of my knowledge, the Servicer has fulfilled its
obligations under the Servicing Agreement throughout the Relevant Year.
DATED as of ________ __, 200_.
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
D-1
EXHIBIT E
CONTENTS OF CREDIT FILE
With respect to each Mortgage Loan, unless otherwise agreed by the Servicer
and the Owner, the Credit File may include each of the following items, which
such items may be originals, copies or documents stored on microfilm or any
other comparable medium:
1. Survey of the Mortgaged Property, if available.
2. Each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy
(i.e., map or plat, restrictions, easements, sewer agreements,
home association declarations, etc.).
3. Evidence of a hazard insurance policy and, if required by law, a
flood insurance policy, with extended coverage of the hazard
insurance policy.
4. Mortgage Loan closing statement (Form HUD-1) and any other
truth-in-lending or real estate settlement procedure forms
required by law.
5. Residential loan application.
6. Verification of employment and income (if required pursuant to
the seller's underwriting criteria).
7. Verification of acceptable evidence of source and amount of down
payment (to the extent required under the seller's underwriting
guidelines).
8. Credit report on the Mortgagor(s) if applicable.
9. Residential appraisal report.
10. Photograph(s) of the property.
11. Executed disclosure statement.
12. Tax receipts, insurance premium receipts, ledger sheets, payment
records, insurance claim files and correspondence,
correspondence, current and historical computerized data files,
underwriting standards used for origination, and all other papers
and records developed or originated by the applicable seller or
others required to document the Mortgage Loan or to service the
Mortgage Loan.
13. The policy of title insurance, including any endorsements
thereto.
14. The executed Power of Attorney, if any.
E-1
15. The original Primary Mortgage Insurance Policy, if any.
E-2
EXHIBIT F
FORM OF CONFIRMATION AGREEMENT
This Confirmation Agreement (the "Confirmation Agreement") dated as of
__________, 200_ is by and between Washington Mutual Bank, FA, a savings bank
organized under the laws of the United States, in its capacity as servicer (the
"Servicer"), and __________, a __________, and its successors and assigns, in
its capacity as owner (the "Owner").
Reference is made to that certain Servicing Agreement (the "Servicing
Agreement"), dated as of _________, 200_, among the Servicer and the Owner, the
provisions of which are incorporated herein, as such terms may be modified or
supplemented. All capitalized terms shall have the meanings ascribed to them in
the Servicing Agreement, unless otherwise defined here.
1. As of the Closing Date (defined below), Washington Mutual Bank, FA shall
service the Mortgage Loans described on the Mortgage Loan Schedule attached
hereto as Schedule 1 (each a "Mortgage Loan," and collectively, the "Mortgage
Loans") for the benefit of the Owner and all subsequent transferees of the
Mortgage Loans in accordance with the terms and conditions of the Servicing
Agreement. The parties to this Confirmation Agreement hereby acknowledge and
agree that, with respect to each Mortgage Loan, the terms and conditions of the
Servicing Agreement shall replace and supercede, as of the Closing Date (defined
below), all of the terms and conditions of any other servicing agreement to
which the Servicer is bound that purports to govern the servicing of any such
Mortgage Loan.
2. For purposes of the Mortgage Loans to be serviced pursuant to this
Confirmation Agreement, the following terms shall have the following meanings:
Closing Date: [__________________________________]
Custodian: [__________________________________]
Cut-off Date: [__________________________________]
Servicing Fee Rate: [__________________________________]
3. This Confirmation Agreement may be executed in one or more counterparts
and by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts,
together, shall constitute one and the same agreement. This Confirmation
Agreement shall inure to the benefit of and be binding upon the Servicer, the
Owner and their respective successors and assigns.
4. This Confirmation Agreement shall be governed by and construed in
accordance with the laws of the State of New York (including Section 5-1401 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
without giving effect to conflict of laws principles other than Section 5-1401
of the New York General Obligations Law.
F-1
TO WITNESS THIS, the parties have caused their names to be signed by their
respective duly authorized officers as of the date first written above.
WASHINGTON MUTUAL BANK, FA
a federally chartered savings bank
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE LENDING INC.
a
--------------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
F-2
SCHEDULE 1
MORTGAGE LOANS
[INTENTIONALLY OMITTED]
Schedule 1 to Exhibit F
SCHEDULE I
MORTGAGE LOANS
[INTENTIONALLY OMITTED]
Mortgage Loan Schedule
Schedule 1