BARCLAYS BANK PLC, Agent, PHH MORTGAGE CORPORATION Seller and Servicer, and PHH CORPORATION, Guarantor AMENDED AND RESTATED SERVICING AGREEMENT dated as of October 29, 2007
Exhibit 10.2
BARCLAYS
BANK PLC,
Agent,
PHH
MORTGAGE CORPORATION
Seller
and Servicer,
and
PHH
CORPORATION,
Guarantor
AMENDED
AND RESTATED SERVICING AGREEMENT
dated
as of October 29, 2007
TABLE
OF CONTENTS
Page
|
DEFINITIONS
|
1
|
|
|
ARTICLE II
|
POSSESSION
OF MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY
OF
DOCUMENTS
|
1
|
|
Section
2.1
|
Possession
of Mortgage Loan Files; Maintenance of Mortgage Loan Files
|
1
|
|
Section
2.2
|
Books
and Records; Transfers of Eligible Mortgage Loans; Custodial
Agreement
|
2
|
|
Section
2.3
|
Servicer
Daily Calculation of Collateral Values and Aggregate Margin Value;
Agent
Calculation of Collateral Value and Aggregate Margin Value
|
3
|
|
Section
2.4
|
Protection
of Ownership Interest of the Agent (on behalf of the
Principals)
|
3
|
|
Section
2.5
|
Fees
|
4
|
|
Section
2.6
|
Payments
and Computations, Etc
|
4
|
|
ARTICLE III
|
REPRESENTATIONS
AND WARRANTIES; COVENANTS; REMEDIES AND BREACH
|
4
|
|
Section
3.1
|
Representations
and Warranties of The Company
|
4
|
|
Section
3.2
|
[Reserved]
|
7
|
|
Section
3.3
|
Remedies
for Breach of Representations and Warranties
|
7
|
|
Section
3.4
|
Covenants
|
7
|
|
ARTICLE IV
|
ADMINISTRATION
AND SERVICING OF ELIGIBLE LOANS
|
8
|
|
Section
4.1
|
The
Company to Act as Servicer; Servicing and Administration of the
Eligible
Mortgage Loans
|
8
|
|
Section
4.2
|
Sales
and Securitizations
|
10
|
|
Section
4.3
|
Liquidation
of Eligible Mortgage Loans
|
10
|
|
Section
4.4
|
Collection
of Eligible Mortgage Loan Payments
|
10
|
|
Section
4.5
|
Establishment
of, and Deposits to, Funding Account and Collection
Account
|
11
|
|
Section
4.6
|
Permitted
Withdrawals From Margin Call Account
|
11
|
|
Section
4.7
|
Establishment
of, and Deposits to, Escrow Account
|
11
|
|
Section
4.8
|
Permitted
Withdrawals From Escrow Account
|
12
|
|
Section
4.9
|
Payment
of Taxes, Insurance and Other Charges
|
13
|
|
Section
4.10
|
Protection
of Accounts; Investment of Funds
|
13
|
|
Section
4.11
|
Maintenance
of Hazard Insurance
|
13
|
|
Section
4.12
|
Maintenance
of Mortgage Impairment Insurance
|
15
|
|
Section
4.13
|
Maintenance
of Fidelity Bond and Errors and Omissions Insurance
|
15
|
|
Section
4.14
|
Inspections
|
15
|
|
Section
4.15
|
Restoration
of Mortgaged Property
|
15
|
|
Section
4.16
|
Maintenance
of PMI Policy; Claims
|
16
|
TABLE
OF CONTENTS
(continued)
Page
|
Section
4.17
|
Title,
Management and Disposition of REO Property
|
17
|
|
Section
4.18
|
Daily
Servicer Reports
|
17
|
|
Section
4.19
|
Real
Estate Owned Reports
|
18
|
|
Section
4.20
|
Liquidation
Reports
|
18
|
|
Section
4.21
|
Reports
of Foreclosures and Abandonments of Mortgaged Property
|
18
|
|
ARTICLE V
|
GENERAL
SERVICING PROCEDURES
|
18
|
|
Section
5.1
|
Transfers
of Mortgaged Property
|
18
|
|
Section
5.2
|
Satisfaction
of Mortgages and Release of Mortgage Loan Files
|
19
|
|
Section
5.3
|
Servicing
Compensation
|
19
|
|
Section
5.4
|
Annual
Statement as to Compliance
|
19
|
|
Section
5.5
|
Annual
Independent Public Accountants’ Servicing Report; Audited
Financials
|
20
|
|
Section
5.6
|
Right
to Examine Servicer Records
|
21
|
|
ARTICLE VI
|
REPURCHASE
OBLIGATION
|
21
|
|
Section
6.1
|
Servicer’s
Purchase Obligations
|
21
|
|
ARTICLE VII
|
SERVICER
TO COOPERATE
|
21
|
|
Section
7.1
|
Provision
of Information
|
21
|
|
ARTICLE VIII
|
THE
SERVICER
|
22
|
|
Section
8.1
|
Indemnification
of Third-Party Claims
|
22
|
|
Section
8.2
|
Corporate
Existence of the Servicer
|
22
|
|
Section
8.3
|
Limitation
on Liability of Servicer and Others
|
22
|
|
Section
8.4
|
Limitation
on Resignation and Assignment by the Servicer
|
23
|
|
Section
8.5
|
Limitation
on Assignment of Right
|
23
|
|
ARTICLE IX
|
SERVICER
DEFAULT
|
23
|
|
Section
9.1
|
Servicer
Default
|
23
|
|
Section
9.2
|
Waiver
of Defaults
|
25
|
|
ARTICLE X
|
TERMINATION
AND LIQUIDATION
|
26
|
|
Section
10.1
|
Termination
of Agreement
|
26
|
|
Section
10.2
|
Termination
of Servicing With Respect to Any Eligible Mortgage Loan
|
26
|
|
ARTICLE XI
|
[RESERVED]
|
26
|
|
ARTICLE XII
|
MISCELLANEOUS
PROVISIONS
|
26
|
|
Section
12.1
|
Successor
to Servicer
|
26
|
|
Section
12.2
|
Amendment
|
27
|
|
Section
12.3
|
Governing
Law
|
27
|
TABLE
OF CONTENTS
(continued)
Page
|
Section
12.4
|
Duration
of Agreement
|
27
|
|
Section
12.5
|
Notices
|
28
|
|
Section
12.6
|
Severability
of Provisions
|
28
|
|
Section
12.7
|
Relationship
of Parties
|
28
|
|
Section
12.8
|
Execution;
Successors and Assigns
|
28
|
|
Section
12.9
|
Recordation
of Assignments of Mortgage
|
28
|
|
Section
12.10
|
[RESERVED]
|
29
|
|
Section
12.11
|
[RESERVED]
|
29
|
|
Section
12.12
|
Waiver
of Offset
|
29
|
|
ARTICLE XIII
|
PHH
CORPORATION GUARANTEE
|
29
|
|
Section
13.1
|
Guarantee
of Seller’s Representations and Warranties, Servicer’s Performance and
Payment Obligations
|
29
|
THIS
AMENDED AND RESTATED SERVICING AGREEMENT, dated as of October 29,
2007 (as amended, supplemented or otherwise modified and in effect from time
to
time, this “Agreement”), among PHH Mortgage Corporation, a New Jersey
corporation (the “Company”), as Seller (in such capacity, the
“Seller”) and as Servicer (in such capacity, the “Servicer”),
Barclays Bank PLC, as Agent (the “Agent”), and PHH Corporation, a
Maryland corporation, as Performance Guarantor of the Servicer’s obligations
(the “Performance Guarantor”).
W
I T N E S S E T H
WHEREAS,
the Seller, the Agent and the other parties from time to time thereto are
parties to that certain Sixth Amended and Restated Master Repurchase Agreement,
dated as of the date hereof (as amended, supplemented or otherwise modified
and
in effect from time to time, “Repurchase Agreement”) pursuant to which
such parties have prescribed the manner of sale of each Eligible Mortgage Loan
and the Related Security;
WHEREAS,
the parties hereto have entered into that certain Servicing Agreement, dated
as
of October 30, 2006 (as amended, supplemented or otherwise modified prior to
the
date hereof, the “Original Servicing Agreement”) which prescribes the
management, control and servicing of the mortgage loans purchased under the
Repurchase Agreement and the guaranty by the Performance Guarantor of the
performance of the obligations of the Servicer;
WHEREAS,
the parties hereto desire to amend and restate the Original Servicing
Agreement in its entirety and contemporaneously therewith enter into the other
Transaction Documents (as such term is defined in the Repurchase Agreement)
to
prescribe for the management, control and servicing of the Eligible Mortgage
Loans and the guaranty by the Performance Guarantor of the performance of the
obligations of the Servicer. Upon the effectiveness of this
Agreement, each reference to the Original Servicing Agreement in any other
document, instrument or agreement shall mean and be a reference to this
Agreement. Nothing contained herein, unless expressly herein stated
to the contrary, is intended to amend, modify or otherwise affect any other
instrument, document or agreement executed and/or delivered in connection with
the Original Servicing Agreement; and
NOW,
THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Capitalized
terms used, but not otherwise defined herein, are used as defined in the
Repurchase Agreement.
ARTICLE II
POSSESSION
OF MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF
DOCUMENTS
Section
2.1 Possession
of Mortgage Loan Files; Maintenance of Mortgage Loan Files.
Pursuant
to Section 2.2(b), Seller shall deliver each Mortgage Note, including
Mortgage Notes on Wet Funded Loans, to the Custodian as soon as practicable,
but
in any event within 10 calendar days of the purchase (or if such 10th calendar
day is not a Business Day, then on the immediately succeeding Business Day)
by
the Agent and, if any Mortgage Note is not delivered within 10 calendar days
of
the purchase (or if such 10th calendar day is not a Business Day, then on the
immediately succeeding Business Day) by the Agent, it shall be repurchased
on
such 10th calendar day (or if such 10th calendar day is not a Business Day,
then
on the immediately succeeding Business Day) by Seller at the Repurchase
Price. The Seller shall deliver the related Loan Documents to the
Servicer and the contents of each Mortgage Loan File shall be held in trust
by
the Servicer for the benefit of the Principals. The possession of
each Mortgage Loan File by the Servicer is at the will of the Agent for the
sole
purpose of servicing the related Eligible Mortgage Loan and such retention
and
possession by the Servicer is in a custodial capacity only. Upon the
sale of the Eligible Mortgage Loans, each Mortgage Note, the related Mortgage,
the Related Security and all Collections and the related Mortgage Loan File
shall vest immediately in the Agent (on behalf of the Principals), and the
ownership of all records and documents with respect to the related Eligible
Mortgage Loan prepared by or which come into the possession of the Servicer
shall vest immediately in the Agent (on behalf of the Principals) and shall
be
retained and maintained by the Servicer, in trust, at the will of the Agent
(on
behalf of the Principals) and only in such custodial capacity. The
Servicer’s master data processing records shall be marked appropriately to
reflect clearly the transfer of the related Eligible Mortgage Loans to the
Agent
(on behalf of the Principals). The Custodian shall only release its
custody of the contents of any Mortgage Loan File in its possession in
accordance with the Custodial Agreement.
Section
2.2 Books
and Records; Transfers of Eligible Mortgage Loans; Custodial
Agreement.
(a) From
and
after each related Purchase Date, all rights arising with respect to the
Eligible Mortgage Loans transferred (not including (i) servicing rights
with respect to the Eligible Mortgage Loans, which shall be retained by the
Servicer subject to the terms of the Repurchase Agreement or (ii) the
Seller’s obligation to fund future advances for any HELOC pursuant to the
related Home Equity Line Agreement up to the Credit Limit) pursuant to any
Transaction Notice including but not limited to all funds received on or in
connection with the Eligible Mortgage Loans, shall be received and held by
the
Servicer in trust for the benefit of the Agent (on behalf of the Principals
and
shall be applied in accordance with Section 6 of the Repurchase
Agreement). Pursuant to the Custodial Agreement, the Custodian shall
hold all of the Mortgage Notes as described in such Custodial
Agreement.
2
The
Servicer shall be responsible for maintaining, and shall maintain, a complete
set of books and records for each Eligible Mortgage Loan which shall be marked
clearly to reflect the transfer of each Eligible Mortgage Loan to the Agent
(on
behalf of the Principals). In particular, the Servicer shall maintain
in its possession, available for inspection by the Agent, the Principals or
their respective designees, evidence of compliance with applicable laws, rules
and regulations. To the extent that original documents are not required for
purposes of realization of Liquidation Proceeds, Insurance Proceeds, VA Guaranty
Proceeds, FHA Proceeds or Securitization proceeds, documents maintained by
the
Servicer may be in the form of microfilm or microfiche or such other reliable
means of recreating original documents, including but not limited to, optical
imagery techniques so long as the Servicer complies with the requirements of
the
Guidelines.
The
Servicer shall maintain with respect to each Eligible Mortgage Loan and shall
make available for inspection, upon reasonable advance notice, at the offices
of
the Servicer during normal business hours by the Agent, any Principal or any
of
their respective designees the related Mortgage Loan File during the time the
Agent retains ownership of an Eligible Mortgage Loan and thereafter in
accordance with applicable laws and regulations.
(b) Pursuant
to the Custodial Agreement, the Seller shall deliver each Mortgage Note,
including Mortgage Notes on Wet Funded Loans, to the Custodian as soon as
practicable, but in any event within 10 calendar days of the purchase (or if
such 10th calendar day is not a Business Day, then on the immediately succeeding
Business Day) by the Agent and, if any Mortgage Note is not delivered within
10
calendar days of the purchase (or if such 10th calendar day is not a Business
Day, then on the immediately succeeding Business Day) by the Agent, it shall
be
repurchased on such 10th calendar day (or if such 10th calendar day is not
a
Business Day, then on the immediately succeeding Business Day) by Seller at
the
Repurchase Price. The Custodian shall hold all Mortgage Notes in
trust as agent for the Agent (on behalf of the Principals).
Section
2.3 Servicer
Daily Calculation of Collateral Values and Aggregate Margin Value; Agent
Calculation of Collateral Value and Aggregate Margin Value.
(a) The
Servicer shall, before 4 p.m. (eastern time) on each Business Day, provide
a transmission of the Collateral Value and Aggregate Margin Value of the
Eligible Mortgage Loans at such time to the Agent. Such transmission
shall be in a form mutually agreed upon by the Servicer and the Agent at such
times in all material respects.
(b) The
Agent
shall provide, at least once per calendar month, but as often as the Agent
deems
necessary, before noon (eastern time) on any Business Day, a transmission of
the
aggregate Collateral Value of the Eligible Mortgage Loans (as determined by
the
Agent or its designee) and the Aggregate Margin Value (as determined by the
Agent or its designee) at such time to the Servicer. Such
transmission shall be in a form mutually agreed upon by the Agent and the
Servicer at such times in all material respects. In connection with
the foregoing, the Servicer shall promptly deliver to the Agent (for its use
and
for use by any third party that the Agent selects to calculate the aggregate
Collateral Value and the Aggregate Margin Value) any books, records, documents,
data tapes or diskettes or other information relating to the Eligible Mortgage
Loans as the Agent may reasonably request.
3
Section
2.4 Protection
of Ownership Interest of the Agent (on behalf of the
Principals).
The
Servicer agrees that it will from time to time, at its expense, promptly execute
and deliver all instruments and documents and take all actions as may be
necessary or as the Agent may reasonably request in order to perfect or protect
the interest of the Agent (on behalf of the Principals) in the Eligible Mortgage
Loans or to enable the Agent or the Principals to exercise or enforce any of
their respective rights hereunder. Without limiting the foregoing,
the Seller will upon the request of the Agent or any of the Principals, in
order
to accurately reflect any assignment, transfer and conveyance transaction under
the Repurchase Agreement, authorize and file such financing or continuation
statements or amendments thereto or assignments thereof as may be
requested by the Agent or any of the Principals. The Servicer shall
upon request of the Agent or any of the Principals obtain such additional search
reports as the Agent or any of the Principals shall request. To the
fullest extent permitted by applicable law, the Agent shall be permitted to
file
continuation statements and amendments thereto and assignments thereof without
the Seller’s signature. Carbon, photographic or other reproduction of
this Agreement or any financing statement shall be sufficient as a financing
statement.
The
Servicer agrees that it will at its expense, on or prior to the related Purchase
Date indicate clearly and unambiguously in its master data processing records
that the Eligible Mortgage Loans have been conveyed to the Agent, for the
benefit of the Principals pursuant to the Repurchase Agreement. The
Servicer further agrees to deliver to the Agent a computer file or microfiche
list containing a true and complete list of all such Eligible Mortgage Loans,
identified by loan number and by Outstanding Principal Balance as of the related
Purchase Date. The Servicer agrees to deliver to the Agent within
five (5) Business Days of the request therefor by the Agent a
computer file or microfiche list containing a true and complete list of all
Eligible Mortgage Loans in existence as of the last day of the prior Due Period,
identified by loan number and by Outstanding Principal Balance as of the last
day of the prior Due Period. The Servicer agrees, on behalf of the
Seller, at its own expense, by the end of each Due Period in which any Eligible
Mortgage Loans have been originated to indicate clearly and unambiguously in
its
master data processing records that the Eligible Mortgage Loans created have
been conveyed to the Agent, for the benefit of the Principals, pursuant to
the
Repurchase Agreement.
Section
2.5 Fees.
The
Seller shall pay the non-refundable fees set forth in the Fee
Letter. Any of the fees described in the Fee Letter which are accrued
but unpaid on the Termination Date shall be paid in full by the Seller on the
Termination Date.
4
Section
2.6 Payments
and Computations, Etc.
All
per
annum fees payable under this Agreement shall be calculated for the actual
days
elapsed on the basis of a 360-day year. All amounts to be paid or
deposited by the Seller or the Servicer hereunder shall be paid or deposited
in
accordance with the terms hereof in immediately available funds no later than
2:00 p.m. (eastern time) on the day when due; if such amounts are payable
to any Principal or Principals they shall be paid or deposited in the Funding
Account unless otherwise notified by the Agent. The Seller shall, to
the extent permitted by Law, pay to the Agent for the account of each Principal
upon demand of the Agent, interest on all amounts not paid or deposited when
due
to the Agent for the account of each Principal hereunder at a rate equal to
the
Default Rate. All computations of interest hereunder shall be made on
the basis of a year of 360 days for the actual number of days (including the
first but excluding the last day) elapsed other than computations of interest
calculated by reference to the Base Rate which shall be calculated on the basis
of a 365- or 366- day year, as applicable.
ARTICLE III
REPRESENTATIONS
AND WARRANTIES; COVENANTS; REMEDIES AND BREACH
Section
3.1 Representations
and Warranties of The Company.
The
Company, as Seller and Servicer, represents and warrants to the Agent (and
for
the benefit of the Principals) that as of each applicable Purchase Date and
as
of the date of the sale or Securitization of each Eligible Mortgage
Loan:
(a) Due
Organization and Authority. The Company is duly organized,
validly existing and in good standing under the laws of New Jersey and has
all
licenses necessary to carry on its business as now being conducted and is
licensed, qualified and in good standing in each state where a Mortgaged
Property is located if required to conduct business of the type conducted by
it,
and in any event the Company is in compliance with the laws of any such state
to
the extent necessary to ensure the enforceability of any Eligible Mortgage
Loan
sold hereunder and the servicing of any such Eligible Mortgage Loan in
accordance with the terms of this Agreement and any Transaction Notice; the
Company has the full power and authority to execute and deliver this Agreement
and any Transaction Notice and to perform its obligations in accordance herewith
and therewith; the execution, delivery and performance of this Agreement and
any
Transaction Notice by the Company and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Company; all requisite corporate action has been taken by the Company to make
this Agreement and any Transaction Notice valid and binding upon the Company
in
accordance with its terms; this Agreement and any Transaction Notice each
evidences the valid, binding and enforceable obligation of the Company, except
that (i) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors’ rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefore may be brought.
(b) Ordinary
Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Company, and the transfer, assignment and conveyance of the Mortgage Notes
and
the Mortgages by the Company pursuant to this Agreement are not subject to
the
bulk transfer or any similar statutory provisions in effect in any applicable
jurisdiction.
5
(c) No
Conflicts. Neither the execution and delivery of this Agreement
or any Transaction Notice, the acquisition of Eligible Mortgage Loans by the
Company, the sale of Eligible Mortgage Loans to the Agent (on behalf of the
Principals) or the transactions contemplated hereby or thereby, nor the
fulfillment of or compliance with the terms and conditions of this Agreement
or
any Transaction Notice, will conflict with or result in a breach of any of
the
terms, conditions or provisions of the Company’s charter or by-laws or any
material agreement or instrument to which the Company is now a party or by
which
it is bound, or constitute a default or result in an acceleration under any
of
the foregoing, or result in the violation in any material respect of any
applicable law, rule, regulation, order, judgment or decree to which the Company
or its property is subject, or impair the ability of the Agent (on behalf of
the
Principals) to realize on the Eligible Mortgage Loans in any material respect,
or impair the value of the Eligible Mortgage Loans in any material respect,
or
impair in any material respect the ability of the Agent (on behalf of the
Principals) to realize the full mortgage insurance benefits (i) of the FHA
Mortgage Insurance Contract with respect to FHA Loans; (ii) of the VA Loan
Guaranty Certificate with respect to VA Loans; or (iii) other insurance
benefits accruing pursuant to this Agreement, including but not limited to
any
PMI Policy.
(d) Ability
to Service. The Company is an Approved Seller/Servicer of
Eligible Mortgage Loans for at least two of GNMA, FNMA and FHLMC with the
facilities, procedures, and experienced personnel necessary for the servicing
of
Eligible Mortgage Loans. The Company is in good standing to sell
mortgage loans to and service mortgage loans for at least two of GNMA, FNMA
and
FHLMC and no event has occurred, including but not limited to a change in
insurance coverage, which would make the Company unable to comply with the
eligibility requirements in all material respects of at least two of GNMA,
FNMA
and FHLMC. As of each Purchase Date, the Company is an FHA Approved
Mortgagee and a VA Approved Lender and has the facilities, procedures, and
experienced personnel necessary for the servicing of mortgage loans of the
same
type as the Eligible Mortgage Loans. As of each Purchase Date, the
Company is in good standing to service mortgage loans for FHA and VA, and no
event has occurred, including but not limited to a change in insurance coverage,
which would make the Company unable to comply with FHA or VA eligibility
requirements in all material respects.
(e) Reasonable
Servicing Fee. The Servicer acknowledges and agrees that the
Servicing Fee represents reasonable compensation for performing such services
as
compensation for the servicing and administration and arranging for the sale
or
Securitization of the Eligible Mortgage Loans pursuant to this Agreement and,
if
paid shall be treated by the Servicer, for accounting and tax purposes, as
compensation for the servicing and administration of the Eligible Mortgage
Loans
pursuant to this Agreement. As of the date hereof, the Seller does
not, and is not expected at a later date to, pay any Servicing Fee to any
Servicer party hereto on the date this Servicing Agreement was first executed
and delivered. However, the Seller is expected to pay Servicing Fees
to any Servicer who is not an Affiliate of the Seller.
6
(f) No
Litigation Pending. There is no action, suit, proceeding or
investigation pending or to its knowledge threatened against the Company which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties
or
assets of the Company, or in any material impairment of the right or ability
of
the Company to carry on its business substantially as now conducted, or in
any
material liability on the part of the Company, or which would draw into question
the validity of this Agreement or any Transaction Notice or the Eligible
Mortgage Loans or of any action taken or to be taken in connection with the
obligations of the Company contemplated herein, or which would be likely to
impair materially the ability of the Company to perform under the terms of
this
Agreement or any Transaction Notice.
(g) No
Consent Required. No consent, approval, authorization or order of
any court or governmental agency or body including, without limitation, HUD,
FHA
or VA, is required for the execution, delivery and performance by the Company
of
or compliance by it with this Agreement or any Transaction Notice or the sale
of
the Eligible Mortgage Loans, or if required, such consent, approval or
authorization has been obtained.
(h) No
Untrue Information. Neither this Agreement, any Transaction
Notice nor any statement, report or other document prepared by the Seller or
to
be prepared by the Company pursuant to this Agreement or any other Transaction
Document or in connection with the transactions contemplated hereby or thereby
contains any untrue statement of a material fact relating to the Company or
the
Eligible Mortgage Loans or omits to state a fact necessary to make the
statements herein or therein not materially misleading.
(i) Ability
to Perform. The Company does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement and each other Transaction Document in all material
respects. The Company is solvent and the sale of the Eligible
Mortgage Loans is not undertaken to hinder, delay or defraud any of the
Company’s creditors.
Section
3.2 [Reserved].
Section
3.3 Remedies
for Breach of Representations and Warranties.
It
is
understood and agreed that the representations and warranties set forth in
Section 3.1 shall survive the sale of the Eligible Mortgage Loans to the
Agent (on behalf of the Principals) and the delivery of the Loan Documents
to
the Servicer and delivery of the Mortgage Notes to the Custodian and shall
inure
to the benefit of the Agent (on behalf of the Principals) notwithstanding any
restrictive or qualified endorsement on any Mortgage Note or Assignment of
Mortgage or the examination or failure to examine any Mortgage Loan
File. Upon discovery by either the Seller, the Servicer or the Agent
(on behalf of the Principals) of a breach of any of the foregoing
representations and warranties which materially and adversely affects the value
of the Eligible Mortgage Loans or the interest of the Agent (on behalf of the
Principals) (or which materially and adversely affects the interest of the
Agent
(on behalf of the Principals) in the related Eligible Mortgage Loan in the
case
of a representation and warranty relating to a particular Eligible Mortgage
Loan), the party discovering such breach shall give prompt written notice to
the
other, the Agent and the Principals.
7
Section
3.4 Covenants.
(a) Licenses. The
Servicer shall maintain its qualifications to do business and all licenses
necessary to perform its obligations hereunder.
(b) Servicing
Standards/Sales and Securitizations. The Servicer will administer
and service Eligible Mortgage Loans, and arrange for the sale and Securitization
of Eligible Mortgage Loans, in accordance with the terms of this Agreement,
the
Mortgage Notes and Accepted Servicing Practices.
(c) Delivery
of Mortgage Note. The Servicer shall deliver each Mortgage Note,
including Mortgage Notes on Wet Funded Loans, to the Custodian as soon as
practicable, but in any event within 10 calendar days of the purchase (or if
such 10th calendar day is not a Business Day, then on the immediately succeeding
Business Day) by the Agent and, if any Mortgage Note is not delivered within
10
calendar days of the purchase (or if such 10th calendar day is not a Business
Day, then on the immediately succeeding Business Day) by the Agent, it shall
be
repurchased on such 10th calendar day (or if such 10th calendar day is not
a
Business Day, then on the immediately succeeding Business Day) by Servicer
at
the Repurchase Price.
(d) Assignment. The
Servicer shall assign to the Agent all right, title and interest of the Company
under the Additional Collateral Transaction Agreement with respect to Additional
Collateral Mortgage Loans transferred.
(e) Back-up
Servicer. On or prior to November 30, 2007, the Servicer shall
have appointed a back-up servicer, who shall be mutually satisfactory to Agent
and the Servicer, and such back-up servicer, the Servicer and Agent shall have
executed and delivered the Back-up Servicing Agreement (as such term is defined
in the Repurchase Agreement), together with any other documents, certificates
and opinions incidental thereto, unless such date is extended in writing by
Agent in its reasonable discretion.
(f) [Reserved].
(g) Financial
Covenants. For so long as any amount shall remain outstanding or
unpaid under the Repurchase Agreement, unless the Required Principals shall
otherwise consent in writing, the Company shall not, directly or indirectly,
(i) permit PHH Corporation’s Consolidated Net Worth on the last day of any
fiscal quarter to be less than the sum of (A) $1,000,000,000 plus
(B) 25% of Consolidated Net Income, if positive, for each fiscal quarter
ended after December 31, 2004; or (ii) permit, at any time, the ratio
of Indebtedness of PHH Corporation and its Subsidiaries to Tangible Net Worth
to
exceed 10.0 to 1.0.
8
ARTICLE IV
ADMINISTRATION
AND SERVICING OF ELIGIBLE LOANS
Section
4.1 The
Company to Act as Servicer; Servicing and Administration of the Eligible
Mortgage Loans.
(a) The
Company, as an independent contractor and owner of the servicing rights to
the
Eligible Mortgage Loans, shall diligently service and administer the Eligible
Mortgage Loans, and shall comply with the Eligibility Criteria, the Portfolio
Criteria, Portfolio Aging Limitations and Wet Funded Loan Limitation, in the
best interest of and for the benefit of the Agent and the Principals in
accordance with applicable law, the terms of this Agreement and the terms of
the
respective Eligible Mortgage Loans, with a view to the maximization of timely
recovery of principal and interest on the Mortgage Notes. Except to
the extent that this Agreement provides for a contrary specific course of
action, the Servicer will be required to service and administer the Eligible
Mortgage Loans (y) in the same manner in which, and with the same care,
skill, prudence and diligence with which it services and administers similar
mortgage loans for other third-party portfolios, giving due consideration to
customary and usual standards of practice of prudent institutional residential
mortgage loan servicers used with respect to loans comparable to the Eligible
Mortgage Loans, or (z) in the same manner in which, and with the same care,
skill, prudence and diligence with which, it services and administers similar
mortgage loans which it owns, whichever standard of care is higher, and taking
into account its other obligations under this Agreement, but without regard
to
(i) any other relationship that Servicer, any sub-servicer or any affiliate
of the Servicer or any sub-servicer may have with the borrowers or any affiliate
of such borrowers; (ii) the ownership of any interest in an Eligible
Mortgage Loan by the Servicer or any affiliate; (iii) the Servicer’s
obligations to incur servicing expenses with respect to the Eligible Mortgage
Loans; (iv) the Servicer’s or any sub-servicer’s right to receive
compensation for its services under this Agreement or with respect to any
particular transaction; or (v) the ownership, servicing or management for
others by the Servicer or any sub-servicer of any other mortgage loans or
property. The Servicer shall maintain its qualification to do
business and all licenses necessary to perform its obligations
hereunder.
(b) The
Servicer shall be obligated to service and administer the Eligible Mortgage
Loans. The Servicer may enter into additional servicing or
sub-servicing agreements with third parties with respect to any of its
respective obligations hereunder, provided that any such agreement shall be
consistent with the provisions of this Agreement and no sub-servicer (or its
agent or subcontractors) shall grant any modification, waiver or amendment
to
any Eligible Mortgage Loan without the approval of the
Servicer. Notwithstanding any servicing or sub-servicing agreement,
any of the provisions of this Agreement relating to agreements or arrangements
between the Servicer and any Person acting as servicer or sub-servicer (or
its
agents or subcontractors) or any reference to action taken through any Person
acting as servicer or sub-servicer or otherwise, the Servicer shall remain
obligated and primarily liable to the Agent (on behalf of the Principals) for
the servicing and administering of the Eligible Mortgage Loans and arranging
for
the sale and Securitization of the Eligible Mortgage Loans in accordance with
the provisions of this Agreement without diminution of such obligation or
liability by virtue of such servicing or sub-servicing agreements or
arrangements or by virtue of indemnification from any Person acting as servicer
or sub-servicer (or its agents or subcontractors) to the same extent and under
the same terms and conditions as if the Servicer alone were engaging in such
activities. In the event the Servicer is a sub-servicer, the Agent
(on behalf of the Principals) shall be entitled to proceed directly against
the
Servicer as sub-servicer to enforce the Servicer’s obligations to the Agent (on
behalf of the Principals).
9
(c) Subject
to the above-described servicing standards, the further provisions of this
Agreement, including but not limited to the Wet Funded Loan Limitation, the
Eligibility Criteria, the Portfolio Criteria and Portfolio Aging Limitation,
and
the terms of the respective Eligible Mortgage Loans, the Servicer shall have
full power and authority, acting alone, to do or cause to be done any and all
things in connection with such servicing and administration that it may deem
necessary or desirable in connection with the servicing and administration
of
the Eligible Mortgage Loans. Without limiting the generality of the
foregoing, the Servicer is hereby authorized and empowered to waive,
modify or vary any term of any Eligible Mortgage Loan or consent to the
postponement of compliance with any such term or in any manner grant indulgence
to any Borrower if in the Servicer’s reasonable and prudent determination such
waiver, modification, postponement or indulgence is not materially adverse
to
the Agent or any of the Principals; provided, however, that the Servicer shall
not make any future advances to a Borrower with respect to an Eligible Mortgage
Loan and (unless the Borrower is in default with respect to the Eligible
Mortgage Loan or such default is, in the judgment of the Servicer, imminent)
the
Servicer shall not permit any modification with respect to any Eligible Mortgage
Loan that would change the interest rate for the related Mortgage, defer or
forgive the payment of principal or interest, reduce or increase the outstanding
principal balance (except for actual payments of principal), release any
collateral from the Eligible Mortgage Loan or change the final maturity date
on
such Eligible Mortgage Loan. Without limiting the generality of the
foregoing, the Servicer shall continue, and is hereby authorized and empowered,
to execute and deliver on behalf of itself and the Agent all instruments of
satisfaction or cancellation, or of partial or full release, discharge and
all
other comparable instruments, with respect to the Eligible Mortgage Loans and
with respect to the Mortgaged Properties. If reasonably required by
the Servicer, the Principals shall furnish the Servicer with any powers of
attorney, in recordable form, and other documents necessary or appropriate
to
enable the Servicer to carry out its servicing and administrative duties under
this Agreement.
Section
4.2 Sales
and Securitizations.
Subject
to the servicing standards described in Section 4.1, the Servicer shall
have full power and authority, acting alone, to do or cause to be done any
and
all things in connection with such servicing and administration that it may
deem
necessary and desirable in connection with the sale and/or Securitization of
Eligible Mortgage Loans with the Seller or third-party purchasers. In
connection with any Securitization of Eligible Mortgage Loans, in the event
the
Agent (on behalf of the Principals) receives securities from the Securitization
Vehicle in exchange for the Eligible Mortgage Loans subject to such
Securitization (“Securitization Securities”), the Servicer shall, on
behalf of the Agent (on behalf of the Principals), arrange for the sale of
such
Securitization Securities. The Servicer shall use its best efforts to
realize for the Agent (on behalf of the Principals) the market value for the
Securitization Securities but shall have no liability to the Principals with
respect to any Securitization or Securitization Security provided that the
Servicer arranges for such Securitization or sale in good faith in accordance
with the procedures utilized by the Servicer in connection with any
Securitization and Securitization Securities held for its own
account. The share of the proceeds of sale of any Securitization
Security due the Principals and the proceeds of sale of any whole loan will
be
remitted to the Collection Account for application in accordance with the
Repurchase Agreement.
10
All
mortgage loans not sold or transferred pursuant to a sale or Securitization
shall continue to be serviced in accordance with the terms of this
Agreement.
Section
4.3 Liquidation
of Eligible Mortgage Loans.
In
the
event that any payment due under any Eligible Mortgage Loan is not paid when
the
payment becomes due and payable, or in the event that the Borrower fails to
perform any other covenant or obligation under the Eligible Mortgage Loan and
such failure continues beyond any applicable grace period, the Servicer shall
take such action as (1) the Servicer would take under similar circumstances
with respect to a similar Eligible Mortgage Loan held for its own account for
investment, (2) shall be consistent with Accepted Servicing Practices,
(3) the Servicer shall determine in accordance with Accepted Servicing
Practices to be in the best interest of the Agent and the Principals, and
(4) is consistent with the related PMI Policy, if any; provided,
however, any Defaulted Loan will be sold by the Servicer on behalf
of the
Principals as soon as practicable after becoming a Defaulted Loan.
Section
4.4 Collection
of Eligible Mortgage Loan Payments.
The
Servicer shall proceed diligently, in accordance with Accepted Servicing
Practices, to collect all payments called for under the terms and provisions
of
the Eligible Mortgage Loans it is obligated to service hereunder and shall
follow such collection procedures as are consistent with the Transaction
Documents (including without limitation, the servicing standards set forth
in
Section 4.1 hereof). The Servicer shall ascertain and estimate,
in accordance with Accepted Servicing Practices, Escrow Payments and all other
charges that will become due and payable with respect to the Eligible Mortgage
Loans and the Mortgaged Property, to the end that the installments payable
by
the Borrowers will be sufficient to pay such charges as and when they become
due
and payable. The Servicer shall segregate and hold all payments
received by it separate and apart from any of its funds and general assets
and
in trust for the Principals and shall apply such payments as provided in the
Repurchase Agreement. The accounts established by the Servicer
pursuant to this Article IV may include any number of sub-accounts for
convenience in administering the Eligible Mortgage Loans.
11
Section
4.5 Establishment
of, and Deposits to, Funding Account and Collection Account.
The
Servicer shall establish single, segregated trust accounts which shall be
designated as the Funding Account and the Collection Account, respectively,
which shall be held in trust in the name of the Agent for the benefit of the
Principals and which shall be subject to Blocked Account Control Agreements,
into which the Servicer shall from time to time deposit, within two Business
Days of the receipt thereof, and retain therein, all Collections. The
Funding Account and the Collection Account shall be established with a Qualified
Depository acceptable to the Agent. Any funds deposited in the
Funding Account and the Collection Account shall at all times be fully insured
to the full extent permitted under applicable law. Any interest
earnings on amounts on deposit from time to time in the Funding Account and
the
Collection Account shall be remitted to the Servicer in accordance with such
arrangements, as shall be agreed upon by the Servicer and the Agent;
provided that the Servicer shall deposit promptly from its own funds to
the Funding Account or the Collection Account, as applicable, an amount equal
to
any loss incurred with respect to an investment of funds in the Funding Account
or the Collection Account, as applicable.
Section
4.6 Permitted
Withdrawals From Margin Call Account.
(a) In
connection with any withdrawals of amounts deposited by the Servicer into the
Margin Call Account by mistake or overpayment or as otherwise required to make
adjustments to amounts deposited therein in accordance with ordinary and normal
servicing adjustments the Servicer shall provide the Agent with a written
request, including such information with respect to such withdrawals as such
Agent may reasonably request to justify such withdrawal. Upon
approval by the Agent of such request, the Agent shall authorize the withdrawal
of such amount from such account; provided that if such request is for an amount
less than $10,000 and the aggregate amount withdrawn from such account under
this proviso in the current Due Period is less than $50,000, such withdrawal
may
be made without approval from the Agent.
(b) The
proceeds of any sales and Securitizations, the Repurchase Price of any Eligible
Mortgage Loans and any other amounts payable in connection with the repurchase
to the Seller or Servicer of any Eligible Mortgage Loan and repayments in full
of Eligible Mortgage Loans shall be deposited directly into the Funding Account
on the same day of receipt for application in accordance with the Repurchase
Agreement.
Section
4.7 Establishment
of, and Deposits to, Escrow Account.
The
Servicer shall segregate and hold all funds collected and received pursuant
to
an Eligible Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one
or
more Escrow Accounts, in the form of time deposit or demand accounts, in a
manner which shall provide maximum available insurance
thereunder. Funds deposited in any Escrow Account may be invested by
the Servicer which shall be entitled to any investment income therefrom except
as otherwise required by law. Funds deposited in any Escrow Account
may be drawn on by the Servicer in accordance with Section 4.8
hereof.
12
The
Servicer shall deposit in such Escrow Account within two Business Days of
receipt thereof and retain therein (a) all Escrow Payments collected on
account of the Eligible Mortgage Loans, for the purpose of effecting timely
payment of any such items as required under the terms of this Agreement and
the
other Transaction Documents; and (b) all amounts representing Insurance
Proceeds or Condemnation Proceeds which are to be applied to the restoration
or
repair of any Mortgaged Property.
The
Servicer shall make withdrawals from any Escrow Account only to effect such
payments as are required under this Agreement, as set forth in Section 4.8
hereof. To the extent required by law, the Servicer shall pay
interest on escrowed funds to the Borrower notwithstanding that such Escrow
Account may be non-interest bearing or that interest paid thereon is
insufficient for such purposes.
The
Seller shall deposit to the Escrow Account an amount equal to all Escrow
Payments, Insurance Proceeds and Condemnation Proceeds collected on account
of
each Eligible Mortgage Loan and held by the Seller as of the date of the
transfer of such Eligible Mortgage Loan to the Agent (on behalf of the
Principals).
Section
4.8 Permitted
Withdrawals From Escrow Account.
Withdrawals
from any Escrow Account may be made by the Servicer only:
(a) To
effect
timely payments of ground rents, taxes, assessments, mortgage insurance
premiums, fire and hazard insurance premiums or other items constituting Escrow
Payments for the related Mortgage;
(b) To
reimburse the Servicer for any servicing advances made by the Servicer pursuant
to Section 4.9 hereof with respect to a related Eligible Mortgage Loan, but
only from amounts received on the related Eligible Mortgage Loan which represent
late collections of Escrow Payments thereunder;
(c) To
refund
to any Borrower any funds found to be in excess of the amounts required under
the terms of the related Eligible Mortgage Loan;
(d) For
application to restoration or repair of the Mortgaged Property in accordance
with the procedures outlined in Section 4.15 hereof; and
(e) To
pay to
the Borrower, to the extent required by law, any interest paid on the funds
deposited in the Escrow Account.
Section
4.9 Payment
of Taxes, Insurance and Other Charges.
With
respect to each Eligible Mortgage Loan, the Servicer shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates,
sewer rents, and other charges which are or may become a lien upon the Mortgaged
Property and the status of PMI Policy premiums, if any, and fire and hazard
insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) and shall effect payment
thereof prior to the applicable penalty or termination date, employing for
such
purpose deposits of the Borrower in the Escrow Account which shall have been
estimated and accumulated by the Servicer in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage. To the extent
that a Mortgage does not provide for Escrow Payments, the Servicer shall
determine that any such payments are made by the Borrower at the time they
first
become due. The Servicer assumes full responsibility for the timely
payment of all such bills and shall effect timely payment of all such charges
irrespective of each Borrower’s faithful performance in the payment of an
Eligible Mortgage Loan or the making of the Escrow Payments, and the Servicer
shall make such payments.
13
Section
4.10 Protection
of Accounts; Investment of Funds.
Amounts
on deposit in the Margin Call Account may at the option of the Seller be
invested in Eligible Investments; provided that in the event that amounts on
deposit in each such account (which shall be properly titled to insure the
funds
in such account on a loan-by-loan basis) exceed the amount fully insured by
the
FDIC (the “Insured Amount”) the Servicer shall be obligated to invest the
excess amount over the Insured Amount in Eligible Investments on the next
Business Day as such excess amount becomes present in the Margin Call
Account. Monies held in the Margin Call Account shall be invested in
Eligible Investments having maturities of no greater than one day; provided,
that if there are no Short-Term Notes then outstanding, monies held in each
such
account shall be invested in Eligible Investments having maturities of no
greater than 30 days. If a Termination Event has not occurred and is
not continuing, earnings on all such Eligible Investments (after deducting
any
losses), if any, shall be paid to the Seller. All such Eligible
Investments shall be made in the name of, and shall be payable to, the
Agent.
Section
4.11 Maintenance
of Hazard Insurance.
The
Servicer shall cause to be maintained for each Eligible Mortgage Loan (other
than HELOCs and Closed End Second Mortgage Loans) hazard insurance such that
all
buildings upon the Mortgaged Property are insured by a generally acceptable
insurer rated A:VI or better in the current Best’s Key Rating Guide
(“Best’s”) against loss by fire, hazards of extended coverage and such
other hazards as are customary in the area where the Mortgaged Property is
located, in an amount which is at least equal to the lesser of (i) the
maximum insurable value of the improvements securing such Eligible Mortgage
Loan
and (ii) the greater of (a) the outstanding principal balance of the
Eligible Mortgage Loan and (b) an amount such that the proceeds thereof
shall be sufficient to prevent the Borrower or the loss payee from becoming
a
co-insurer.
If
upon
origination or acquisition of the Eligible Mortgage Loan, the related Mortgaged
Property was located in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) the Servicer shall cause to be in
effect a flood insurance policy meeting the requirements of the current
guidelines of the Flood Insurance Administration with a generally acceptable
insurance carrier rated A:VI or better in Best’s in an amount representing
coverage equal to the lesser of (i) the minimum amount required, under the
terms of coverage, to compensate for any damage or loss on a replacement cost
basis (or the unpaid balance of the mortgage if replacement cost coverage is
not
available for the type of building insured) and (ii) the maximum amount of
insurance which is available under the Flood Disaster Protection Act of 1973,
as
amended. If at any time during the term of the Eligible Mortgage
Loan, the Servicer determines in accordance with applicable law and pursuant
to
the Guidelines that a Mortgaged Property is located in a special flood hazard
area and is not covered by flood insurance or is covered in an amount less
than
the amount required by the Flood Disaster Protection Act of 1973, as amended,
the Servicer shall notify the related Borrower that the Borrower must obtain
such flood insurance coverage, and if said Borrower fails to obtain the required
flood insurance coverage within forty-five (45) days after such notification,
the Servicer shall immediately force place the required flood insurance on
the
Borrower’s behalf.
14
The
Servicer shall cause to be maintained on each Mortgaged Property such additional
insurance as may be required pursuant to such applicable laws and regulations
as
shall at any time be in force and as shall require such additional insurance,
or
pursuant to the requirements of any private mortgage guaranty insurer, or as
may
be required to conform with Accepted Servicing Practices.
In
the
event that the Servicer shall determine, in accordance with Accepted Services
Practices that the Mortgaged Property should be insured against loss or damage
by hazards and risks not covered by the insurance required to be maintained
by
the Borrower pursuant to the terms of the Mortgage, the Servicer shall
communicate and consult with the Borrower with respect to the need for such
insurance and bring to the Borrower’s attention the desirability of protection
of the Mortgaged Property.
The
Servicer shall not interfere with the Borrower’s freedom of choice in selecting
either his insurance carrier or agent; provided, however, that the Servicer
shall not accept any such insurance policies from insurance companies unless
such companies are rated A:VI or better in Best’s and are licensed to do
business in the jurisdiction in which the Mortgaged Property is
located. The Servicer shall determine that such policies provide
sufficient risk coverage and amounts, that they insure the property owner,
and
that they properly describe the property address. The Servicer shall
furnish to the Borrower a formal notice of expiration of any such insurance
in
sufficient time for the Borrower to arrange for renewal coverage by the
expiration date.
Pursuant
to Section 4.5 hereof, any amounts collected by the Servicer under any such
policies (other than amounts to be deposited in any Escrow Account and applied
to the restoration or repair of the related Mortgaged Property, or property
acquired in liquidation of the Eligible Mortgage Loan, or to be released to
the
Borrower, in accordance with Accepted Servicing Practices as specified in
Section 4.15 hereof) shall be deposited in the Collection
Account.
Section
4.12 Maintenance
of Mortgage Impairment Insurance.
If
the
Servicer shall obtain and maintain a blanket policy insuring against losses
arising from fire and hazards covered under extended coverage on all of the
Eligible Mortgage Loans, then, to the extent such policy provides coverage
in an
amount equal to the amount required pursuant to Section 4.11 hereof and
otherwise complies with all other requirements of Section 4.11, it shall
conclusively be deemed to have satisfied its obligations as set forth in such
Section 4.11. Any amounts collected by the Servicer under any
such policy relating to an Eligible Mortgage Loan shall be deposited in the
Collection Account. Such policy may contain a deductible clause, in
which case, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with Section 4.11 hereof, and
there shall have been a loss which would have been covered by such policy,
the
Servicer shall deposit in the Collection Account at the time of such loss the
amount not otherwise payable under the blanket policy because of such deductible
clause, such amount to be deposited from the Servicer’s funds, without
reimbursement therefor. Upon request of the Agent, the Servicer shall
cause to be delivered to the Agent a certified true copy of such
policy.
15
Section
4.13 Maintenance
of Fidelity Bond and Errors and Omissions Insurance.
The
Servicer shall maintain with responsible companies, at its own expense, a
blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad
coverage on all officers, employees or other persons acting in any capacity
requiring such persons to handle funds, money, documents or papers relating
to
the Eligible Mortgage Loans (“Company Employees”). Any such
Fidelity Bond and Errors and Omissions Insurance Policy shall be in the form
of
the Mortgage Banker’s Blanket Bond and shall protect and insure the Servicer
against losses, including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such Company Employees. Such Fidelity
Bond and Errors and Omissions Insurance Policy also shall protect and insure
the
Servicer against losses in connection with the release or satisfaction of an
Eligible Mortgage Loan without having obtained payment in full of the
indebtedness secured thereby. No provision of this Section 4.13
requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall
diminish or relieve the Servicer from its duties and obligations as set forth
in
this Agreement. The minimum coverage under any such bond and
insurance policy shall be at least equal to the corresponding amounts required
by the Guidelines. Upon the request of the Agent, the Servicer shall
cause to be delivered to the Agent a certified true copy of such fidelity bond
and insurance policy.
Section
4.14 Inspections.
The
Servicer shall inspect the Mortgaged Property as often as deemed necessary
by
the Servicer to assure itself that the value of the Mortgaged Property is being
preserved.
Section
4.15 Restoration
of Mortgaged Property.
The
Servicer need not obtain the approval of the Agent or the Principals prior
to
releasing any Insurance Proceeds or Condemnation Proceeds to the Borrower to
be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Accepted Servicing Practices. At a minimum, the
Servicer shall comply with the following conditions in connection with any
such
release of Insurance Proceeds or Condemnation Proceeds:
(a) The
Servicer shall receive satisfactory independent verification of completion
of
repairs and issuance of any required approvals with respect
thereto;
(b) The
Servicer shall take all steps necessary to preserve the priority of the lien
of
the Mortgage, including, but not limited to, requiring waivers with respect
to
mechanics’ and materialmen’s liens;
16
(c) The
Servicer shall verify that the Eligible Mortgage Loan is not in default;
and
(d) Pending
repairs or restoration, the Servicer shall place the Insurance Proceeds or
Condemnation Proceeds in any Escrow Account.
Section
4.16 Maintenance
of PMI Policy; Claims.
Except
where the Guidelines exempt certain Eligible Mortgage Loans from this
requirement, for each Eligible Mortgage Loan (other than FHA Loans, VA Loans,
Uninsured Loans, HELOCs and Closed End Second Mortgage Loans) with a
Loan-to-Value Ratio in excess of 80%, the Servicer shall, without any cost
to
the Agent or any Principal, maintain or cause the Borrower to maintain in full
force and effect a PMI Policy insuring that portion of the Eligible Mortgage
Loan in excess of 80% of value, and shall pay or shall cause the Borrower to
pay
the premium thereon on a timely basis, until the Loan-to-Value Ratio of such
Eligible Mortgage Loan is reduced to 80% or less. In the event that
such PMI Policy shall be terminated, the Servicer shall, prior to any such
termination, obtain from another Qualified Insurer a comparable replacement
policy, with a total coverage equal to the remaining coverage of such terminated
PMI Policy. If the insurer shall cease to be a Qualified Insurer, the
Servicer shall determine whether recoveries under the PMI Policy are jeopardized
for reasons related to the financial condition of such insurer, it being
understood that the Servicer shall in no event have any responsibility or
liability for any failure to recover under the PMI Policy for such
reason. If the Servicer determines that recoveries are so
jeopardized, it shall notify the Agent and the Borrower, if required, and obtain
from another Qualified Insurer a replacement insurance policy. The
Servicer shall not take any action which would result in noncoverage under
any
applicable PMI Policy of any loss which, but for the actions of the Servicer,
would have been covered thereunder. In connection with any assumption
or substitution agreement entered into or to be entered into pursuant to
Section 5.1 hereof, the Servicer shall promptly notify the insurer under
the related PMI Policy, if any, of such assumption or substitution of liability
in accordance with the terms of such PMI Policy and shall take all actions
which
may be required by such insurer as a condition to the continuation of coverage
under such PMI Policy. If such PMI Policy is terminated as a result
of such assumption or substitution of liability, the Servicer shall obtain
a
replacement PMI Policy as provided above.
In
connection with its activities as Servicer, the Servicer agrees to prepare
and
present claims to the insurer under any PMI Policy in a timely fashion in
accordance with the terms of such PMI Policy and, in this regard, to take such
action as shall be necessary to permit recovery under any PMI Policy respecting
a Defaulted Loan. Pursuant to Section 4.5 hereof, any amounts
collected by the Servicer under any PMI Policy shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 4.6
hereof.
Section
4.17 Title,
Management and Disposition of REO Property.
In
the
event that title to any Mortgaged Property is acquired in foreclosure or by
deed
in lieu of foreclosure, the deed or certificate of sale shall be taken in the
name of the Servicer as agent for the Agent, or in the event the Servicer is
not
authorized or permitted to hold title to real property in the state where the
REO Property is located, or would be adversely affected under the “doing
business” or tax laws of such state by so holding title, the deed or certificate
of sale shall be taken in the name of such Person or Persons as shall be
reasonably acceptable to the Agent. The Person or Persons holding such title
other than the Servicer shall acknowledge in writing that such title is being
held as nominee for the Servicer.
17
The
Servicer shall manage, conserve, protect and operate each REO Property for
the
Principals solely for the purpose of its prompt disposition and
sale. The Servicer, either itself or through an agent selected by the
Servicer, shall manage, conserve, protect and operate the REO Property in the
manner that it manages, conserves, protects and operates other foreclosed
property for its own account, and in the manner that similar property
in the locality as the REO Property is managed. The Servicer shall
attempt to sell the Eligible Mortgage Loan on such terms and conditions as
the
Servicer deems to be in the best interest of the Agent and the
Principals. The Servicer shall dispose of the REO Property in
accordance with Accepted Servicing Practices as soon as possible.
The
Servicer shall also maintain on each REO Property fire and hazard insurance
with
extended coverage in an amount which is at least equal to the maximum insurable
value of the improvements which are a part of such property, liability insurance
and, to the extent required and available under the Flood Disaster Protection
Act of 1973, as amended.
The
disposition of REO Property shall be carried out by the Servicer at such price
and, upon such terms and conditions, as the Servicer deems to be in the best
interest of the Agent and the Principals. The proceeds of sale of the
REO Property shall be promptly deposited in the Collection Account.
Section
4.18 Daily
Servicer Reports.
On
a
daily basis, the Servicer shall prepare and forward to the Agent, the Custodian
and each Principal (i) a report, substantially in the form of
Exhibit D (a “Daily Servicer Report”), as of the close of business
on the immediately preceding Business Day (which shall include, without
limitation, (a) the aggregate Outstanding Principal Balance of the Eligible
Mortgage Loans, (b) Collections on the Eligible Mortgage Loans,
(c) the aggregate Outstanding Principal Balance of Delinquent Loans and
Defaulted Loans and (d) the yield on the Eligible Mortgage Loans,
(e) the Aggregate Purchase Price, (f) the Aggregate Margin Value,
(g) the amount on deposit in the Margin Call Account, if any, and
(h) the amount of repayment of maturing related Short-Term Notes, if any,
as of the date of such Daily Servicer Report), (ii) an updated Daily Loan
Inventory and (iii) if requested by the Agent, a listing of all Eligible
Mortgage Loans together with an aging of such Eligible Mortgage Loans and such
other information concerning actual historical collections experience and other
matters as the Agent may reasonably request.
The
Seller shall, or shall cause the Servicer to, furnish to the Agent at any time
and from time to time, such other or further information in respect of the
Eligible Mortgage Loans, the Seller and the Borrowers as the Agent may
reasonably request.
18
Section
4.19 Real
Estate Owned Reports.
The
Servicer shall furnish to the Agent on a monthly basis an REO Property report
in
form and substance satisfactory to the Agent, together with such other
information as the Agent shall reasonably request.
Section
4.20 Liquidation
Reports.
Upon
the
foreclosure sale of any Mortgaged Property or the acquisition thereof by the
Agent pursuant to a deed in lieu of foreclosure, the Servicer shall submit
to
the Agent a liquidation report with respect to such Mortgaged
Property.
Section
4.21 Reports
of Foreclosures and Abandonments of Mortgaged Property.
Following
the foreclosure sale or abandonment of any Mortgaged Property, the Servicer
shall report such foreclosure or abandonment as required pursuant to
Section 5050J of the Code.
ARTICLE V
GENERAL
SERVICING PROCEDURES
Section
5.1 Transfers
of Mortgaged Property.
The
Servicer shall enforce any “due-on-sale” provision in accordance with Accepted
Servicing Practices and applicable law 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 Borrower remains liable on the Mortgage and the
Mortgage Note. When the Mortgaged Property has been conveyed by the
Borrower, the Servicer shall, to the extent it has knowledge of such conveyance,
exercise its rights to accelerate the maturity of such Eligible Mortgage Loan
under the “due-on-sale” clause applicable thereto; provided,
however, that the Servicer shall not exercise such rights if prohibited
by law from doing so or if the exercise of such rights would impair or threaten
to impair any recovery under the related PMI Policy, if any.
If
the
Servicer reasonably believes it is unable under applicable law to enforce such
“due-on-sale” clause, the Servicer shall enter into (i) an assumption and
modification agreement with the person to whom such property has been conveyed,
pursuant to which such person becomes liable under the Mortgage Note and the
original Borrower remains liable thereon or (ii) in the event that the
Servicer is unable under applicable law to require that the original Borrower
remain liable under the Mortgage Note and the Servicer has the prior consent
of
the primary mortgage guaranty insurer, a substitution of liability agreement
with the purchaser of the Mortgaged Property pursuant to which the original
Borrower is released from liability and the purchaser of the Mortgaged Property
is substituted as Borrower and becomes liable under the Mortgage
Note.
19
Section
5.2 Satisfaction
of Mortgages and Release of Mortgage Loan Files.
Upon
the
payment in full of any Eligible 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 notify the Agent.
If
the
Servicer satisfies or releases a Mortgage without first having obtained payment
in full of the indebtedness secured by the Mortgage or should the Servicer
otherwise prejudice any rights the Agent or the Principals may have under the
mortgage instruments, upon written demand of the Agent, the Servicer shall
repurchase the related Eligible Mortgage Loan at the Repurchase Price by deposit
thereof in the Funding Account within two Business Days of receipt of such
demand by the Agent for application in reduction of the Aggregate Purchase
Price. The Servicer shall maintain the Fidelity Bond and Errors and
Omissions Insurance Policy as provided for in Section 4.13 hereof insuring
the Servicer against any loss it may sustain with respect to any Eligible
Mortgage Loan not satisfied in accordance with the procedures set forth
herein.
Section
5.3 Servicing
Compensation.
As
compensation for its services hereunder, the Servicer shall be entitled to
the
Servicing Fee. If the Servicer or an affiliate thereof ceases to be
the Servicer, the Agent and such successor Servicer may agree to amend such
Servicing Fee (but not to exceed an amount equal to 110% of the aggregate
reasonable costs and expenses incurred by such successor Servicer in connection
with performance of its obligations as Servicer hereunder). The
Servicing Fee shall be payable only from Collections pursuant to and in
accordance with the terms of Section 6 of the Repurchase
Agreement. To the extent such Collections are not sufficient to pay
the Servicing Fee in full, none of the Agent or any Principal shall have any
liability for such deficiency. Each Servicer shall be required to pay
all expense incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement therefor except as specifically
provided herein.
Section
5.4 Annual
Statement as to Compliance.
The
Servicer shall deliver to the Agent and each Bank Principal, on or before
April 5 each year beginning in April 2008, an Officer’s Certificate,
stating that (i) a review of the activities of the Servicer during the
preceding fiscal year ended December 31 and of performance under this
Agreement has been made under such officer’s supervision, (ii) the Servicer
has complied with the provisions of Article II and Article IV hereof,
and (iii) to the best of such officer’s knowledge, based on such review,
the Servicer has fulfilled its obligations in all material respects 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 and the action being taken by the
Servicer to cure such default.
Section
5.5 Annual
Independent Public Accountants’ Servicing Report; Audited
Financials.
(a) On
the
Effective Date and on or before or before April 6 of each year beginning in
April 2008, the Servicer, at its expense, shall cause a firm of nationally
recognized independent public accountants which is a member of the American
Institute of Certified Public Accountants (or such other accountants acceptable
to the Agent) to furnish a report to the Agent and each Bank Principal stating
that such firm has examined PHH Mortgage’s overall servicing operation in
accordance with the minimum standards identified in the Mortgage Bankers
Association of America’s Uniform Single Attestation Program for Mortgage Bankers
(USAP), and stating such firm’s conclusions relating thereto.
20
(b) The
Performance Guarantor shall furnish or cause to be furnished to the Agent and
each Bank Principal, as soon as available, and in any event within 100 days
after the end of each fiscal year of PHH Corporation subsequent to its 2007
fiscal year, the following financial statements: (i) either
(A) consolidated statements of income (or operations) and consolidated
statements of cash flows and changes in stockholders’ equity of PHH Corporation
and its Consolidated Subsidiaries for such year and the related consolidated
balance sheets as at the end of such year, or (B) the Form 10-K filed by
PHH Corporation with the Securities and Exchange Commission and (ii) if not
included in such Form 10-K, an opinion of independent certified public
accountants of recognized national standing, which opinion shall state that
said
consolidated financial statements present fairly the consolidated financial
position and results of operations of PHH Corporation and its Consolidated
Subsidiaries as of the end of such fiscal year and that such financial
statements were prepared in accordance with GAAP applied consistently throughout
the periods reflected therein and with prior periods.
(c) The
financial statements of PHH Corporation and its Consolidated Subsidiaries for
the fiscal quarter ending September 30, 2007 shall be furnished no later
than November 30, 2007. The Performance Guarantor shall furnish or
cause to be furnished to the Agent and each Bank Principal, as soon as is
practicable, and in any event within 60 days after the end of each of the first
three fiscal quarters of each fiscal year subsequent to the fiscal quarter
ended
on December 31, 2007, either (i) the Form 10-Q filed by PHH
Corporation with the Securities and Exchange Commission or (ii) the
unaudited consolidated balance sheet of PHH Corporation and its Consolidated
Subsidiaries, as of the end of such fiscal quarter, and the related unaudited
consolidated statements of income and cash flows for such quarter and for the
period from the beginning of the then current fiscal year to the end of such
fiscal quarter and the corresponding figures as of the end of the preceding
fiscal year, and for the corresponding period in the preceding fiscal year,
in
each case, together with a certificate (substantially in the form of
Exhibit C to this Agreement) signed by the chief financial officer, the
chief accounting officer or a vice president responsible for financial
administration of PHH Corporation to the effect that such financial statements,
while not examined by independent public accountants, reflect, in his\her
opinion and in the opinion of PHH Corporation, all adjustments necessary to
present fairly the consolidated financial position of PHH Corporation and its
Consolidated Subsidiaries, as of the end of the fiscal quarter, and the
consolidated results of their operations for the quarter then ended, in
conformity with GAAP consistently applied, subject only to year-end audit
adjustments and to the absence of footnote disclosure.
21
Section
5.6 Right
to Examine Servicer Records.
The
Agent
shall each have the right to reasonable access to the books, records, or other
information of the Servicer, whether held by the Servicer or by another on
its
behalf, with respect to or concerning this Agreement or the Eligible Mortgage
Loans, during regular business hours or at such other times as may be reasonable
under applicable circumstances, upon reasonable advance notice.
ARTICLE VI
REPURCHASE
OBLIGATION
Section
6.1 Servicer’s
Purchase Obligations.
Upon
receipt by the Servicer of notice from the Agent of a breach of any
representation or warranty of it contained in this Agreement or any action
resulting in prejudice to the Principals in accordance with Section 5.2
hereof, the Servicer shall promptly notify the Seller and shall, at the
direction of the Agent use its best efforts to cure and correct any such breach,
and, in the event such breach is not cured and corrected within the applicable
grace period, if any, the Servicer shall repurchase the related Eligible
Mortgage Loan at the Repurchase Price.
Upon
deposit by the Servicer of the Repurchase Price in the Funding Account, the
Servicer shall arrange for the repurchase of Eligible Mortgage Loans adversely
affected by such breach, and the delivery from the Custodian of any documents
constituting the Mortgage Loan Files for such repurchased mortgage
loans. In the event of a repurchase, the Servicer shall,
simultaneously with such repurchase, give written notice to the Seller and
the
Agent that such repurchase has taken place, and amend the Mortgage Loan
Schedule to reflect the subtraction of the repurchased Eligible Mortgage
Loan from the Repurchase Agreement.
ARTICLE VII
SERVICER
TO COOPERATE
Section
7.1 Provision
of Information.
During
the term of this Agreement and the other Transaction Documents, the Servicer
shall furnish to the Agent such periodic, special, or other reports or
information, including the Daily Servicer Report required to be delivered to
the
Agent, the Bank Principals and the Custodian on each Payment Date, and copies
or
originals of any documents contained in the Mortgage Loan File for each Eligible
Mortgage Loan, whether or not provided for herein, as shall be necessary,
reasonable, or appropriate with respect to the Principals. All such
reports, documents or information shall be provided by and in accordance with
all reasonable instructions and directions which the Agent may
give.
The
Servicer shall execute and deliver all such instruments and take all such action
as the Agent and the Custodian may reasonably request from time to time, in
order to effectuate the purposes and to carry out the terms of this
Agreement.
22
ARTICLE VIII
THE
SERVICER
Section
8.1 Indemnification
of Third-Party Claims.
The
Servicer agrees to indemnify and hold harmless each of the Principals and the
Agent against any and all claims, losses, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments, and any other costs, fees
and expenses that they may sustain in any way related to the failure of the
Servicer to perform its duties and service the mortgage loans in strict
compliance with the terms of this Agreement or for any losses related to the
investment of funds in the Escrow Account. The Servicer shall
immediately notify the Agent if a claim is made by a third party with respect
to
this Agreement or the mortgage loans and the Servicer shall assume the defense
of any such claim and pay all expenses in connection therewith, including
counsel fees, and promptly pay, discharge and satisfy any judgment or decree
which may be entered against the Principals and the Agent in respect of such
claim. The Servicer’s indemnification obligation pursuant to this
Section 8.1 shall survive the termination of this Agreement.
Section
8.2 Corporate
Existence of the Servicer.
The
Servicer shall keep in full effect its existence, rights and franchises as
a
corporation, and shall obtain and preserve its qualification to do business
as a
foreign corporation in each jurisdiction in which such qualification is or
shall
be necessary to protect the validity and enforceability of this Agreement or
any
of the Eligible Mortgage Loans and to perform its duties under this
Agreement.
Section
8.3 Limitation
on Liability of Servicer and Others.
Neither
the Servicer nor any of the directors, officers, employees or agents of the
Servicer shall be under any liability to the Agent or any Principal for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Servicer or any
such
person against any breach of warranties or representations made herein, or
failure to perform its obligations in compliance with any standard of care
set
forth in this Agreement, or any liability which would otherwise be imposed
by
reason of any breach of the terms and conditions of this
Agreement. The Servicer and any director, officer, employee or agent
of the Servicer may rely in good faith on any document which it in good faith
reasonably believes to be genuine and have been adopted or signed by the proper
authorities respecting any matters arising hereunder. The Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties to service the Eligible Mortgage
Loans in accordance with this Agreement and which in its opinion may involve
it
in any expense or liability; provided, however, that the Servicer may, with
the
consent of the Required Principals undertake any such action which it may deem
necessary or desirable with respect to this Agreement and the rights and duties
of the parties hereto. In such event, the Servicer shall be entitled
to reimbursement from the Agent of the reasonable legal expenses and costs
of
such action.
23
Section
8.4 Limitation
on Resignation and Assignment by the Servicer.
The
Agent
and the Principals have entered into this Agreement and the other Transaction
Documents to which they are a party with the Company, as Servicer, in reliance
upon the representations as to the adequacy of its servicing facilities, plant,
personnel, records and procedures, its integrity, reputation and financial
standing, and the continuance thereof. The Servicer shall not resign
from the obligations and duties hereby imposed on it as to any Eligible Mortgage
Loan except by consent of the Required Principals and the Agent or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot reasonably be cured by the
Servicer. Notice of any such determination permitting the resignation
of the Servicer shall be delivered to the Agent and each Bank Principal and
any
such determination shall evidenced by an Opinion of Counsel to such effect
delivered to the Agent (on behalf of the Principals) which Opinion of Counsel
shall be in form and substance acceptable to the Agent. No such
resignation shall become effective until a successor shall have assumed the
Servicer’s responsibilities and obligations hereunder in the manner provided in
Section 12.1 hereof.
Section
8.5 Limitation
on Assignment of Right.
Except
pursuant to a resignation approved pursuant to Section 8.4 hereof, the
Servicer shall not assign, sell or otherwise transfer its right to receive
any
payments (including the Servicing Fee) hereunder.
ARTICLE IX
SERVICER
DEFAULT
Section
9.1 Servicer
Default.
Each
of
the following shall constitute a “Servicer Default” on the part of the
Servicer:
(a) Any
failure by the Servicer or the Performance Guarantor to observe or perform
any
of the terms, covenants or agreements on the part of the Servicer set forth
in
this Agreement (other than those which are incapable of cure) which continues
unremedied for a period of thirty (30) days after the earlier of the date on
which the Servicer or the Performance Guarantor has actual knowledge or written
notice of such failure;
(b) Any
representation, warranty, statement or certification made by the Servicer or
the
Performance Guarantor shall prove to have been materially incorrect as of the
time when made, and which continues to be materially incorrect for thirty (30)
days after the earlier of the date on which the Servicer or the Performance
Guarantor has actual knowledge or written notice of such
inaccuracy;
(c) Any
failure by the Servicer to maintain any required licenses to do business in
any
jurisdiction where the Mortgaged Property is located, except where such failure
could not reasonably be expected to result in a material adverse effect or
any
failure by the Servicer to be an Approved Seller/Servicer for any two of FNMA,
GNMA or FHLMC;
24
(d) Application
for the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, including bankruptcy, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or liquidation
of
its affairs, shall have been entered against the Servicer and a decree or order
shall have remained in force undischarged or unstayed for a period of 60
days;
(e) the
Servicer shall consent to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Servicer or of or
relating to all or substantially all of its property;
(f) the
Servicer shall admit in writing its inability to pay its debts generally as
they
become due, file a petition to take advantage of any applicable insolvency,
bankruptcy or reorganization statute, make an assignment for the benefit of
its
creditors, voluntarily suspend payment of its obligations or cease its normal
business operations;
(g) the
Servicer or the Performance Guarantor enters into a consent agreement or
otherwise agrees in writing with any federal or state regulatory agency or
authority to restrict its activities, if the default of such agreement by the
Servicer or the Performance Guarantor entitles such applicable federal or state
agency to place the Servicer in receivership or conservatorship;
(h) failure
of the Servicer to deposit into the Funding Account on or before 2 Business
Days
after the date of sale or Securitization of an Eligible Mortgage Loan the
proceeds of any such sale or Securitization;
(i) on
or
prior to November 30, 2007, the Servicer shall have failed to either (x) appoint
a back-up servicer satisfactory to Agent, or (y) enter into the Back-up
Servicing Agreement (as such term is defined in the Repurchase Agreement),
and
such date has not been extended in writing by Agent;
(j) (i)
the
Servicer, Performance Guarantor or any of their respective Subsidiaries shall
fail to (x) pay any Indebtedness or Interest Rate Protection Agreements
where the amount or amounts of such Indebtedness or Interest Rate Protection
Agreement exceeds $50,000,000 (or its equivalent thereof in any other currency)
in the aggregate; or (y) perform any other term, provision or condition
with respect to any Indebtedness or Interest Rate Protection Agreements of
greater than $50,000,000 (or its equivalent thereof in any other currency),
which failure results in such Indebtedness becoming due prior to the scheduled
date of maturity thereof or enables or permits the holder or holders of such
Indebtedness or any trustee or agent on its or their behalf to cause such
Indebtedness to become due, or to require the prepayment (other than by a
regularly scheduled payment), repurchase, redemption or defeasance thereof,
prior to the scheduled date of maturity thereof; or (ii) any other
circumstance shall arise (other than the mere passage of time) by reason of
which the Servicer, the Performance Guarantor or any of their respective
Subsidiaries is required to redeem or repurchase, or offer to holders the
opportunity to have redeemed or repurchased, any such Indebtedness or Interest
Rate Protection Agreement where the amount or amounts of such Indebtedness
or
Interest Rate Protection Agreement exceeds $50,000,000 (or its equivalent
thereof in any other currency) in the aggregate;
25
(k) at
any
time the Delinquency Ratio shall be greater than five percent (5%) of the
Aggregate Purchase Price at such time;
(l) any
financial covenant of PHH Corporation contained in Section 3.4(g) shall not
be satisfied; or
(m) the
failure on the part of the Servicer to make any payment or deposit required
under this Agreement or any other Transaction Document on or before 2 Business
Days after the date such payment or deposit is required to be made.
In
each
and every such case, so long as a Servicer Default shall not have been remedied,
in addition to whatsoever rights the Agent and the Principals may have at law
or
in equity to damages, including injunctive relief and specific performance,
the
Agent, by notice in writing to the Servicer may terminate all of the rights
and
obligations of the Servicer under this Agreement and in and to the Eligible
Mortgage Loans and the proceeds thereof other than unpaid Servicing
Fees. The Agent will only remove the Servicer as described above upon
the affirmative vote of the Required Principals.
Upon
receipt by the Servicer of such written notice, all authority and power of
the
Servicer under this Agreement, whether with respect to the Eligible Mortgage
Loans or otherwise, shall pass to and be vested in the successor
appointed pursuant to Section 12.1 hereof. Upon written request
from the Agent, the Servicer shall prepare, execute and deliver to the successor
entity designated by the Agent any and all documents and other instruments,
place in such successor’s possession all Mortgage Loan 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, including but not limited to the transfer and
endorsement or assignment of the Eligible Mortgage Loans and related documents,
at the Servicer’s sole expense. The Servicer shall cooperate with
such successor in effecting the termination of the Servicer’s responsibilities
and rights hereunder, including without limitation, the transfer to such
successor for administration by it of all cash amounts which shall at the time
be credited by the Servicer to Margin Call Account or Escrow Account or
thereafter received with respect to the Eligible Mortgage Loans.
Section
9.2 Waiver
of Defaults.
With
the
consent of the Required Principals, the Agent may waive any default by the
Servicer in the performance of its obligations hereunder and its
consequences. Upon any waiver of a past default, such default shall
cease to exist, and any event of default arising therefrom shall be deemed
to
have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived.
26
ARTICLE X
TERMINATION
AND LIQUIDATION
Section
10.1 Termination
of Agreement.
This
Agreement shall terminate upon the final payment or other liquidation (or any
advance with respect thereto) of the last Eligible Mortgage Loan sold under
the
Repurchase Agreement.
Section
10.2 Termination
of Servicing With Respect to Any Eligible Mortgage Loan.
This
Agreement shall terminate with respect to any Eligible Mortgage Loan upon the
occurrence of the following: (i) the receipt into the Funding Account of
the proceeds of any sale or Securitization of such Eligible Mortgage Loan or
the
Repurchase Price or Principal Prepayment in full of such Eligible Mortgage
Loan;
or (ii) the effectiveness of the termination of the Company pursuant to
Section 12.1. No termination shall become effective until a successor shall
have assumed the Servicer’s responsibilities and obligations hereunder in the
manner provided in Section 12.1.
Upon
written request from the Agent, the Servicer shall prepare, execute and deliver
to the successor entity designated by the Agent any and all documents and other
instruments, place in such successor’s possession all Mortgage Loan 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, including but not limited
to
the transfer and endorsement or assignment of the Eligible Mortgage Loans and
related documents, at the Servicer’s sole expense. The Servicer shall
cooperate with such successor in effecting the termination of the Servicer’s
responsibilities and rights hereunder, including without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Servicer to the Funding Account, Collection
Account or Escrow Account or thereafter received with respect to the Eligible
Mortgage Loans.
ARTICLE XI
[RESERVED]
ARTICLE XII
MISCELLANEOUS
PROVISIONS
Section
12.1 Successor
to Servicer.
Prior
to
termination of the Servicer’s responsibilities and duties under this Agreement
pursuant to Sections 8.4 or 10.1 hereof, the Agent shall appoint a
successor which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement
prior to the termination of the Servicer’s responsibilities, duties and
liabilities under this Agreement. In connection with such appointment
and assumption, the Agent may make such arrangements for the compensation of
such successor out of payments on Eligible Mortgage Loans as it and such
successor shall agree. In the event that the Servicer’s duties,
responsibilities and liabilities under this Agreement should be terminated
pursuant to the aforementioned sections, the Servicer shall discharge such
duties, responsibilities and liabilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with
the
degree of diligence and prudence which it is obligated to exercise under this
Agreement and shall take no action whatsoever that might impair or prejudice
the
rights or financial condition of its successor. The resignation or
removal of the Servicer pursuant to the aforementioned Sections shall not
become effective until a successor shall be appointed pursuant to this
Section 12.1 and such resignation or removal shall in no event relieve the
Servicer of the representations and warranties made pursuant to Section 3.1
hereof and the remedies available to the Agent under Section 3.3 hereof, it
being understood and agreed that the provisions of such Sections 3.1 and
3.3 shall be applicable to the Servicer notwithstanding any such sale,
assignment, resignation or termination of the Servicer, or the termination
of
this Agreement.
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Any
successor appointed as provided herein shall execute, acknowledge and deliver
to
the Servicer and the Agent an instrument accepting such appointment, wherein
the
successor shall make the representations and warranties set forth in
Section 3.1 hereof, whereupon such successor shall become fully vested with
all the rights, powers, duties, responsibilities, obligations and liabilities
of
the Servicer, with like effect as if originally named as a party to this
Agreement. Any termination or resignation of the Servicer or
termination of this Agreement pursuant to Sections 8.4, or 10.1 hereof
shall not affect any claims that the Agent or any Principal may have against
the
Servicer arising out of the Servicer’s actions or failure to act prior to any
such termination or resignation.
The
Servicer shall deliver promptly to the successor Servicer the funds in the
Margin Call Account, the Collection Account, the Funding Account and the Escrow
Account and all Mortgage Loan Files and related documents and statements held
by
it hereunder and 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.
Section
12.2 Amendment.
This
Agreement may only be amended with the written consent of the Seller, the Agent,
the Required Principals, the Performance Guarantor and the
Servicer. The costs and expenses associated with any such amendment
shall be borne by the Seller.
Section
12.3 Governing
Law.
This
Agreement shall be construed in accordance with the laws of the State of New
York and the obligations, rights and remedies of the parties hereunder shall
be
determined in accordance with such laws.
Section
12.4 Duration
of Agreement.
This
Agreement shall continue in existence and effect until terminated as herein
provided.
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Section
12.5 Notices.
All
demands, notices and communications hereunder shall be in writing and shall
be
deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, addressed as follows:
(i) if
to PHH
Mortgage Corporation, to it at its address set forth in Section 29 of the
Repurchase Agreement or such other address as may hereafter be furnished to
the
Agent in writing;
(ii) if
to the
Agent, to it at its address set forth in Section 29 of the Repurchase
Agreement; and
(iii) if
to the
Performance Guarantor, to it at PHH Mortgage Corporation’s address set forth in
Section 29 of the Repurchase Agreement.
Section
12.6 Severability
of Provisions.
If
any
one or more of the covenants, agreements, provisions or terms of this Agreement
shall be held invalid for any reason whatsoever, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no
way
affect the validity or enforceability of the other provisions of this
Agreement
Section
12.7 Relationship
of Parties.
Nothing
herein contained shall be deemed or construed to create a partnership or joint
venture between the parties hereto and the services of the Servicer shall be
rendered as an independent contractor and not as agent for the Agent or any
Principal.
Section
12.8 Execution;
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 agreement. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns; provided, however, that the rights of the Principals to an indemnity
from the Servicer pursuant to Section 3.3 hereof are not assignable and
shall inure only to the benefit of the Principals and to no other
Person.
Section
12.9 Recordation
of Assignments of Mortgage.
To
the
extent permitted by applicable law, each of the Assignments of Mortgage 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 at the
Servicer’s expense in the event recordation is either necessary under applicable
law or requested by the Agent at its sole option.
29
Section
12.10 [RESERVED].
Section
12.11 [RESERVED].
Section
12.12 Waiver
of Offset.
The
Servicer agrees to deliver to the Agent (for itself and for the benefit of
each
Principal) all amounts required by this Agreement to be delivered by the
Servicer to such Persons free and clear of any offset, counterclaim or other
deduction on account of, or in respect of, any such Person to the Servicer
hereunder.
ARTICLE XIII
PHH
CORPORATION GUARANTEE
Section
13.1 Guarantee
of Seller’s Representations and Warranties, Servicer’s Performance and Payment
Obligations.
For
value
received, and in consideration of the financial accommodation accorded to the
Company by the Agent and the Principals under the Transaction Documents, PHH
Corporation (the “Performance Guarantor”) hereby fully, unconditionally,
and irrevocably guarantees to the Agent, each Principal, the holders of all
the
holders of the Short-Term Notes and the APA Purchasers (i) with respect to
the Seller, the representations and warranties set forth herein and in the
other
Transaction Documents, and (ii) as to the Servicer, the due performance of,
and punctual payment of all amounts payable by, the Company, in its capacity
as
Servicer under this Agreement and the other Transaction Documents when and
as
such obligations hereunder shall become due and, in the case of any payments,
payable. The Performance Guarantor will ensure the performance and
payment of every act, duty, obligation, agreement and responsibility of the
Servicer set forth herein.
In
case
of the failure or inability of (i) the Seller, regarding its obligations
pursuant to Section 3.3 hereof with respect to a breach of a representation
or warranty made in any Transaction Document, (iii) the Seller, with
respect to its obligations pursuant to Section 2.2(b) and 3.5 hereof and
(iii) the Servicer to punctually perform any such act, duty, obligation,
responsibility or agreement or to pay punctually any such amounts, the
Performance Guarantor hereby agrees, upon written demand by the Agent, to,
as
applicable, (i) perform any such act, duty, obligation, responsibility or
agreement and (ii) pay or cause to be paid any such amount, punctually when
and as the same shall become due and, in the case of any payment, payable
(exclusive of any grace period).
(a) Performance
Guarantor hereby agrees that its obligations under this Section 13.1
constitute a guarantee of performance and payment when due and not of
collection.
30
(b) Performance
Guarantor hereby agrees that its obligations under this Section 13.1 shall
be unconditional, irrespective of the validity, regularity or enforceability
of
this Agreement or any other Transaction Document against the Company, the
absence of any action to enforce the Company’s obligations under any Transaction
Document, any waiver or consent by the Agent, and Principal or any APA Purchaser
with respect to any provisions thereof, the entry by the Company and the Agent
and the Principals into additional transactions under the Repurchase Agreement
or any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor (other than the defenses of statute of
limitations or payment, which are not waived); provided, however, that
Performance Guarantor shall be entitled to exercise any right that the Servicer
could have exercised under any Transaction Document to cure any default in
respect of its obligations thereunder or to set-off, counterclaim or withhold
payment in respect of any event of default or potential event of default in
respect of the Agent or any Principal or any Affiliate, but only to the extent
such right is provided to the Company under the applicable Transaction
Document. The Performance Guarantor acknowledges that the Servicer
and the Agent (for and on behalf of the Principals) may from time to time enter
into one or more transactions pursuant to the Repurchase Agreement and agrees
that the obligations of the Performance Guarantor under this Section 13.1
will upon the execution of any such transaction extend to all such transactions
without the taking of further action by the Performance Guarantor.
(c) The
Performance Guarantor hereby waives (i) promptness, diligence, presentment,
demand of payment, protest, order and, except as set forth in paragraph (a)
hereof, notice of any kind in connection with any Transaction Document and
this
Section 13.1, or (ii) any requirement that the Agent, any Principal or
any APA Purchaser exhaust any right to take any action against the Company
or
any other person prior to or contemporaneously with proceeding to exercise
any
right against the Performance Guarantor under this
Section 13.1.
31
IN
WITNESS WHEREOF, the Company, the Performance Guarantor and the Agent
have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above
written.
|
PHH
MORTGAGE CORPORATION, as
Seller
and Servicer
By: /s/
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
Vice President and Treasurer
|
|
Amended
and Restated Servicing
Agreement
(PHH Mortgage)
S-1
|
PHH
CORPORATION, solely in its capacity as Performance
Guarantor
By: /s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
and CEO
|
|
Amended
and Restated Servicing
Agreement (PHH Mortgage)
S-2
|
BARCLAYS
BANK PLC, as Agent
By: /s/
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director
|
Amended
and Restated Servicing
Agreement
(PHH Mortgage)
S-3