EXECUTION COPY
MORTGAGE LOAN PURCHASE AND INTERIM SERVICING AGREEMENT
DLJ MORTGAGE CAPITAL, INC.
Initial Purchaser
AMERICAN BUSINESS CREDIT, INC.
Seller and Servicer
HOMEAMERICAN CREDIT, INC.
D/B/A
UPLAND MORTGAGE
Seller
AMERICAN BUSINESS MORTGAGE SERVICES, INC.
Seller
Dated as of July 22, 2003
Fixed Rate Mortgage Loans
MORTGAGE LOAN PURCHASE AND INTERIM SERVICING AGREEMENT
This is a MORTGAGE LOAN PURCHASE AND INTERIM SERVICING AGREEMENT (the
"Agreement"), dated as of July 22, 2003, by and among DLJ Mortgage Capital,
Inc., as initial purchaser (in such capacity, the "Initial Purchaser," and the
Initial Purchaser or the Person, if any, to which the Initial Purchaser assigns
its rights and obligations hereunder as Purchaser with respect to a Mortgage
Loan, and each of their respective successors and assigns, the "Purchaser"),
American Business Credit, Inc. ("ABC"), as a seller (in such capacity, a
"Seller") and as servicer (in such capacity, the "Servicer"), HomeAmerican
Credit, Inc., doing business as Upland Mortgage ("Upland"), as a seller (in such
capacity, a "Seller") and American Business Mortgage Services, Inc. ("ABMS"), as
a seller (in such capacity, a "Seller" and, together with ABC and Upland, the
"Sellers").
W I T N E S S E T H :
WHEREAS, the Sellers desire to sell to the Purchaser, and the Purchaser
desires to purchase from the Sellers, certain fixed rate residential first lien
and second lien mortgage loans (the "Mortgage Loans"), including the right to
any Prepayment Charges payable by the related mortgagors in connection with any
principal prepayments on the Mortgage Loans, which are serviced by the Servicer
as described herein on a servicing-released basis, and which shall be delivered
as whole loans as provided herein (with respect to the Mortgage Loans purchased
on any such date, the related "Closing Date");
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust or
other security instrument creating a first or second lien on a residential
dwelling located in the jurisdiction indicated on the Mortgage Loan Schedule,
which is to be annexed hereto on the related Closing Date as Schedule I;
WHEREAS, the Purchaser, the Sellers and the Servicer wish to prescribe
the manner of the conveyance, servicing and control of the Mortgage Loans; and
WHEREAS, following its purchase of the Mortgage Loans from the Sellers,
the Purchaser desires to sell some or all of the Mortgage Loans to one or more
purchasers in one or more whole loan transfers or in one or more public or
private mortgage-backed securities transactions;
NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Purchaser, the Sellers and the
Servicer agree as follows:
1. Definitions. For purposes of this Agreement the following
capitalized terms shall have the respective meanings set forth below.
Accepted Servicing Practices: As defined in the Servicing Addendum.
Agreement: This Mortgage Loan Purchase and Interim Servicing Agreement
including all exhibits, schedules, amendments and supplements hereto.
Ancillary Income: All income derived from the Mortgage Loans, other
than interest, principal, and Prepayment Charges collected, including but not
limited to, fees received with respect to late charges, checks or bank drafts
returned by the related bank for non-sufficient funds, assumption fees (subject
to Subsection 11.19 hereof), and all other incidental fees and charges. The
Servicer shall retain all Ancillary Income.
Appraised Value: With respect to any Mortgaged Property, the lesser of
(i) the lesser of (a) the value thereof as determined by an appraisal made for
the originator of the Mortgage Loan at the time of origination of the Mortgage
Loan by a licensed appraiser and (b) the value thereof as determined by a review
appraisal conducted by the Servicer in the event any such review appraisal
determines an appraised value ten percent or more lower than the value thereof
as determined by the appraisal referred to in clause (i)(a) above, and (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan, provided, however, (1) in the case of a
Refinanced Mortgage Loan, such value of the Mortgaged Property is based solely
upon the lesser of (i) the value determined by an appraisal made for the
originator of such Refinanced Mortgage Loan at the time of origination of such
Refinanced Mortgage Loan by a licensed appraiser and (ii) the value thereof as
determined by a review appraisal conducted by the Servicer in the event any such
review appraisal determines an appraised value ten percent or more lower than
the value thereof as determined by the appraisal referred to in clause
(ii)(a)(i) above and (2) in the case of a Mortgage Loan originated in connection
with a "lease-option purchase," such value of the Mortgaged Property is based on
the lower of the value determined by an appraisal made for the originator of
such Mortgage Loan at the time of origination or the sale price of such
Mortgaged Property if the "lease option purchase price" was set less than 12
months prior to origination, and is based on the value determined by an
appraisal made for the originator of such Mortgage Loan at the time of
origination if the "lease option purchase price" was set 12 months or more prior
to origination.
Assignment of Mortgage: An individual assignment of the Mortgage,
notice of transfer or equivalent instrument in recordable form, sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property is located
to give record notice of the sale of the Mortgage to the Purchaser.
Bankruptcy Act: The Bankruptcy Reform Act of 1978, as amended (Title 11
of the United States Code).
BIF: The Bank Insurance Fund, or any successor thereto.
Business Day: Any day other than a Saturday or Sunday, or a day on
which banking and savings and loan institutions in the State of California or
the State of New York are authorized or obligated by law or executive order to
be closed.
Cash-Out Refinancing: A Refinanced Mortgage Loan, the proceeds of which
were more than $1,000 in excess of the principal balance of an existing first
mortgage on the related Mortgaged Property, the principal balance of any
existing subordinate mortgages on the related Mortgaged Property and related
closing costs, and were used to satisfy such existing first mortgage, any such
subordinate mortgages, to pay related closing costs and to provide to the
mortgagor more than $1,000 in addition thereto.
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Certificate Insurer: The certificate insurer as shall be designated by
the Purchaser in connection with any Reconstitution Agreement.
Certificates: The certificates issued in connection with any
Reconstitution Agreement on the related Reconstitution Date as provided in
Section 12 hereof.
Closing Date: With respect to each Mortgage Loan, the date on which the
Purchaser shall purchase and the related Seller shall sell to the Purchaser such
Mortgage Loan together with such other Mortgage Loans as shall be listed on the
related Mortgage Loan Schedule. The Closing Date for any Mortgage Loan shall in
no event be later than August 10, 2003.
Closing Documents: The documents required pursuant to Section 9.
Code: The Internal Revenue Code of 1986, or any successor statute
thereto.
Combined Loan-to-Value Ratio or CLTV: As of any date and Mortgage Loan
which is secured by a Mortgaged Property which also secures the repayment of a
subordinated second mortgage loan, the fraction, expressed as a percentage, the
numerator of which is the sum of (a) the original principal balance of the
Mortgage Loan, plus (b) the unpaid principal balance of any second mortgage loan
secured by the Mortgaged Property as of such date, and the denominator of which
is the Appraised Value of the related Mortgaged Property; as of any date and
Mortgage Loan which is secured by a Mortgaged Property which does not also
secure the repayment of a subordinated second mortgage loan, the Loan-to-Value
Ratio.
Commitment Letter: With respect to each Mortgage Loan, the related
letter agreement dated July 1, 2003 between the Purchaser and the Sellers
(including any exhibits, schedules and attachments thereto) and attached hereto
as Exhibit 9.
Condemnation Proceeds: All awards, compensation and settlements in
respect of a taking of all or part of a Mortgaged Property by exercise of the
power of condemnation or the right of eminent domain.
Custodial Account: The separate account or accounts, each of which
shall be an Eligible Account, created and maintained pursuant to this Agreement,
which shall be entitled "American Business Credit, Inc., as custodian for the
Purchaser, First and Second Lien Fixed Rate Mortgage Loans" or such other title
as shall be acceptable to the Purchaser.
Custodial Agreement: The custodial agreement dated as of July 1, 2003
among the Initial Purchaser, the Sellers and the Custodian, governing the
retention of the originals of each Mortgage Note, Mortgage, Assignment of
Mortgage and other Mortgage Loan Documents, a form of which agreement is annexed
hereto as Exhibit 6 or any other custodial agreement among a custodian, the
Sellers and the Initial Purchaser pursuant to which such custodian is to hold
any of the documents or instruments referred to above as agent for the Initial
Purchaser.
Custodian: A custodian that is appointed pursuant to a Custodial
Agreement or its successor in interest or assigns, any successor to the
Custodian under the Custodial Agreement, as therein provided. The initial
Custodian shall be JPMorgan Chase Bank.
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Cut-off Date: With respect to each Mortgage Loan (other than a
Qualified Substitute Mortgage Loan), the later of (i) the last day of the month
immediately preceding the month in which the related Closing Date with respect
to such Mortgage Loan occurs and (ii) the origination date of the related
Mortgage Loan, and with respect to each Qualified Substitute Mortgage Loan, its
date of substitution.
Deleted Mortgage Loan: A Mortgage Loan rejected by the Purchaser or a
Mortgage Loan replaced or to be replaced by a Qualified Substitute Mortgage
Loan.
Determination Date: With respect to each Distribution Date, the tenth
(10th) day of the calendar month in which such Distribution Date occurs or, if
such tenth (10th) day is not a Business Day, the Business Day immediately
preceding such tenth (10th) day.
Distribution Date: The fifteenth (15th) day of each month, commencing
on the fifteenth (15th) day of the month next following the month in which the
related Cut-off Date occurs, or if such fifteenth (15th) day is not a Business
Day, the first Business Day immediately following such fifteenth (15th) day.
Due Date: With respect to each Mortgage Loan and any Distribution Date,
the date on which Monthly Payments on such Mortgage Loan are due which is either
the first day of the month of such Distribution Date, or if Monthly Payments on
such Mortgage Loan are due on a day other than the first day of the month, the
date in the calendar month immediately preceding the Distribution Date on which
such Monthly Payments are due, exclusive of any days of grace.
Due Period: With respect to each Distribution Date, the period
commencing on the first day of the month preceding the month of the Distribution
Date and ending on the last day of the month of the preceding the month of the
Distribution Date.
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated A-1 by S&P or Prime-1 by Moody's (or a comparable rating if another rating
agency is specified by the Initial Purchaser by written notice to each Seller)
at the time any amounts are held on deposit therein, (ii) an account or accounts
the deposits in which are fully insured by the FDIC to the full extent permitted
or (iii) a trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity. Eligible Accounts may bear interest.
Escrow Account: The separate trust account or accounts created and
maintained pursuant to this Agreement which shall be entitled "American Business
Credit, Inc., as Servicer, in trust for the Purchaser and various Mortgagors,
Fixed Rate Mortgage Loans" or such other title as shall be acceptable to the
Purchaser.
Escrow Payments: The amounts constituting ground rents, taxes,
assessments, water charges, sewer rents, Primary Insurance Policy premiums (if
any), fire and hazard insurance premiums and other payments required to be
escrowed by the Mortgagor with the Mortgagee pursuant to the terms of any
Mortgage Note or Mortgage.
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Event of Default: Any one of the events enumerated in Subsection 14.01.
Fair Credit Reporting Act: 15 U.S.C.ss.ss.1681 et seq.
▇▇▇▇▇▇ Mae: ▇▇▇▇▇▇ ▇▇▇, formerly known as Federal National Mortgage
Association ("FNMA") or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
Final Recovery Determination: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Servicer), a determination made by the Servicer that all Condemnation
Proceeds, Insurance Proceeds, Liquidation Proceeds and other payments or
recoveries which the Servicer, in its reasonable good faith judgment, expects to
be finally recoverable in respect thereof have been so recovered. The Servicer
shall maintain records, prepared by a servicing officer of the Servicer, of each
Final Recovery Determination.
First Lien: With respect to any second lien Mortgage Loan, the mortgage
loan relating to the corresponding Mortgaged Property having a first priority
lien.
First Payment Default Loan: Any Mortgage Loan for which the related
Mortgagor does not make the contractual first payment within 30 days of its due
date or the related Mortgagor does not make the first contractual payment after
such Mortgage Loan is owned by the Initial Purchaser within 30 days of its due
date. For example, if a Mortgagor of a Mortgage Loan fails to make the June 2003
payment, July 2003 payment or the August 2003 payment within 30 days of its due
date, that Mortgage Loan qualifies as a First Payment Default Loan.
Fitch: Fitch Ratings, or its successor in interest.
Fixed Rate Mortgage Loan: A Mortgage Loan with respect to which the
Mortgage Interest Rate is fixed for the life of such Mortgage Loan.
▇▇▇▇▇▇▇ Mac: ▇▇▇▇▇▇▇ Mac, formerly known as Federal Home Loan Mortgage
Corporation ("FHLMC") or any successor thereto.
Holdback Amount: The amount due to be paid by the Purchaser to the
related Seller pursuant to the Commitment Letter upon delivery to the Seller or
its Custodian Assignments of Mortgage in blank in recordable form for each of
the Mortgage Loans sold by such Seller to the Purchaser.
HUD: The United States Department of Housing and Urban Development or
any successor thereto.
Initial Purchaser: DLJ Mortgage Capital, Inc., or its successor
thereto.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property
to the extent such proceeds are not applied to the restoration of the related
Mortgaged Property or released to the related Mortgagor.
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Interim Servicing Period: With respect to any Mortgage Loan, the period
commencing on the related Closing Date and ending not later than the close of
business on October 1, 2003, or such other date, earlier or later, as specified
in a written notice from the Purchaser to each Seller and the Servicer.
Liquidation Event: With respect to any Mortgage Loan or REO Property,
any of the following events: (i) a Final Recovery Determination is made as to
such Mortgage Loan or REO Property; (ii) such Mortgage Loan or REO Property is
removed from this Agreement by reason of its being repurchased, sold or replaced
pursuant to or as contemplated by any provision of this Agreement; or (iii) such
Mortgage Loan is paid in full.
Liquidation Proceeds: Amounts, other than Insurance Proceeds and
Condemnation Proceeds, received in connection with the liquidation of a
defaulted Mortgage Loan through trustee's sale, foreclosure sale or otherwise,
other than amounts received following the acquisition of REO Property.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan as of any
date of determination, the ratio on such date of the outstanding principal
amount of such Mortgage Loan, to the Appraised Value of the related Mortgaged
Property.
Monthly Payment: With respect to any Mortgage Loan, the scheduled
combined payment of principal and interest payable by a Mortgagor under the
related Mortgage Note on each Due Date.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first or second lien on Mortgaged Property securing the Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit 5 annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement or the Commitment
Letter.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note with respect to each Mortgage Loan as set forth in the related Mortgage
Loan and the Mortgage Loan Schedule.
Mortgage Loan: Each Mortgage Loan sold, assigned and transferred to the
Purchaser pursuant to this Agreement and the Commitment Letter and identified on
the Mortgage Loan Schedule annexed to this Agreement on the related Closing
Date, which Mortgage Loan includes without limitation the related Mortgage File,
the Monthly Payments, Principal Prepayments, Prepayment Charges, Liquidation
Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition proceeds,
and all other rights, benefits, proceeds and obligations arising from or in
connection with such Mortgage Loan.
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Mortgage Loan Documents: The documents listed in Section 2 of the
Custodial Agreement pertaining to the related Mortgage Loan.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
related Mortgage Interest Rate.
Mortgage Loan Schedule: The schedule of Mortgage Loans to be annexed
hereto as Schedule I on the related Closing Date for the Mortgage Loans
delivered on that Closing Date, in both hard copy and "read only" electronic
format, such schedule setting forth the following information with respect to
each such Mortgage Loan: (1) the related Seller's Mortgage Loan identifying
number; (2) the Mortgagor's name; (3) the street address of the Mortgaged
Property including the state and zip code; (4) a code indicating whether the
Mortgaged Property is owner-occupied; (5) the type of Residential Dwelling
constituting the Mortgaged Property; (6) the Loan-to-Value Ratio or Combined
Loan-to-Value Ratio, as applicable, at origination; (7) the Mortgage Interest
Rate in effect as of the related Cut-off Date; (8) the stated maturity date of
the Mortgage Loan and, if such Mortgage Loan is a second lien Mortgage Loan, the
stated maturity date of the related First Lien; (9) the amount of the Monthly
Payment at origination; (10) the amount of the Monthly Payment as of the related
Cut-off Date; (11) the last Due Date on which a Monthly Payment was actually
applied to the unpaid stated principal balance; (12) the original principal
balance of the Mortgage Loan and, if such Mortgage Loan is a second lien
Mortgage Loan, the original principal balance of the related First Lien, as of
the date of origination; (13) the Stated Principal Balance of the Mortgage Loan
and, if such Mortgage Loan is a second lien Mortgage Loan, the Stated Principal
Balance of the related First Lien, as of the close of business on the related
origination date; (14) a code indicating the purpose of the loan (i.e., purchase
financing, Rate/Term Refinancing, Cash-Out Refinancing); (15) the Mortgage
Interest Rate at origination; (16) a code indicating the documentation style
(i.e., full, limited or stated); (17) the related Seller's risk grade; (18) the
Appraised Value of the Mortgaged Property; (19) the sale price of the Mortgaged
Property, if applicable; (20) on the Mortgage Loan Schedule in "read only"
electronic format, the actual unpaid principal balance of the Mortgage Loan as
of the related Cut-off Date; (21) the actual paid to date; (22) the number of
years any prepayment penalty is in effect; (23) the loan type (e.g., fixed);
(24) a code indicating whether the Mortgage Loan is a second lien Mortgage Loan.
With respect to the Mortgage Loans in the aggregate, the Mortgage Loan Schedule
shall set forth the following information, as of the related Cut-off Date: (1)
the number of Mortgage Loans; (2) the Stated Principal Balance of the Mortgage
Loans; (3) the weighted average Mortgage Interest Rate of the Mortgage Loans;
and (4) the weighted average maturity of the Mortgage Loans.
Mortgage Note: The original executed note or other evidence of the
Mortgage Loan indebtedness of a Mortgagor.
Mortgaged Property: The Mortgagor's real property securing repayment of
a related Mortgage Note, consisting of a fee simple interest in a single parcel
of real property improved by a Residential Dwelling.
Mortgagee: The mortgagee or beneficiary named in the Mortgage and the
successors and assigns of such mortgagee or beneficiary.
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Mortgagor: The obligor on a Mortgage Note, the owner of the Mortgaged
Property and the grantor or mortgagor named in the related Mortgage and such
grantor's or mortgagor's successors in title to the Mortgaged Property.
Nonrecoverable Servicing Advance: Any Servicing Advance previously made
or proposed to be made in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the Servicer, will not, or, in the case of a
proposed Servicing Advance, would not, be ultimately recoverable from related
late payments, Condemnation Proceeds, Insurance Proceeds or Liquidation Proceeds
on such Mortgage Loan or REO Property as provided herein.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or a President or a Vice President and
by the Treasurer or the Secretary or one of the Assistant Treasurers or
Assistant Secretaries of the Person on behalf of whom such certificate is being
delivered.
Pass-Through Transfer: The sale or transfer of some or all of the
Mortgage Loans by the Purchaser to a trust to be formed as part of a publicly
issued or privately placed mortgage-backed securities transaction.
Person: An individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
Prepayment Charge: With respect to each Mortgage Loan, any prepayment
penalty payable in connection with a Principal Prepayment on such Mortgage Loan
made on or after the related Cut-off Date, transferred and assigned to the
Purchaser pursuant to the terms of this Agreement and identified in the Mortgage
Loan Schedule.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan received in advance of its scheduled Due Date, including any
prepayment penalty or premium thereon, which is not accompanied by an amount of
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment.
Prospectus and Prospectus Supplement: The prospectus and the prospectus
supplement relating to the Certificates, if any.
Purchase Price: The price paid on the related Closing Date by the
Purchaser to the related Seller pursuant to the Commitment Letter in exchange
for the Mortgage Loans purchased on such Closing Date as calculated as provided
in Section 4.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by a Seller for a Deleted Mortgage Loan, which must have the
following qualities on the date of substitution: (i) have an outstanding
principal balance, after deduction of all scheduled payments due in the month of
substitution, not in excess of the outstanding principal balance of the Deleted
Mortgage Loan (the amount of any shortfall shall be deposited in the Custodial
Account by the related Seller out of its own funds without right of
reimbursement as provided in Subsection 7.04 herein), (ii) have a current
Mortgage Interest Rate not less than and not more than 1% greater than the
current Mortgage Interest Rate of the Deleted Mortgage Loan, (iii) have a
remaining term to maturity not greater than, and not more than three (3) months
less than, that of the Deleted Mortgage Loan, (iv) be of the same type as the
Deleted Mortgage Loan (i.e., if the Deleted Mortgage Loan is a Fixed Rate
Mortgage Loan, the substituted loan shall be a Fixed Rate Mortgage Loan), (v)
comply with each representation and warranty respecting individual Mortgage
Loans set forth in Subsection 7.03 herein, provided, that for purposes of
applying such representations and warranties to each such Qualified Substitute
Mortgage Loan, references in such Subsection to the related Closing Date shall
be deemed to be references to the date of substitution of such Qualified
Substitute Mortgage Loan and (vi) be contractually current as of the date of
substitution. If one or more Mortgage Loans are substituted for one or more
Deleted Mortgage Loans pursuant to Subsection 7.04 herein, the amounts described
in clause (i) hereof shall be determined on the basis of the aggregate principal
balances; the Mortgage Interest Rate and the term to maturity described in
clauses (ii) and (iii) hereof shall be determined on the basis of weighted
average Mortgage Interest Rates and original terms to maturity respectively.
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Rate/Term Refinancing: A Refinanced Mortgage Loan, the proceeds of
which were not more than $1,000 in excess of the principal balance of an
existing first mortgage on the related Mortgaged Property, the principal balance
of any existing subordinate mortgages on the related Mortgaged Property and
related closing costs, and were used to satisfy such existing first mortgage or
any such subordinate mortgages, to pay related closing costs and to provide to
the Mortgagor not more than $1,000 in addition thereto.
Rating Agency: Each of S&P, ▇▇▇▇▇'▇ and Fitch.
Reconstitution: Either a Pass-Through Transfer or Whole Loan Transfer.
Reconstitution Agreement: In connection with a Reconstitution, an
agreement pursuant to which each Seller makes representations and warranties
with respect to the Mortgage Loans subject to the Reconstitution as of the date
of the Reconstitution and undertakes certain other obligations, as set forth in
such Reconstitution Agreement.
Reconstitution Date: As to any Mortgage Loan, the date on which this
Agreement, as it relates to such Mortgage Loan, is reconstituted as part of a
transaction described in Section 12 hereof.
Reconstitution Period: With respect to any Mortgage Loan, the period
beginning from the related Closing Date to no later than September 30, 2003.
Record Date: With respect to each Distribution Date, the last Business
Day of the month immediately preceding the month in which such Distribution Date
occurs.
Refinanced Mortgage Loan: A Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REO Disposition: The final sale by the Servicer of any REO Property.
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REO Property: A Mortgaged Property acquired as a result of the
liquidation of a Mortgage Loan.
Repurchase Price: The Repurchase Price for any Mortgage Loan as to
which a First Payment Default has occurred or such Mortgage Loan is to be
repurchased pursuant to Subsection 7.04 shall be equal to the sum of (i) the
product of the Purchase Price Percentage (as stated in the Commitment Letter)
and the Stated Principal Balance of such Mortgage Loan as of the date of
repurchase, plus accrued interest thereon until the date in which such
repurchase occurs and (ii) any costs and damages incurred by the Purchaser in
connection with a breach of the representation made in Subsection 7.03(h). All
amounts owed to the Purchaser shall be delivered via wire transfer of
immediately available funds within two Business Days of such event.
Residential Dwelling: Any one of the following: (i) an attached or
detached one-family dwelling, (ii) an attached or detached two- to four-family
dwelling, (iii) an attached or detached one-family dwelling unit in a
condominium project, (iv) an attached or detached one-family dwelling in a
planned unit development, none of which is a cooperative, or mobile home (as
defined in ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, Section 5402(6)) or (v) a manufactured home.
SAIF: The Savings Association Insurance Fund or any successor thereto.
Sellers: American Business Credit, Inc., HomeAmerican Credit, Inc.
doing business as Upland Mortgage and American Business Mortgage Services, Inc.
or any of their respective successor in interest thereto.
Servicer: American Business Credit, Inc., or its successor in interest
thereto.
Servicing Addendum: The terms and conditions attached hereto as Exhibit
11 which will govern the servicing of the Mortgage Loans by the Servicer during
the Interim Servicing Period.
Servicing Advances: All customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred by the Servicer in the performance
of its servicing obligations, including, but not limited to, the cost of (i)
preservation, restoration and repair of a Mortgaged Property, (ii) any
enforcement or judicial proceedings with respect to a Mortgage Loan, including
foreclosure actions and (iii) the management and liquidation of REO Property.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
fee the Purchaser shall pay to the Servicer, which shall, for each month, be
equal to 0.50% per annum per Mortgage Loan, payable monthly, in arrears. If the
Interim Servicing Period includes any partial month, the Servicing Fee for such
month shall be pro rated at a per diem rate based upon a 30-day month.
Servicing File: With respect to each Mortgage Loan, the file retained
by the Servicer consisting of originals of all documents in the Mortgage File
that are not delivered to the Purchaser or the Custodian and copies of the
Mortgage Loan Documents set forth in Section 2 of the Custodial Agreement.
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Servicing Rights: All of the Purchaser's right, title and interest in
and to the servicing of the Mortgage Loans, together with all Custodial
Accounts, Escrow Accounts, contract rights, incidental income and benefits, and
exclusive rights to possession and use of servicing files and records directly
or indirectly related thereto, including, without limitation, borrower lists,
insurance policies and tax service agreements.
Servicing Transfer Date: With respect to a Mortgage Loan, the date on
which the physical servicing of such Mortgage Loan and the related Servicing
Rights and servicer responsibilities are transferred to the Purchaser or its
designee, pursuant to Subsection 13.05 herein, which date shall not be later
than the end of the Interim Servicing Period, or such other date as may be
mutually agreed to in writing by the Sellers and Initial Purchaser; provided,
however, if the Purchaser exercises its option to terminate the Servicer
pursuant to this Agreement, the Servicing Transfer Date will be deemed to have
occurred upon such termination.
S&P: Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. or its successor in interest thereto.
Stated Principal Balance: As to each Mortgage Loan as of any date of
determination, (i) the unpaid principal balance of the Mortgage Loan as of the
related Cut-off Date, minus (ii) all amounts previously distributed to the
Purchaser with respect to such Mortgage Loan representing payments or recoveries
of principal.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans by the Purchaser to a third party, which sale or transfer is not
a Pass-Through Transfer.
2. Agreement to Purchase. On the related Closing Date, the Sellers
agree to sell, and the Purchaser agrees to purchase, without recourse but
subject to the representations, warranties, terms and provisions of this
Agreement, Mortgage Loans having an aggregate principal balance on the related
Cut-off Date in an amount as set forth in the Commitment Letter, or in such
other amount as agreed by the Purchaser and the Sellers as evidenced by the
actual aggregate principal balance of the Mortgage Loans accepted by the
Purchaser on such Closing Date.
3. Mortgage Loan Schedule. The Sellers shall deliver a Mortgage Loan
Schedule for the Mortgage Loans, or each Seller shall deliver a Mortgage Loan
Schedule for the related Mortgage Loans, to be purchased on the related Closing
Date to the Purchaser at least two (2) Business Days prior to such Closing Date.
4. Purchase Price. The Purchase Price for each Mortgage Loan listed on
the related Mortgage Loan Schedule shall be the amount determined pursuant to
the terms of the Commitment Letter (subject to adjustment as provided therein).
If so provided in the Commitment Letter, portions of the Mortgage Loans shall be
priced separately. The Purchase Price shall be remitted by the Initial Purchaser
to the related Seller on the related Closing Date by wire transfer of
immediately available funds to the bank account designated by such Seller. At
such time as the Sellers deliver to the Purchaser or its Custodian Assignments
of Mortgage in blank in recordable form for each Mortgage Loan purchased by the
Purchaser on a Closing Date, the Purchaser shall pay the applicable Holdback
Amount to the related Seller; provided, that, no Seller shall be entitled to
payment of the Holdback Amount if the Assignments of Mortgage relating to all
the purchased Mortgage Loans are not delivered to the Purchaser or its Custodian
on or prior to August 11, 2003.
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In addition to the Purchase Price as described above, the
Initial Purchaser shall pay to related Seller, on the related Closing Date,
accrued interest on the Stated Principal Balance of each Mortgage Loan at its
Mortgage Interest Rate from the last interest paid-through date to but not
including related Closing Date.
The Purchaser shall own and be entitled to receive with
respect to each Mortgage Loan purchased, (1) all scheduled principal received
after the related Cut-off Date, (2) all other recoveries of principal collected
after the related Cut-off Date, (3) all payments of interest on the Mortgage
Loans at the Mortgage Interest Rate from the last interest paid-through date and
(4) all Prepayment Charges on the Mortgage Loans collected on or after the
related Cut-off Date. The Stated Principal Balance of each Mortgage Loan as of
the related Cut-off Date is determined after application to the reduction of
principal of payments of principal received on or before the related Cut-off
Date. All payments of principal and interest, less the applicable Servicing Fee,
received on a Due Date following the related Cut-off Date shall belong to the
Purchaser.
5. Examination of Mortgage Files. In addition to the rights granted to
the Initial Purchaser under the Commitment Letter to underwrite the Mortgage
Loans and review the Mortgage Files, the Sellers, at least two (2) days prior to
the related Closing Date, shall (a) deliver to the Custodian in escrow, for
examination with respect to each Mortgage Loan to be purchased on such Closing
Date, the related Mortgage File, including the Assignment of Mortgage,
pertaining to each Mortgage Loan, or (b) at the option of the Initial Purchaser,
make the related Mortgage File available to the Initial Purchaser for
examination at the related Seller's offices or such other location as shall
otherwise be agreed upon by the Purchaser and such Seller. Such examination may
be made by the Purchaser or its designee at any reasonable time before or after
the related Closing Date. If the Initial Purchaser identifies any Mortgage Loans
that do not conform to the terms of the Commitment Letter or this Agreement,
such Mortgage Loans may, at the Initial Purchaser's option, be rejected for
purchase by the Initial Purchaser prior to the related Closing Date. If not
purchased by the Initial Purchaser, such Mortgage Loans shall be deleted from
the Mortgage Loan Schedule. The Initial Purchaser may, at its option and without
notice to any Seller, purchase all or less than all of the Mortgage Loans
without conducting any partial or complete examination. The fact that the
Purchaser has conducted or has determined not to conduct any partial or complete
examination of the Mortgage Files shall not affect the Purchaser's (or any of
its successors') rights to demand repurchase or other relief or remedy provided
for in this Agreement.
6. Conveyance from the Sellers to the Initial Purchaser.
6.01. Conveyance of Mortgage Loans; Possession of Servicing Files.
The Sellers, simultaneously with the payment of the Purchase Price, shall
execute and deliver to the Initial Purchaser an Assignment and Conveyance with
respect to the related Mortgage Loans in the form attached hereto as Exhibit 4.
The Servicing File retained by the Servicer with respect to each Mortgage Loan
pursuant to this Agreement shall be appropriately identified in the Servicer's
computer system to reflect clearly the sale of such related Mortgage Loan to the
Purchaser. The Servicer shall release from its custody the contents of any
Servicing File retained by it only in accordance with this Agreement, except
when such release is (i) required in connection with a repurchase of any such
Mortgage Loan pursuant to Subsection 7.04 or 7.06 or (ii) to a document imaging
or reproduction contractor engaged by the Servicer at its own expense and
identified to the Purchaser.
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6.02. Books and Records. Upon the purchase of the Mortgage Loans
hereunder, record title to each Mortgage and the related Mortgage Note as of the
related Closing Date shall be in the name of the related Seller, the related
Seller's predecessor in interest, the Purchaser, the Custodian or one or more
designees of the Purchaser, as the Purchaser shall designate. Notwithstanding
the foregoing, beneficial ownership of each Mortgage and the related Mortgage
Note shall be vested solely in the Purchaser or the appropriate designee of the
Purchaser, as the case may be. Upon the purchase of the Mortgage Loans
hereunder, all rights arising out of the Mortgage Loans including, but not
limited to, all funds received by the Sellers or the Servicer after the related
Cut-off Date on or in connection with a Mortgage Loan as provided in and subject
to Section 4 shall be vested in the Purchaser or one or more designees of the
Purchaser; provided, however, that all such funds received on or in connection
with a Mortgage Loan as provided in and subject to Section 4 shall be received
and held by the Servicer as custodian for the benefit of the Purchaser or the
assignee of the Purchaser, as the case may be, as the owner of the Mortgage
Loans pursuant to the terms of this Agreement.
It is the express intention of the parties that the transactions
contemplated by this Agreement be, and be construed as, a sale of the Mortgage
Loans by the Sellers and not a pledge of the Mortgage Loans by any Seller to the
Purchaser to secure a debt or other obligation of such Seller. Consequently, the
sale of each Mortgage Loan shall be reflected as a sale on the related Seller's
business records, tax returns and financial statements.
6.03. Delivery of Mortgage Loan Documents. Pursuant to the Custodial
Agreement to be executed among and delivered by the Initial Purchaser, the
Custodian, the Servicer and the Sellers prior to the related Closing Date, each
Seller shall in connection with such Closing Date, at least two (2) Business
Days prior to such Closing Date, deliver and release to the Custodian those
Mortgage Loan Documents as required by the Custodial Agreement with respect to
each Mortgage Loan to be purchased and sold on the such Closing Date and set
forth on the Mortgage Loan Schedule delivered with such Mortgage Loan Documents.
The Custodian shall certify its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to the Custodial Agreement for the
related Closing Date, as evidenced by the Trust Receipt and Initial
Certification of the Custodian in the form annexed to the Custodial Agreement.
The Sellers shall be responsible for maintaining in effect the Custodial
Agreement during the Interim Servicing Period. The fees and expenses of the
Custodian during such period and thereafter shall be paid by the Sellers.
Each Seller shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with this Agreement within two weeks of
their execution, provided, however, that each Seller shall provide the Custodian
with a certified true copy of any such document submitted for recordation within
two weeks of its execution, and shall provide the original of any document
submitted for recordation or a copy of such document certified by the
appropriate public recording office (unless the recording office does not
routinely return originals or provide certifications) to be a true and complete
copy of the original within five days after its return from the recording
office.
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7. Representations, Warranties and Covenants of each Seller and the
Servicer: Remedies for Breach.
7.01. Representations and Warranties Respecting each Seller. Each
Seller represents, warrants and covenants to the Purchaser as of the date
hereof, the related Closing Date and the Reconstitution Date, or as of such
other date specifically provided herein or in the applicable Assignment and
Conveyance:
(a) Each Seller is duly organized, validly existing and in good
standing as a corporation under the laws of its state of incorporation and is
and will remain in compliance with the laws of each state in which any Mortgaged
Property is located to the extent necessary to ensure the enforceability of each
Mortgage Loan in accordance with the terms of this Agreement;
(b) Each Seller has the full power and authority to hold each
Mortgage Loan, to sell each Mortgage Loan, and to execute, deliver and perform,
and to enter into and consummate, all transactions contemplated by this
Agreement. Each Seller has duly authorized the execution, delivery and
performance of this Agreement, has duly executed and delivered this Agreement,
and this Agreement, assuming due authorization, execution and delivery by the
Initial Purchaser and the Servicer, constitutes a legal, valid and binding
obligation of each Seller, enforceable against it in accordance with its terms
except as the enforceability thereof may be limited by bankruptcy, insolvency or
reorganization;
(c) The execution and delivery of this Agreement by each Seller and
the performance of and compliance with the terms of this Agreement will not
violate such Seller's articles of incorporation or by-laws or constitute a
default under or result in a breach or acceleration of, any material contract,
agreement or other instrument to which such Seller is a party or which may be
applicable to such Seller or its assets;
(d) Each Seller is not in violation of, and the execution and
delivery of this Agreement by each Seller and its performance and compliance
with the terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency having jurisdiction over such Seller or
its assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of such
Seller or its assets or might have consequences that would materially and
adversely affect the performance of its obligations and duties hereunder;
(e) Each Seller does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained in
this Agreement;
(f) Immediately prior to the payment of the Purchase Price for a
Mortgage Loan, the related Seller was the sole owner of the related Mortgage and
the indebtedness evidenced by the related Mortgage Note and upon the payment of
the Purchase Price by the Purchaser, the Purchaser will own such Mortgage Loan
free and clear of any lien. In the event that the related Seller retains record
title, such Seller shall retain such record title to each Mortgage, each related
Mortgage Note and the related Mortgage Files with respect thereto for the sole
benefit of the Purchaser as the owner thereof;
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(g) There are no actions or proceedings against, investigations
known to it of, a Seller before any court, administrative or other tribunal (A)
that might prohibit its entering into this Agreement, (B) seeking to prevent the
sale of the Mortgage Loans or the consummation of the transactions contemplated
by this Agreement or (C) that might prohibit or materially and adversely affect
the performance by such Seller of its obligations under, or validity or
enforceability of, this Agreement or the Mortgage Loans;
(h) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by a Seller of, or compliance by such Seller with, this Agreement or
the consummation of the transactions contemplated by this Agreement, except for
such consents, approvals, authorizations or orders, if any, that have been
obtained;
(i) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of each Seller, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
each Seller pursuant to this Agreement are not subject to the bulk transfer or
any similar statutory provisions;
(j) With respect to each Mortgage Loan, each Seller is in possession
of a complete Mortgage File in compliance with Exhibit 5, except for such
documents as have been delivered to the Custodian; and
(k) Neither this Agreement nor any written statement report or other
document prepared and furnished or to be prepared and furnished by each Seller
pursuant to this Agreement or in connection with the transaction contemplated
hereby contains any untrue statement of material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances in which they were made.
7.02. Representations and Warranties Respecting the Servicer. The
Servicer represents warrants and covenants to the Purchaser as of the related
Closing Date and as of each Reconstitution Date, or as of such other date
specifically provided herein:
(a) The Servicer is duly organized, validly existing and in good
standing as a corporation under the laws of the Commonwealth of Pennsylvania and
is and will remain duly licensed and in compliance with the laws of each state
in which any Mortgaged Property is located to the extent necessary to ensure the
enforceability of each Mortgage Loan in accordance with the terms of this
Agreement;
(b) The Servicer has the full power and authority to (1) on behalf
of the Purchaser, (i) hold each Mortgage Loan and (ii) sell each Mortgage Loan,
and (2) execute, deliver and perform, and to enter into and consummate, all
transactions contemplated by this Agreement. The Servicer has duly authorized
the execution, delivery and performance of this Agreement, has duly executed and
delivered this Agreement, and this Agreement, assuming due authorization,
execution and delivery by the Purchaser and the Seller, constitutes a legal,
valid and binding obligation of the Servicer, enforceable against it in
accordance with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency or reorganization;
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(c) The execution and delivery of this Agreement by the Servicer and
the performance of and compliance with the terms of this Agreement will not
violate the Servicer's articles of incorporation or by-laws or constitute a
default under or result in a breach or acceleration of, any material contract,
agreement or other instrument to which the Servicer is a party or which may be
applicable to the Servicer or its assets;
(d) The Servicer is not in violation of, and the execution and
delivery of this Agreement by the Servicer and its performance and compliance
with the terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency having jurisdiction over the Seller or
its assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of the
Servicer or its assets or might have consequences that would materially and
adversely affect the performance of its obligations and duties hereunder;
(e) The Servicer does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained in
this Agreement;
(f) There are no actions or proceedings against, investigations
known to it of, the Servicer before any court, administrative or other tribunal
(i) that might prohibit its entering into this Agreement, (ii) seeking to
prevent the sale of the Mortgage Loans or the consummation of the transactions
contemplated by this Agreement or (iii) other than the subpoena from the United
States Attorney for the Eastern District of Pennsylvania dated May 14, 2003,
that might prohibit or materially and adversely affect the performance by the
Servicer of its obligations under, or validity or enforceability of, this
Agreement or to the Mortgage Loans;
(g) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement or the consummation of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations or orders, if
any, that have been obtained;
(h) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Servicer;
(i) The information delivered by the Servicer to the Purchaser with
respect to the Servicer's loan loss, foreclosure and delinquency experience on
mortgage loans underwritten to the same standards as the Mortgage Loans and
covering mortgaged properties similar to the Mortgaged Properties, is true and
correct in all material respects and includes adjustments for payments which are
timely received but which are not honored, due to insufficient funds or for any
other reason; and
(j) The Servicer will not waive any Prepayment Charge unless it is
waived in accordance with Accepted Servicing Practices or the Servicing
Addendum.
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7.03. Representations and Warranties Regarding Individual Mortgage
Loans. The Sellers and the Servicer hereby represent and warrant to the
Purchaser that, as to each Mortgage Loan, as of the related Closing Date and as
of each Reconstitution Date, or as of such date specifically provided herein;
provided that the application and interpretation of the following representation
and warranties with respect to second lien Mortgage Loans shall be deemed to be
modified only to the extent that a specific requirement or guideline addressed
in the related Seller's underwriting guidelines for the origination of second
lien mortgage loans differs from the comparable requirement or guideline
addressed in such Seller's underwriting guidelines for the origination of first
lien mortgage loans:
(a) The information set forth in the Mortgage Loan Schedule is
complete, true and correct as of the related Cut-off Date;
(b) The Mortgage Loan is in compliance with all requirements set
forth in the Commitment Letter;
(c) No Seller has advanced funds, or induced, solicited or knowingly
received any advance of funds from a party other than the owner of the related
Mortgaged Property, directly or indirectly, for the payment of any amount
required by the Mortgage Note or Mortgage, and no Mortgage Loan has been
delinquent for more than 30 days (as of any month end) in the prior 12 months as
of the related Closing Date;
(d) There are no delinquent taxes, ground rents, water charges,
sewer rents, assessments, insurance premiums, leasehold payments, including
assessments payable in future installments or other outstanding charges
affecting the related Mortgaged Property;
(e) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments, recorded in the applicable public recording office if necessary to
maintain the lien priority of the Mortgage, and which have been delivered to the
Custodian; the substance of any such waiver, alteration or modification has been
approved by the title insurer, to the extent required by the related policy, and
is reflected on the Mortgage Loan Schedule. No instrument of waiver, alteration
or modification has been executed, and no Mortgagor has been released, in whole
or in part, except in connection with an assumption agreement approved by the
title insurer, to the extent required by the policy, and which assumption
agreement has been delivered to the Custodian and the terms of which are
reflected in the Mortgage Loan Schedule;
(f) The Mortgage Note and the Mortgage are not subject to any right
of rescission, set-off, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
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(g) All buildings upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customary in the area where the Mortgaged Property
is located, pursuant to insurance policies conforming to the requirements of the
Servicing Addendum. All such insurance policies contain a standard mortgagee
clause naming the Servicer, its successors and assigns as mortgagee and all
premiums thereon have been paid. If upon origination of the Mortgage Loan, the
Mortgaged Property was in an area identified on a Flood Hazard Map or Flood
Insurance Rate Map issued by the Federal Emergency Management Agency as having
special flood hazards (and such flood insurance has been made available) a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration is in effect. The Mortgage obligates the
Mortgagor thereunder to maintain all such insurance at the Mortgagor's cost and
expense, and on the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to maintain such insurance at Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;
(h) Each Mortgage Loan at the time it was made complied in all
material respects with all applicable local, state and federal laws, including,
without limitation, usury, equal credit opportunity, disclosure, recording and
all applicable predatory and abusive lending laws;
(i) The Mortgage has not been satisfied, canceled, subordinated or
rescinded, in whole or in part, and the Mortgaged Property has not been released
from the lien of the Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such satisfaction, cancellation, subordination,
rescission or release;
(j) With respect to a first lien Mortgage Loan, the Mortgage creates
a first lien or a first priority ownership interest in the related Mortgaged
Property. With respect to a second lien Mortgage Loan, the Mortgage creates a
second lien or a second priority ownership interest in the related Mortgaged
Property;
(k) With respect to any first lien Mortgage Loan, the related
Mortgage is a valid, existing and enforceable first lien on the related
Mortgaged Property and, with respect to any second lien Mortgage Loan, the
related Mortgage is a valid, existing and enforceable second lien on the related
Mortgaged Property, including all improvements on the related Mortgaged Property
subject only to (i) with respect to any second lien Mortgage Loan, the related
First Lien, (ii) the lien of current real property taxes and assessments not yet
due and payable, (iii) covenants, conditions and restrictions, rights of way,
easements, mineral right reservations and other matters of the public record as
of the date of recording of such Mortgage being acceptable to mortgage lending
institutions generally and specifically referred to in the lender's title
insurance policy delivered to the originator of the related Mortgage Loan and
which do not adversely affect the Appraised Value of the related Mortgaged
Property and (iv) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security intended to
be provided by the related Mortgage or the use, enjoyment, value (as determined
by Appraised Value) or marketability of the related Mortgaged Property. Any
security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates (1) with
respect to any first lien Mortgage Loan, a valid, subsisting, enforceable and
perfected first lien and first priority security interest and (2) with respect
to any second lien Mortgage Loan, a valid, subsisting, enforceable and perfected
second lien and second priority security interest, in each case, on the property
described therein, and the Seller has the full right to sell and assign the same
to the Purchaser;
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(l) The Mortgage Note and the related Mortgage are genuine and each
is the legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms;
(m) All parties to the Mortgage Note and the Mortgage had legal
capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage
Note and the Mortgage, and the Mortgage Note and the Mortgage have been duly and
properly executed by such parties. The Mortgagor is a natural person who is a
party to the Mortgage Note and the Mortgage is in an individual capacity or
family trust that is guaranteed by a natural person;
(n) The proceeds of the Mortgage Loan have been fully disbursed to
or for the account of the Mortgagor and there is no obligation for the Mortgagee
to advance additional funds thereunder and any and all requirements as to
completion of any on-site or off-site improvement and as to disbursements of any
escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage have been paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due to the Mortgagee pursuant to the Mortgage Note or Mortgage;
(o) As of the related Closing Date and immediately prior to the sale
of the Mortgage Loan hereunder, each Seller is the sole legal, beneficial and
equitable owner of the related Mortgage Note and the related Mortgage and has
full right to transfer and sell the Mortgage Loan to the Purchaser free and
clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest;
(p) All parties which have had any interest in the Mortgage Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) in compliance with any
and all applicable "doing business" and licensing requirements of the laws of
the state wherein the Mortgaged Property is located;
(q) The Mortgage Loan is covered by an ALTA lender's title insurance
policy issued by a title insurer indicated in the Mortgage File and qualified to
do business in the jurisdiction where the Mortgaged Property is located,
insuring (subject to the exceptions contained in (j)(ii) and (iii) above) the
related Seller or Servicer, its successors and assigns as to the first or
second, as applicable, priority lien of the Mortgage in the original principal
amount of the Mortgage Loan. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress to and from the Mortgaged Property, and
against encroachments by or upon the Mortgaged Property or any interest therein.
The related Seller or Servicer is the sole insured of such lender's title
insurance policy, and such lender's title insurance policy is in full force and
effect and will be in full force and effect upon the consummation of the
transactions contemplated by this Agreement. Such lender's title insurance
policy has been duly and validly endorsed to the Purchaser or the assignment to
the Purchaser of the Servicer's interest therein does not require the consent of
or notification to the related insurer. No claims have been made under such
lender's title insurance policy, and no prior holder of the related Mortgage,
including the related Seller, has done, by act or omission, anything which would
impair the coverage of such lender's title insurance policy;
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(r) As of the related Closing Date, there is no default, breach,
violation or event of acceleration existing under the Mortgage or the Mortgage
Note and no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration; and as of the related Closing Date and
Reconstitution Date, the Sellers or the Servicer has not waived any default,
breach, violation or event of acceleration. With respect to each second lien
Mortgage Loan, (i) the First Lien is in full force and effect, (ii) to the
related Seller's knowledge, there is no default, breach, violation or event of
acceleration existing under such prior mortgage or the related mortgage note,
(iii) no event which, with the passage of time or with notice and the expiration
of any grace or cure period, has occurred that would constitute a default,
breach, violation or event of acceleration thereunder, and (iv) either (A) the
prior mortgage contains a provision which allows or (B) applicable law requires,
the mortgagee under the second lien Mortgage Loan to receive notice of, and
affords such mortgagee an opportunity to cure any default by payment in full or
otherwise under the prior mortgage. For purposes of the foregoing, a delinquent
payment of less than 30 days on a Mortgage Loan in and of itself does not
constitute a default, breach, violation or event of acceleration with respect to
such Mortgage Loan.
(s) There are no mechanics' or similar liens or claims which have
been filed for work, labor or material (and no rights are outstanding that under
law could give rise to such lien) affecting the related Mortgaged Property which
are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage;
(t) All improvements which were considered in determining the
Appraised Value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property. Each
appraisal has been performed in accordance with the provisions of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989;
(u) The Mortgage Loan was (i) originated by a Seller or by a savings
and loan association, a savings bank, a commercial bank or similar banking
institution which is supervised and examined by a federal or state authority, or
by a mortgagee approved as such by the Secretary of HUD or (ii) acquired by a
Seller directly through loan brokers or correspondents such that (a) the
Mortgage Loan was originated in conformity with such Seller's underwriting
guidelines, (b) such Seller approved the Mortgage Loan prior to funding and (c)
such Seller provided, or caused one of its lenders to provide, the funds used to
originate the Mortgage Loan and acquired the Mortgage Loan on the date of
origination thereof;
(v) Principal payments on the Mortgage Loan are scheduled to
commence no more than sixty days after the proceeds of the Mortgage Loan are
disbursed. The Mortgage Loan bears interest at the Mortgage Interest Rate.
Interest on the Mortgage Loan is calculated on the basis of a 360-day year
consisting of twelve 30-day months. The Mortgage Note does not permit negative
amortization;
(w) The origination and collection practices used by the Sellers and
the Servicer, as applicable, with respect to each Mortgage Note and Mortgage
have been in all respects legal, proper, prudent and customary in the mortgage
origination and servicing industry. The Mortgage Loan has been serviced by the
Servicer and any predecessor servicer in accordance with the terms of the
Mortgage Note and applicable law. With respect to escrow deposits and Escrow
Payments, if any, all such payments are in the possession of, or under the
control with, the Servicer, and there exist no deficiencies in connection
therewith for which customary arrangements for repayment thereof have not been
made. No escrow deposits or Escrow Payments or other charges or payments due the
Servicer have been capitalized under any Mortgage or the related Mortgage Note;
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(x) The Mortgaged Property is free of damage and waste and there is
no proceeding pending for the total or partial condemnation thereof;
(y) The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure. Since the date of origination of the Mortgage Loan, the
Mortgaged Property has not been subject to any bankruptcy proceeding or
foreclosure proceeding and the Mortgagor has not filed for protection under
applicable bankruptcy laws. There is no homestead or other exemption available
to the Mortgagor, which would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage. The
Mortgagor has not notified the Servicer or any Seller and neither the Sellers
nor the Servicer has any knowledge of any relief requested or allowed to the
Mortgagor under the Soldiers and Sailors Civil Relief Act of 1940;
(z) The related Mortgaged Property is not a leasehold estate or, if
such Mortgaged Property is a leasehold estate, the remaining term of such lease
is at least ten (10) years greater than the remaining term of the related
Mortgage Note;
(aa) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the Mortgaged
Property, any commercial mortgage granted for a business purpose and the
security interest of any applicable security agreement or chattel mortgage
referred to above;
(bb) The Mortgage File contains an appraisal of the related
Mortgaged Property made and signed, prior to the approval of the Mortgage Loan
application, by a qualified appraiser who had no interest, direct or indirect in
the Mortgaged Property or in any loan made on the security thereof, whose
compensation is not affected by the approval or disapproval of the Mortgage
Loan;
(cc) In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
Mortgagor;
(dd) No Mortgage Loan contains provisions pursuant to which Monthly
Payments are (i) paid or partially paid with funds deposited in any separate
account established by the related Seller, the Mortgagor, or anyone on behalf of
the Mortgagor, (ii) paid by any source other than the Mortgagor or (ii) contains
any other similar provisions which may constitute a "buydown" provision. The
Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature;
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(ee) The Mortgagor has executed a statement to the effect that the
Mortgagor has received the specified disclosure materials required by applicable
law with respect to the making of a Refinanced Mortgage Loan, and evidence of
such receipt is and will remain in the Mortgage File;
(ff) The Mortgage Note, the Mortgage, the Assignment of Mortgage and
any other documents required to be delivered with respect to each Mortgage Loan
pursuant to the Custodial Agreement, have been delivered to the Custodian all in
compliance with the specific requirements of the Custodial Agreement;
(gg) The Mortgaged Property is lawfully occupied under applicable
law; all inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of the Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy, have been made or obtained from the appropriate
authorities;
(hh) No error, omission, misrepresentation, negligence, fraud or
similar occurrence with respect to a Mortgage Loan has taken place on the part
of any person, including, without limitation, the Mortgagor, any appraiser, any
builder or developer, or any other party involved in the origination of the
Mortgage Loan or in the application of any insurance in relation to such
Mortgage Loan;
(ii) The Assignment of Mortgage, is in recordable form and (other
than with respect to the blank assignee) is acceptable for recording under the
laws of the jurisdiction in which the Mortgaged Property is located. When
endorsed as provided for in this Agreement, the Mortgage Notes will be duly
endorsed under applicable law;
(jj) Any principal advances made to the Mortgagor prior to the
related Cut-off Date have been consolidated with the outstanding principal
amount secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term. The lien
of the Mortgage securing the consolidated principal amount is expressly insured
as having first lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by other title
evidence. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan;
(kk) Reserved;
(ll) No statement, report or other document constituting a part of
the Mortgage File contains any material untrue statement of fact or omits to
state a fact necessary to make the statements contained therein not misleading
which would, either individually or in the aggregate, have a material adverse
effect on the value of the Mortgage Loans; no error or omission,
misrepresentations, negligence, fraud or similar occurrence with respect to any
Mortgage Loan has taken place on the part of any person, including without
limitation, the Mortgagor, any appraiser, any builder or developer, or any other
party involved in the origination of the Mortgage Loan or in the application for
any insurance in relation to the Mortgage Loan;
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(mm) Assuming a REMIC election were made with respect to a trust of
which the Mortgage Loans are a part, each Mortgage Loan constitutes a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code;
(nn) No Mortgage Loan has an LTV or CLTV, as applicable, of more
than 100%;
(oo) With respect to any second lien Mortgage Loan, either (a) no
consent for the second lien Mortgage Loan is required by the holder of the
related First Lien or (b) such consent has been obtained and is contained in the
Mortgage File;
(pp) With respect to any second lien Mortgage Loan, neither the
Sellers nor the Servicer has received notice of (1) any proceeding for the total
or partial condemnation of any Mortgaged Property or (2) any default under any
mortgage, lien or other encumbrance senior to the related Mortgage;
(qq) With respect to any second lien Mortgage Loan, where required
by law in the jurisdiction in which the Mortgaged Property is located, the
original lender has filed for record a request for notice of any action by the
senior lienholder under the related First Lien, and the original lender has
notified any senior lienholder in writing of the existence of the second lien
Mortgage Loan and requested notification of any action to be taken against the
Mortgagor by the senior lienholder;
(rr) No second lien Mortgage Loan is a "home equity line of credit";
(ss) As of the related Closing Date and with respect to any second
lien Mortgage Loan, neither the Seller nor the Servicer has received a notice of
default of a First Lien that has not been cured. For purposes of the foregoing,
a delinquent payment of less than 30 days on a Mortgage Loan in and of itself
does not constitute a default, breach, violation or event of acceleration with
respect to such Mortgage Loan;
(tt) No Mortgage Loan is a "high cost" mortgage loan, as defined in
the applicable predatory and abusive lending laws, including, but not limited
to, the Georgia Fair Lending Act and Section 6-L of the New York State Banking
Law; and
(uu) No Mortgage Loan is subject to the Home Ownership and Equity
Protection Act of 1994 ("HOEPA") or in violation of any comparable federal,
state or local law;
(vv) No Mortgage Loan originated on or after October 1, 2002 and
before March 7, 2003 is secured by a Mortgaged Property located in the State of
Georgia;
(ww) No proceeds from any Mortgage Loan were used to finance
single-premium credit insurance policies;
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(xx) No Mortgage Loan will impose a Prepayment Charge for a term in
excess of five years;
(yy) The Servicer has fully furnished, in accordance with the Fair
Credit Reporting Act and its implementing regulations, accurate and complete
information (i.e., favorable and unfavorable) on its borrower credit files to
Equifax, Experian and Trans Union Credit Information Seller, on a monthly basis;
(zz) With respect to any Mortgage Loan secured by a manufactured
home, each such contract is secured by a "single family residence" within the
meaning of Section 25(e)(10) of the Internal Revenue Code of 1986, as amended
(the "Code"). The fair market value of the manufactured home securing each such
contract was at least equal to 80% of the adjusted issue price of the contract
at either (i) the time the contract was originated (determined pursuant to REMIC
Provisions) or (ii) the time the contract is transferred to the Initial
Purchaser. Assuming a REMIC election were made with respect to a trust of which
the Mortgage Loans secured by a manufactured home are a part, each such contract
is a "qualified mortgage" under Section 860(a)(3) of the Code.
(aaa) With respect to each Mortgage Loan subject to a Prepayment
Charge, such Prepayment Charge, at the time of the origination of the related
Mortgage Loan, is enforceable and in compliance with all applicable local, state
and federal law.
7.04. Remedies for Breach of Representations and Warranties. It is
understood and agreed that the representations and warranties set forth in
Subsections 7.01, 7.02 and 7.03 shall survive the sale of the Mortgage Loans to
the Purchaser and shall inure to the benefit of the Purchaser, notwithstanding
any restrictive or qualified endorsement on any Mortgage Note or Assignment of
Mortgage or the examination or lack of examination of any Mortgage File. Upon
discovery by the Purchaser of a breach of any of the foregoing representations
and warranties which materially and adversely affects the value of the Mortgage
Loans or the interest of the Purchaser (or which materially and adversely
affects the interests of the Purchaser in the related Mortgage Loan in the case
of a representation and warranty relating to a particular Mortgage Loan), the
party discovering such breach shall give prompt written notice to the others.
Any breach of the representations and warranties set forth in Subsections
7.03(uu) through 7.03(aaa) shall be deemed to materially and adversely affect
the value of the related Mortgage Loan. With respect to any representation and
warranties described in this Subsections 7.01, 7.02 and 7.03 which are made to a
Seller's knowledge if it is discovered that the substance of such representation
and warranty is inaccurate and such inaccuracy materially and adversely affects
the value of the related Mortgage Loan or the interests of the Purchaser
therein, notwithstanding such Seller's lack of knowledge with respect to the
substance of such representation or warranty, such inaccuracy shall be deemed a
breach of the applicable representation or warranty. With respect to the
representation and warranty described in Subsection 7.02(f)(iii), if it is
discovered that the substance of such representation and warranty is inaccurate
and such inaccuracy materially and adversely affects the value of the Mortgage
Loans or the interests of the Purchaser therein, notwithstanding the disclosure
of the existence of the subpoena by the Sellers, such inaccuracy shall be deemed
a breach of that representation and warranty.
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Within 60 days of the earlier of either discovery by or notice to a
Seller of any breach of a representation or warranty which materially and
adversely affects the value of a Mortgage Loan or the Mortgage Loans, such
Seller shall use its best efforts promptly to cure such breach in all material
respects and, if such breach cannot be cured, such Seller shall, at the
Purchaser's option, repurchase such Mortgage Loan at the Repurchase Price. In
the event that a breach shall involve any representation or warranty set forth
in Subsection 7.01 which materially and adversely affects the value of the
Mortgage Loans and such breach cannot be cured within 60 days of the earlier of
either discovery by or notice to such Seller of such breach, all of the Mortgage
Loans shall, at the Purchaser's option, be repurchased by the Sellers at the
Repurchase Price. Any repurchase of a Mortgage Loan(s) pursuant to the foregoing
provisions of this Subsection 7.04 shall occur on a date designated by the
Purchaser and shall be accomplished (i) during the Interim Servicing Period by
deposit in the Custodial Account of the amount of the Repurchase Price for
distribution to the Purchaser on the next scheduled Distribution Date and (ii)
following the Interim Servicing Period, by wire transfer of immediately
available funds on the repurchase date to an account designated by the
Purchaser.
Notwithstanding the foregoing, if a Seller discovers or receives
notice of any such breach or defect, such Seller may remove any such Deleted
Mortgage Loan, rather than repurchase any such Mortgage Loan as provided above,
and substitute in its place a Qualified Substitute Mortgage Loan(s).
For each Qualified Substitute Mortgage Loan(s) substituted for a
Deleted Mortgage Loan, the related Seller shall deliver to the Custodian the
documents specified in Subsection 6.03, with the Mortgage Note endorsed as
required by Subsection 6.03 and, where applicable, original documents having
evidence of recording thereon. Such Seller shall also take such actions with
respect to the documents pertaining to each such Qualified Substitute Mortgage
Loan as are required to be taken pursuant to Subsection 6.03 with respect to the
Mortgage Loans originally subject to this Agreement. For purposes of applying
the requirements of Subsection 6.03 to any Qualified Substitute Mortgage Loan,
references in such Subsection to the related Closing Date shall be deemed to be
references to the applicable date of substitution of such Qualified Substitute
Mortgage Loan. Each Seller shall deposit in the Custodial Account the Monthly
Payment due on each Qualified Substitute Mortgage Loan in the month following
the date of such substitution (with the interest portion thereof adjusted to the
applicable Mortgage Loan Remittance Rate), and the Monthly Payment due with
respect to such Qualified Substitute Mortgage Loan in the month of substitution
shall be retained by such Seller. For the month of substitution, distributions
to the Purchaser shall include the Monthly Payment due on such Deleted Mortgage
Loan in the month of substitution, including all interest due up to, but not
including, the date of substitution, and each Seller shall thereafter be
entitled to retain all amounts subsequently received by such Seller in respect
of such Deleted Mortgage Loan. Each Seller shall amend the related Mortgage Loan
Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of
this Agreement and the substitution of the Qualified Substitute Mortgage Loan(s)
and shall give written notice to the Purchaser that such substitution has taken
place, which notice shall have attached thereto a copy of such amended Mortgage
Loan Schedule in hard copy or "read-only" electronic format (as reasonably
acceptable to the Sellers and the Purchaser). Upon such substitution, each such
Qualified Substitute Mortgage Loan shall be subject to the terms of this
Agreement in all respects, and each Seller shall make and shall be deemed to
have made, with respect to such Qualified Substitute Mortgage Loan(s), as of the
date of substitution or of any reconstitution, the representations and
warranties set forth in Subsections 7.01 and 7.03 (and, for purposes of applying
such representations and warranties to each such Qualified Substitute Mortgage
Loan, references in such Subsections to the related Closing Date shall be deemed
to be references to such date of substitution of such Qualified Substitute
Mortgage Loan).
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For any month in which a Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer
shall determine and notify such Seller and the Purchaser of the amount, if any,
by which the aggregate Stated Principal Balance of all such Qualified Substitute
Mortgage Loans as of the date of substitution is less than the aggregate Stated
Principal Balance of all such Deleted Mortgage Loans (after application of
scheduled principal payments due in the month of substitution). Each Seller
shall deposit from its own funds (and without any right of reimbursement
therefor) into the Custodial Account an amount equal to the amount of such
shortfall.
Prior to the repurchase or substitution of any deficient Mortgage
Loan, the Purchaser and each Seller shall arrange for (1) the reassignment of
the repurchased Mortgage Loan or Deleted Mortgage Loan to each Seller, without
recourse, and (2) the delivery to such Seller of any documents held by the
Custodian relating to the repurchased Mortgage Loan or Deleted Mortgage Loan. In
the event the Repurchase Price is deposited in the Custodial Account, each
Seller shall, simultaneously with such deposit, give written notice to the
Purchaser that such deposit has taken place. Upon such repurchase, the Mortgage
Loan Schedule shall be amended to reflect the withdrawal of the repurchased
Mortgage Loan from this Agreement.
Payments of principal received by the Purchaser with respect to a
repurchased Mortgage Loan shall belong to the respective Seller (to the extent
not deducted in the Stated Principal Balance on the related repurchase date) and
the Purchaser shall forward such payments of principal to the respective Seller
within five (5) Business Days.
Each Seller shall also be required to promptly repurchase at the
Repurchase Price or substitute any Mortgage Loan that is a First Payment Default
Loan; provided, however, that such repurchase request must be made within 90
days of such default.
In addition to such cure, repurchase and substitution obligation,
the Sellers or the Servicer, as applicable, shall indemnify the Purchaser and
hold it harmless against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs including those incurred
in an action between the parties, judgments, and other costs and expenses
resulting from any claim, demand, defense or assertion based on or grounded
upon, or resulting from, a breach of a Seller's or Servicer's representations
and warranties, as applicable, contained in Section 7 (including the
representation and warranty described in Subsection 7.02(f)(iii) notwithstanding
the disclosure to the Purchaser of the existence of the subpoena referred to
therein). It is understood and agreed that the obligations of the Sellers set
forth in this Section 7 to cure, repurchase or substitute a defective Mortgage
Loan and to indemnify the Purchaser constitute the sole remedies of the
Purchaser respecting a breach of a Seller's representations and warranties
contained in Section 7.
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Any cause of action against the Sellers or the Servicer, as
applicable, relating to or arising out of the breach of any representations and
warranties made in Subsections 7.01, 7.02 or 7.03, as applicable, shall accrue
as to any Mortgage Loan upon (i) discovery of such breach by the Purchaser or
notice thereof by a Seller or the Servicer, as applicable, to the Purchaser,
(ii) failure by the Sellers or the Servicer, as applicable, to cure such breach
or repurchase such Mortgage Loan as specified above, and (iii) demand upon a
Seller or the Servicer, as applicable, by the Purchaser for compliance with the
relevant provisions of this Agreement.
7.05. Prepayments and Partial Prepayments. (a) In the event that any
full Principal Prepayments are made on any Mortgage Loans on or before ninety
(90) days after the related Closing Date and such Mortgage Loans do not entail a
Prepayment Charge, the Seller shall pay to the Purchaser an amount equal to the
sum of (a) the product of (i) the aggregate amount of such full Principal
Prepayment multiplied by (ii) the excess, if any, of the Purchase Price
percentage as stated in the Commitment Letter over 100%.
(b) Any Prepayment Charges received on the Mortgage Loans shall be
distributed to the Purchaser. In the event the Servicer waives the obligation of
a Mortgagor to make a Prepayment Charge in connection with any full or partial
Principal Prepayment, the Servicer shall distribute or cause to be distributed
the amount of the Prepayment Charge otherwise payable to the Purchaser. The
Servicer shall be required to enforce the obligation of any Mortgagor to pay a
Prepayment Charge.
(c) The Purchaser agrees not to directly solicit the Mortgagors for
a refinance during the ninety day period referred to in Section 7.05(a).
7.06. First Payment Default Loans. With respect to each First
Payment Default Loan, the related Seller shall (i) repurchase such First Payment
Default Loan at the Purchase Price, plus accrued interest on the Stated
Principal Balance at the Mortgage Loan Remittance Rate from the date on which
interest has last been paid and distributed to the Purchaser to date of
repurchase, less amounts received or advanced in respect of such First Payment
Default Loan which are being held in the Custodial Account for distribution in
the month of repurchase, plus all actual costs and expenses (excluding
Purchaser's internal or overhead costs), including reasonable attorney fees,
incurred by the Purchaser to effect such repurchases, within thirty (30) days of
demand thereof, (ii) recalculate the purchase price of such First Payment
Default Loan as agreed to by the parties and remit any monies owed to the
Purchaser as a result of such recalculation within thirty (30) days of demand
thereof, or (iii) substitute a Qualified Substitute Mortgage Loan for such First
Payment Default Mortgage Loan; provided, however, that any such request to
repurchase or substitute a Mortgage Loan must be made within 90 days of such
default.
8. Closing. The closing shall take place on the related Closing Date.
At the Purchaser's option, the closing shall be either: by telephone, confirmed
by letter or wire as the parties shall agree, or conducted in person, at such
place as the parties shall agree. The closing for the Mortgage Loans to be
purchased on the related Closing Date shall be subject to each of the following
conditions:
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(a) all of the representations and warranties of the Sellers and the
Servicer under this Agreement shall be true and correct as of the related
Closing Date and no event shall have occurred which, with notice or the passage
of time, would constitute a default under this Agreement;
(b) the Initial Purchaser shall have received, or the Initial
Purchaser's attorneys shall have received in escrow, all Closing Documents and
other documents specified in Section 9 of this Agreement in such forms as are
agreed upon and acceptable to the Purchaser, duly executed by all signatories
other than the Purchaser as required pursuant to the terms hereof;
(c) the Sellers shall have delivered and released to the Custodian
all documents required pursuant to the Custodial Agreement; and
(d) all other terms and conditions of this Agreement shall have been
complied with.
Subject to the foregoing conditions, the Initial Purchaser shall pay
to the related Seller on the related Closing Date the Purchase Price, plus
accrued interest pursuant to Section 4, by wire transfer of immediately
available funds to the account designated by such Seller.
9. Closing Documents.
(a) On or before the related Closing Date, the related Seller or the
Servicer, as applicable, shall submit to the Initial Purchaser fully executed
originals of the following documents:
1. this Agreement, in counterparts;
2. the Custodial Agreement, in counterparts, in the form
attached as Exhibit 6 hereto;
3. a Custodial Account Letter Agreement in the form attached as
Exhibit 7 hereto;
4. an Escrow Account Letter Agreement in the form attached as
Exhibit 8 hereto;
5. Officer's Certificates of each Seller, in the form of Exhibit
1A hereto, including all attachments thereto;
6. an Officer's Certificate of the Servicer, in the form of
Exhibit 1B hereto, including all attachments thereto;
7. Opinion(s) of Counsel to Sellers and the Servicer, in the
form of Exhibit 2 hereto, including any attachments thereto;
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8. an Assignment and Conveyance in the form of Exhibit 4 hereto;
and
9. the related Commitment Letter.
(b) The Closing Documents for the Mortgage Loans to be purchased on
the related Closing Date shall consist of fully executed originals of the
following documents:
1. the related Mortgage Loan Schedule, one copy to be attached
hereto and one copy to be attached to the Custodian's counterpart to the
Custodial Agreement, as the Mortgage Loan Schedule thereto;
2. a Custodian's Trust Receipt and Certification, as required
under the Custodial Agreement, in the form attached to the Custodial Agreement;
3. Officer's Certificates of the Sellers, in the form of Exhibit
1A hereto, including all attachments thereto;
4. an Officer's Certificate of the Servicer, in the form of
Exhibit 1B hereto, including all attachments thereto;
5. Opinion(s) of Counsel to the Sellers and the Servicer, in the
form of Exhibit 2 hereto, including any attachments thereto;
6. a Security Release Certification, in the form of Exhibit 3
hereto executed by any Person, as requested by the Initial Purchaser, if any of
the Mortgage Loans has at any time been subject to any security interest, pledge
or hypothecation for the benefit of such Person;
7. an Assignment and Conveyance in the form of Exhibit 4 hereto;
and
8. the related Commitment Letter, if such Commitment Letter was
not delivered pursuant to Section 9(a) above.
10. Costs. The Sellers shall pay all costs and expenses incurred in
connection with the transfer and delivery of the Mortgage Loans at the Initial
Purchaser's sole discretion and direction, including without limitation
recording fees, fees for title policy endorsements and continuations, fees for
recording Assignments of Mortgage, (including any fees to complete Assignments
of Mortgages) and the fees and expenses of the Sellers' accountants and
attorneys. The Initial Purchaser shall pay any commissions due its salesmen, and
the costs and expenses of printing (or otherwise reproducing) and delivering a
prospectus, prospectus supplement, any private placement memorandum, a
Reconstitution Agreement and related documents including the costs of printing
any mortgage pass-through certificates, the fees, costs and expenses of any
trustee under a Reconstitution Agreement, the fees and expenses of the
Purchaser's counsel in connection with the preparation of any Reconstitution
Agreements, any filing fees charged by the Securities and Exchange Commission
for registration of certificates related to a Reconstitution Agreement and the
fees charged by any rating agency to rate certificates related to a
Reconstitution Agreement.
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11. Servicer's Servicing Obligations. The Servicer, as independent
contract servicer, shall service and administer the Mortgage Loans during the
Interim Servicing Period in accordance with the Servicing Addendum.
12. Reconstitution. The Sellers, the Servicer and the Initial Purchaser
agree that with respect to some or all of the Mortgage Loans, the Initial
Purchaser may effect one or more Whole Loan Transfers or one or more
Pass-Through Transfers within the Reconstitution Period for such Mortgage Loan;
however, the Initial Purchaser shall not be entitled to effect more than two
Reconstitutions during the Reconstitution Period. With respect to any
Reconstitution, the Sellers and the Servicer agree to the following:
(a) to cooperate fully with the Initial Purchaser and any
prospective purchaser with respect to all reasonable requests and due diligence
procedures including participating in meetings with rating agencies, bond
insurers and such other parties as the Initial Purchaser shall designate and
participating in meetings with prospective purchasers of the Mortgage Loans or
interests therein and providing information reasonably requested by such
purchasers;
(b) to execute all Reconstitution Agreements provided that each of
the Sellers, the Servicer and the Initial Purchaser is given an opportunity to
review and reasonably negotiate in good faith the content of such documents not
specifically referenced or provided for herein; provided, however, no
Reconstitution Agreement shall contain any additional provisions which would be
deemed to be onerous by the parties unless such provisions are standard industry
practice for similar transactions;
(c) with respect to any Whole Loan Transfer or Pass-Through
Transfer, the Sellers and the Servicer shall make the representations and
warranties contained in this Agreement regarding the Sellers or the Servicer, as
applicable, and the Mortgage Loans and such other reasonable representations,
warranties and covenants which in form and substance conform to the
representations and warranties in this Agreement and to secondary market
standards for securities backed by mortgage loans similar to the Mortgage Loans
and other covenants as required by the Initial Purchaser and one or more
nationally recognized rating agencies for "AAA" rated mortgage pass-through
transactions; provided that the Sellers and the Servicer shall only be required
to make such representations and warranties with respect to the period during
which the Servicer serviced the related Mortgage Loans;
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(d) to deliver to the Initial Purchaser for inclusion in any
prospectus or other offering material such publicly available information
regarding the Servicer, its financial condition and its mortgage loan
delinquency, foreclosure and loss experience and any additional information
reasonably requested by the Initial Purchaser, and to deliver to the Initial
Purchaser any similar non-public, unaudited financial information (which the
Initial Purchaser may, at its option and cost, have audited by certified public
accountants) and such other information as is reasonably requested by the
Initial Purchaser and which the Servicer is capable of providing without
unreasonable effort or expense. The Servicer and each Seller agrees to indemnify
and hold harmless the Purchaser and each person, if any, who controls the
Purchaser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Party") against any and all losses, claims, expenses, damages or
liabilities to which the Indemnified Party may become subject, under the
Securities Act of 1933, as amended (the "1933 Act") or otherwise, insofar as
such losses, claims, expenses, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (a) any untrue statement or alleged
untrue statement of any material fact contained in the Prospectus Supplement or
the related Prospectus (or in any related private placement memorandum) or the
omission or the alleged omission to state therein a material fact necessary in
order to make the statements therein not misleading, in each case to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with information furnished
in writing to the Purchaser by a Seller or the Servicer, as applicable,
specifically for use therein or (b) any representation, warranty or covenant
made by a Seller or the Servicer, as applicable, in this Agreement or in any
Reconstitution Agreement, on which the Purchaser has relied, being, or alleged
to be, untrue or incorrect; provided, however, that to the extent that any such
losses, claims, expenses, damages or liabilities to which the Indemnified Party
may become subject arise out of or are based upon both (1) statements,
omissions, representations, warranties or covenants of a Seller or the Servicer,
as applicable, described in clause (a) or (b) above and (2) any other factual
basis, the Sellers or the Servicer, as applicable, shall indemnify and hold
harmless the Indemnified Party only to the extent that the losses, claims,
expenses, damages or liabilities of the person or persons asserting the claim
are determined to arise from or be based upon matters set forth above. This
indemnity agreement will be in addition to any liability that each Seller or the
Servicer, as applicable, may otherwise have. Notwithstanding the foregoing, each
Seller and the Servicer shall have the right to review and comment on the
Prospectus Supplement prior to the finalization of such document;
(e) to deliver to the Initial Purchaser and to any Person designated
by the Initial Purchaser, at the Seller's expense, such statements and audit
letters of reputable, certified public accountants pertaining to information
provided by the Seller pursuant to clause (d) above as shall be reasonably
requested by the Initial Purchaser;
(f) to deliver to the Initial Purchaser, and to any Person
designated by the Initial Purchaser, such legal documents, Opinions of Counsel
and in-house Opinions of Counsel as are customarily delivered by originators or
servicers, as the case may be, and reasonably determined by the Initial
Purchaser to be necessary in connection with Whole Loan Transfers or
Pass-Through Transfers, as the case may be, such Opinions of Counsel and
in-house Opinions of Counsel for a Pass-Through Transfer to be in a form
reasonably acceptable to the Initial Purchaser, it being understood that the
cost of any opinions of outside special counsel that may be required for a Whole
Loan Transfer or Pass-Through Transfer, as the case may be, shall be the
responsibility of the Initial Purchaser;
(g) to cooperate fully with the Initial Purchaser and any
prospective purchaser with respect to the delivery of Mortgage Loan Documents
and other related documents, with respect to servicing requirements reasonably
requested by the rating agencies and credit enhancers;
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(h) to negotiate in good faith and execute one or more subservicing
agreements between the Servicer and any master servicer which is generally
considered to be a prudent master servicer in the secondary mortgage market,
designated by the Initial Purchaser in its sole discretion after consultation
with the Servicer and/or one or more custodial and servicing agreements among
the Initial Purchaser or an Affiliate, the Servicer, the Sellers and a third
party custodian/trustee which is generally considered to be a prudent
custodian/trustee in the secondary mortgage market and designated by the Initial
Purchaser in its sole discretion after consultation with the Servicer, in either
case at a market rate subservicing fee and for the purpose of pooling the
Mortgage Loans with other Mortgage Loans for resale or securitization; and
(i) in connection with any securitization of any Mortgage Loans, to
execute a pooling and servicing agreement, which pooling and servicing agreement
may, at the Initial Purchaser's direction, contain mortgage loan representations
and warranties which in form and substance conform to the representations and
warranties in this Agreement and to secondary market standards for securities
backed by mortgage loans similar to the Mortgage Loans and other covenants as
are required by the Initial Purchaser and one or more nationally recognized
rating agencies for "AAA" rated mortgage pass-through transactions, unless
otherwise mutually agreed. If the Initial Purchaser deems it advisable at any
time to pool the Mortgage Loans with other mortgage loans for the purpose of
resale or securitization, the Servicer agrees to execute one or more
subservicing agreements between itself (as master servicer) and a sub-servicer
designated by the Initial Purchaser at its sole discretion, and/or one or more
servicing agreements among the Servicer (as servicer), the Initial Purchaser or
an Affiliate and a trustee designated by the Initial Purchaser at its sole
discretion, such agreements in each case incorporating terms and provisions,
such as a market rate subservicing fee, substantially identical to those
described in the immediately preceding paragraph.
All Mortgage Loans not sold or transferred pursuant to a Whole Loan
Transfer or Pass-Through Transfer shall be subject to this Agreement and shall
continue to be serviced for the remainder of the Interim Servicing Period in
accordance with the terms of this Agreement and with respect thereto this
Agreement shall remain in full force and effect.
13. The Servicer.
13.01. Additional Indemnification by the Servicer. In addition to
the indemnification provided in Subsection 7.04, the Servicer shall indemnify
the Purchaser and hold the Purchaser harmless against any and all claims,
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments, and any other costs, fees and expenses that
the Purchaser may sustain in any way related to the failure of the Servicer to
perform its obligations under this Agreement including but not limited to the
Servicer's obligation to service and administer the Mortgage Loans in strict
compliance with the terms of this Agreement or any Reconstitution Agreement
entered into pursuant to Section 12.
13.02. Merger or Consolidation of the Servicer. The Servicer shall
keep in full force and effect its existence, rights and franchises as a
corporation under the laws of the state of its incorporation except as permitted
herein, 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 Mortgage Loans, and to enable the Servicer to perform its duties under
this Agreement.
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Any Person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person succeeding
to the business of the Servicer, shall be the successor of the Servicer
hereunder, as applicable, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor or surviving
Person with respect to the Servicer shall be an institution whose deposits are
insured by FDIC or a company whose business is the origination and servicing of
mortgage loans, shall be a ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac approved seller/servicer
and shall satisfy any requirements of Section 16 with respect to the
qualifications of a successor to the Servicer.
13.03. Limitation on Liability of the Sellers, the Servicer and
Others. Neither the Servicer, nor any of the officers, employees or agents of
the Servicer shall be under any liability to the Purchaser for any action taken
or for refraining from the taking of any action in good faith in connection with
the servicing of the Mortgage Loans pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Sellers
or the Servicer or any such person against any breach of warranties or
representations made herein, or failure to perform its obligations in strict
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 Sellers or the Servicer or any officer,
employee or agent of the Sellers or Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. Neither the Sellers nor the Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its obligation to sell or duty to service the
Mortgage Loans in accordance with this Agreement and which in its opinion may
involve it in any expenses or liability; provided, however, that the Servicer
may, with the consent of the Purchaser, undertake any such action which it may
deem necessary or desirable in respect to this Agreement and the rights and
duties of the parties hereto. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities for which the Purchaser shall be liable, the Servicer or shall be
entitled to reimbursement therefor from the Purchaser upon written demand except
when such expenses, costs and liabilities are subject to the Servicer's
indemnification under Subsections 7.04 or 13.01.
13.04. Servicer Not to Resign. The Servicer shall not assign this
Agreement or any rights or obligations hereunder or resign from the obligations
and duties hereby imposed on it except by mutual consent of the parties hereto,
or with respect to the Servicer, upon the determination that its servicing
duties hereunder are no longer permissible under applicable law and such
incapacity cannot be cured by the Servicer in which event the Servicer may
resign as Servicer. Any such determination permitting the resignation of the
Servicer as servicer shall be evidenced by an Opinion of Counsel to such effect
delivered to the Purchaser which Opinion of Counsel shall be in form and
substance acceptable to the Purchaser. 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 16.
13.05. Transfer of Servicing. The Servicer acknowledges that the
Purchaser has acted in reliance upon the adequacy of the Servicer's servicing
facilities, personnel, records and procedures, its integrity, reputation and
financial standing and the continuance thereof. Without in any way limiting the
generality of this Section and except with respect to the transfer of servicing
described below, the Servicer shall neither assign this Agreement nor the
servicing hereunder nor delegate its rights or duties hereunder or any portion
thereof, nor sell or otherwise dispose of all or substantially all of its
property or assets, without the prior written approval of the Purchaser, which
consent will not be unreasonably withheld.
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On the applicable Servicing Transfer Date, the Purchaser, or its
designee, shall assume all servicing responsibilities related to, and the
Sellers shall cause the Servicer to cease all servicing responsibilities related
to, the related Mortgage Loans subject to such Servicing Transfer Date. On or
prior to the applicable Servicing Transfer Date, the Sellers shall, at its sole
cost and expense, take such steps as may be necessary or appropriate to
effectuate and evidence the transfer of the servicing of the related Mortgage
Loans to the Purchaser, or its designee, including but not limited to the
following:
(a) The Sellers shall cause the Servicer to mail to the Mortgagor of
each related Mortgage Loan a letter advising such Mortgagor of the transfer of
the servicing of the related Mortgage Loan to the Purchaser, or its designee, in
accordance with the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ National Affordable Housing Act of 1990;
provided, however, the content and format of the letter shall have the prior
approval of the Purchaser. The Sellers shall cause the Servicer to provide the
Purchaser with copies of all such related notices no later than the Servicing
Transfer Date.
(b) The Sellers shall cause the Servicer to transmit to the
applicable taxing authorities and insurance companies (including primary
mortgage insurance policy insurers, if applicable) and/or agents, notification
of the transfer of the servicing to the Purchaser, or its designee, and
instructions to deliver all notices, tax bills and insurance statements, as the
case may be, to the Purchaser from and after the Servicing Transfer Date. The
Sellers shall cause the Servicer to provide the Purchaser with copies of all
such notices no later than the Servicing Transfer Date.
(c) The Sellers shall cause the Servicer to forward to the
Purchaser, or its designee, all servicing records and the Servicing File in the
Servicer's possession relating to each related Mortgage Loan.
(d) The Sellers shall cause the Servicer to provide the Purchaser,
or its designee, with immediately available funds by wire transfer in the amount
of the net Escrow Payments and suspense balances and all loss draft balances
associated with the related Mortgage Loans. The Sellers shall cause the Servicer
to provide the Purchaser with an accounting statement, in electronic format
acceptable to the Purchaser in its sole discretion, of Escrow Payments and
suspense balances and loss draft balances sufficient to enable the Purchaser to
reconcile the amount of such payment with the accounts of the Mortgage Loans.
Additionally, the Sellers shall cause the Servicer to wire transfer to the
Purchaser the amount of any agency, trustee or prepaid Mortgage Loan payments
and all other similar amounts held by the Servicer.
(e) The Sellers shall cause the Servicer to provide to the
Purchaser, or its designee, copies of all assumption and payoff statements
generated by the Servicer on the related Mortgage Loans from the related Cut-off
Date to the Servicing Transfer Date.
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(f) Prior to the Servicing Transfer Date all payments received by
the Servicer or the Sellers on each related Mortgage Loan shall be properly
applied by the Sellers to the account of the particular Mortgagor.
(g) The amount of any related Monthly Payments received by the
Seller after the Servicing Transfer Date shall be forwarded to the Purchaser by
overnight mail on the date of receipt. Each Seller shall notify the Purchaser of
the particulars of the payment, which notification requirement shall be
satisfied if such Seller forwards with its payment sufficient information to
permit appropriate processing of the payment by the Purchaser. Such Seller shall
assume full responsibility for the necessary and appropriate legal application
of such Monthly Payments received by such Seller after the Servicing Transfer
Date with respect to related Mortgage Loans then in foreclosure or bankruptcy;
provided, for purposes of this Agreement, necessary and appropriate legal
application of such Monthly Payments shall include, but not be limited to,
endorsement of a Monthly Payment to the Purchaser with the particulars of the
payment such as the account number, dollar amount, date received and any special
Mortgagor application instructions and such Seller shall cause the Servicer to
comply with the foregoing requirements with respect to all Monthly Payments
received by the Servicer after the Servicing Transfer Date.
(h) Misapplied payments shall be processed as follows:
(1) All parties shall cooperate in correcting misapplication
errors;
(2) The party receiving notice of a misapplied payment occurring
prior to the applicable Servicing Transfer Date and
discovered after the Servicing Transfer Date shall
immediately notify the other party;
(3) If a misapplied payment which occurred prior to the
Servicing Transfer Date cannot be identified and said
misapplied payment has resulted in a shortage in a Custodial
Account or Escrow Account, the Sellers shall be liable for
the amount of such shortage. The Sellers shall reimburse the
Purchaser for the amount of such shortage within thirty (30)
days after receipt of written demand therefor from the
Purchaser;
(4) If a misapplied payment which occurred prior to the
Servicing Transfer Date has created an improper Purchase
Price as the result of an inaccurate outstanding principal
balance, a check shall be issued to the party shorted by the
improper payment application within five (5) Business Days
after notice thereof by the other party; and
(5) Any check issued under the provisions of this Section shall
be accompanied by a statement indicating the corresponding
Seller and/or the Purchaser Mortgage Loan identification
number and an explanation of the allocation of any such
payments.
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(i) On the Servicing Transfer Date, the books, records and accounts
of the Sellers with respect to the related Mortgage Loans shall be in accordance
with all applicable Purchaser requirements.
(j) The Sellers shall, on or before the Servicing Transfer Date,
reconcile principal balances and make any monetary adjustments required by the
Purchaser. Any such monetary adjustments will be transferred between the Sellers
and the Purchaser as appropriate.
(k) The Sellers shall or shall cause the Servicer to file all IRS
forms 1099, 1099A, 1098 or 1041 and K-1 which are required to be filed on or
before the Servicing Transfer Date in relation to the servicing and ownership of
the related Mortgage Loans. The Sellers shall provide copies of such forms to
the Purchaser upon request and shall reimburse the Purchaser for any costs or
penalties incurred by the Purchaser due to the Sellers' failure to comply with
this paragraph.
(l) The Purchaser agrees to indemnify the Servicer and Sellers
against any and all claims, losses, penalties, fines, forfeitures, reasonable
legal fees and related costs, judgments, and any other costs, fees and expenses
that the Servicer or a Seller may sustain in any way related to the gross
negligence of any subsequent servicer of the Mortgage Loans in the performance
of its duties in connection with the servicing of the Mortgage Loans; provided
that the Purchaser shall have liability under this clause (l) only to the extent
that the Purchaser has received indemnification for such claims, losses,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any other costs, fees and expenses from such subsequent servicer.
14. Default.
14.01. Events of Default. In case one or more of the following
Events of Default by the Servicer shall occur and be continuing, that is to say:
(i) any failure by the Servicer to remit to the Purchaser any
payment required to be made under the terms of this Agreement which continues
unremedied for a period of three Business Days after the date due; or
(ii) failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements on the
part of the Servicer set forth in this Agreement which continues unremedied for
a period of thirty days (except that such number of days shall be fifteen in the
case of a failure to pay any premium for any insurance policy required to be
maintained under this Agreement) after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Purchaser; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, bankruptcy, readjustment of debt, marshalling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force undischarged or unstayed for a
period of sixty days; or
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(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the servicer or of or relating to all or
substantially all of its property; or
(v) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(vi) failure by the Servicer to be in compliance with the
"doing business" or licensing laws of any jurisdiction where a Mortgaged
Property is located which continues unremedied for a period of thirty (30) days
after knowledge of such failure by the Servicer; or
(vii) other than as provided in Subsection 13.05, the Servicer
attempts to assign its right to servicing compensation hereunder or the Servicer
attempts, without the consent of the Purchaser, to sell or otherwise dispose of
all or substantially all of its property or assets or to assign this Agreement
or the servicing responsibilities hereunder or to delegate its duties hereunder
or any portion thereof;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Purchaser, by notice in writing to the Servicer may, in
addition to whatever rights the Purchaser may have at law or equity to damages,
including injunctive relief and specific performance, terminate all the rights
and obligations of the Servicer as servicer under this Agreement. On or after
the receipt by the Servicer of such written notice, all authority and power of
the Servicer to service the Mortgage Loans under this Agreement shall on the
date set forth in such notice pass to and be vested in the successor appointed
pursuant to Section 16 herein.
14.02. Waiver of Defaults. The Purchaser may waive any default by
the Servicer in the performance of its obligations hereunder and its
consequences. Upon any such 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.
15. Termination. The obligations and responsibilities of the Servicer
as servicer, shall terminate at the expiration of the Interim Servicing Period
unless terminated with respect to all or a portion of the Mortgage Loans on an
earlier date at the option of the Purchaser pursuant to this Section 15 or
pursuant to Section 14. Upon written request from the Purchaser in connection
with any such termination, the Servicer shall prepare, execute and deliver, any
and all documents and other instruments, place in the Purchaser's possession all
Mortgage Files, and do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise, at the Servicer's sole expense. The Servicer
agrees to cooperate with the Purchaser and such successor in effecting the
termination of the Servicer's responsibilities and rights hereunder as servicer,
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 Custodial Account or Escrow Account or thereafter received with respect to
the Mortgage Loans.
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16. Successor to the Servicer. Prior to the termination of Servicer's
responsibilities and duties under this Agreement pursuant to Section 14 or 15,
the Purchaser shall (i) succeed to and assume all of the Servicer's
responsibilities, rights, duties and obligations under this Agreement, or (ii)
appoint a successor which shall succeed to all rights and assume all of the
responsibilities, duties and obligations of the Servicer under this Agreement;
provided that the Purchaser or such successor will not assume any liabilities of
the Servicer arising from acts or omissions prior to the effective date of
termination, for which the Servicer shall remain liable. In connection with such
appointment and assumption, the Purchaser may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree. In the event that the Servicer's duties, responsibilities
and liabilities as servicer under this Agreement should be terminated pursuant
to the aforementioned Sections, the Servicer shall discharge such duties and
obligations during the period from the date it acquires knowledge of such
termination until the effective date thereof with the same degree of diligence
and prudence which it is obligated to exercise under this Agreement, and shall
take no action whatsoever that might impair or prejudice the rights or financial
condition of the Purchaser or such successor. The termination of the Servicer as
servicer pursuant to the aforementioned Sections shall not become effective
until a successor shall be appointed pursuant to this Section 16 and shall in no
event relieve the Servicer of the representations and warranties made pursuant
to Subsections 7.02 and 7.03 and the remedies available to the Purchaser under
Subsection 7.04 or 13.01, it being understood and agreed that the provisions of
such Subsections 7.01, 7.02, 7.03 and 13.01 shall be applicable to the Servicer
and the Sellers, as applicable, notwithstanding any such resignation or
termination of the Servicer, or the termination of this Agreement.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Servicer and to the Purchaser an instrument
accepting such appointment, whereupon such successor shall become fully vested
with all the rights, powers, duties, responsibilities and obligations of the
Servicer, with like effect as if originally named as a party to this Agreement
and the Custodial Agreement provided, however, that such successor shall not
assume, and the Servicer shall indemnify such successor for, any and all
liabilities arising out of the Servicer's acts as servicer. Any termination of
the Servicer as servicer pursuant to Section 12, 14 or 15 shall not affect any
claims that the Purchaser may have against the Servicer arising prior to any
such termination or resignation or remedies with respect to such claims.
The Servicer shall timely deliver to the successor the funds in the
Custodial Account and the Escrow Account and the Mortgage Files and related
documents and statements held by it hereunder and the Servicer shall account for
all funds. The Servicer shall execute and deliver such instruments and do such
other things all as may reasonably be required to more fully and definitely vest
and confirm in the successor all such rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer as servicer. The successor shall
make arrangements as it may deem appropriate to reimburse the Servicer for
amounts the Servicer actually expended as servicer pursuant to this Agreement
which the successor is entitled to retain hereunder and which would otherwise
have been recovered by the Servicer pursuant to this Agreement but for the
appointment of the successor servicer.
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17. Financial Statements. The Servicer understands that in connection
with the Purchaser's marketing of the Mortgage Loans, the Purchaser shall make
available to prospective purchasers the Servicer's, or the Servicer's parent's,
publicly available financial statements for the most recently completed three
fiscal years. The Servicer also shall make available any comparable interim
statements to the extent any such statements have been prepared by such parties
(and are available upon request to members or stockholders of such parties or
the public at large). The Servicer, if it has not already done so, agrees to
furnish promptly to the Purchaser copies of the statements specified above. Each
such party also shall make available information on its servicing performance
with respect to mortgage loans serviced for others, including delinquency
ratios.
The Servicer also agrees to allow access to knowledgeable financial,
accounting, origination and servicing officers of such parties for the purpose
of answering questions asked by any prospective purchaser regarding recent
developments affecting such parties, their loan origination or servicing
practices or the financial statements of such parties.
18. Mandatory Delivery: Grant of Security Interest. The sale and
delivery of all of the Mortgage Loans on the related Closing Date is mandatory
from and after the date of the execution of the Commitment Letter, it being
specifically understood and agreed that each Mortgage Loan is unique and
identifiable on the date hereof and that an award of money damages would be
insufficient to compensate the Initial Purchaser for the losses and damages
incurred by the Initial Purchaser (including damages to prospective purchasers
of the Mortgage Loans) in the event of a Seller's failure to deliver each of the
Mortgage Loans or one or more Mortgage Loans otherwise acceptable to the
Purchaser on or before the related Closing Date. The Seller hereby grants to the
Initial Purchaser a lien on and a continuing security interest in each Mortgage
Loan and each document and instrument evidencing each such Mortgage Loan to
secure the performance by the Seller of its obligation hereunder, and the Seller
agrees that it holds such Mortgage Loans in custody for the Initial Purchaser
subject to the Initial Purchaser's (i) right to reject any Mortgage Loan under
the terms of this Agreement and the Commitment Letter, and (ii) obligation to
pay the Purchase Price for the Mortgage Loans. All rights and remedies of the
Purchaser under this Agreement are distinct from, and cumulative with, any other
rights or remedies under this Agreement or afforded by law or equity and all
such rights and remedies may be exercised concurrently, independently or
successively.
19. Notices. All demands, notices and communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed, by registered
or certified mail, return receipt requested, or, if by other means, when
received by the other party at the address as follows:
(i) if to ABC, Upland or ABMS:
American Business Credit, Inc.
The ▇▇▇▇▇▇▇▇▇ Building
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, General Counsel
39
(ii) with a copy to:
Blank Rom LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇
(iii) if to the Purchaser:
DLJ Mortgage Capital, Inc.
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Attention: ▇▇▇ ▇▇▇▇▇▇
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
20. Severability Clause. Any part, provision, representation or
warranty of this Agreement that is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law that prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the economic effect of which is nearly as
possible the same as the economic effect of this Agreement without regard to
such invalidity.
21. Counterparts. This Agreement may be executed simultaneously in any
number of counterparts. Each counterpart shall be deemed to be an original, and
all such counterparts shall constitute one and the same instrument.
22. Governing Law. The 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 the laws of the
State of New York without regard to the conflicts of laws provisions therein,
except to the extent preempted by Federal law.
23. Intention of the Parties. It is the intention of the parties that
the Initial Purchaser is purchasing, and the Sellers are selling, the Mortgage
Loans and not a debt instrument of the Sellers or another security. Accordingly,
the parties hereto each intend to treat the transaction for Federal income tax
purposes as a sale by the Sellers, and a purchase by the Purchaser, of the
Mortgage Loans. The Initial Purchaser shall have the right to review the
Mortgage Loans and the related Mortgage Loan Files to determine the
characteristics of the Mortgage Loans which shall affect the Federal income tax
consequences of owning the Mortgage Loans and the Sellers shall cooperate with
all reasonable requests made by the Initial Purchaser in the course of such
review.
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24. Successors and Assigns. This Agreement shall bind and inure to the
benefit of and be enforceable by the Sellers, the Servicer and the Purchaser and
the respective successors and assigns of the Sellers, the Servicer and the
Purchaser. The Purchaser may assign this Agreement to any Person to whom any
Mortgage Loan is transferred whether pursuant to a sale or financing and to any
Person to whom the servicing or master servicing of any Mortgage Loan is sold or
transferred. Upon any such assignment and written notice thereof to the Sellers
and the Servicer, the Person to whom such assignment is made shall succeed to
all rights and obligations of the Purchaser under this Agreement to the extent
of the related Mortgage Loan or Mortgage Loans and this Agreement, to the extent
of the related Mortgage Loan or Loans, shall be deemed to be a separate and
distinct Agreement among the Sellers and such Purchaser, and a separate and
distinct Agreement among the Sellers, the Servicer and each other Purchaser to
the extent of the other related Mortgage Loan or Loans. This Agreement shall not
be assigned, pledged or hypothecated by the Sellers or the Servicer to a third
party without the consent of the Purchaser.
25. Waivers. No term or provision of this Agreement may be waived or
modified unless such waiver or modification is in writing and signed by the
party against whom such waiver or modification is sought to be enforced.
26. Exhibits. The exhibits to this Agreement are hereby incorporated
and made a part hereof and are an integral part of this Agreement.
27. General Interpretive Principles. For purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other Subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
41
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
28. Reproduction of Documents. This Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
29. Further Agreements. The Sellers, the Servicer and the Purchaser
each agree to execute and deliver to the other such reasonable and appropriate
additional documents, instruments or agreements as may be necessary or
appropriate to effectuate the purposes of this Agreement.
Without limiting the generality of the foregoing, the Sellers
and the Servicer shall reasonably cooperate with the Purchaser in connection
with any Whole Loan Transfer or Pass-Through Transfer contemplated by the
Purchaser pursuant to Section 12 hereof. In such connection, the Sellers and the
Servicer shall provide to the Initial Purchaser or any prospective purchaser:
(i) any and all information and appropriate verification of information, whether
through letters of its auditors and counsel or otherwise, as the Initial
Purchaser shall request in its sole discretion; and (ii) such representations,
warranties, covenants, opinions of counsel, letters from auditors, and
certificates of public officials or officers of the Sellers and the Servicer as
are reasonably believed necessary by the Initial Purchaser, in its sole
discretion, in connection with such transactions.
30. Tax Service Contracts. To the extent the Sellers have not already
obtained and paid for a fully assignable life of loan tax service contract
issued by a tax service contract provider for each Mortgage Loan, the Sellers
shall obtain such a contract at its expense on or before the Servicing Transfer
Date; provided that such fees and expenses do not exceed $75.00 per tax service
contract.
31. Access to Files. The Purchaser or its designee agrees to permit, or
cause its designee to permit, for so long as the Purchaser is the owner of the
related Mortgage Loan, the Sellers and their representatives reasonable access
to the Mortgage Files after the Closing Date, to the extent the Sellers or
representatives do not have access to similar documentation, at the Sellers'
expense, in the event such access is required to defend any third party claim or
potential claim (including any regulatory or government proceedings that may
occur) against any of the Sellers or their respective affiliates in relation to
the Mortgage Loans or if reasonably necessary in order to permit the Sellers to
comply with applicable law, to demonstrate such compliance or to respond to a
regulatory or governmental inquiry with respect to the Mortgage Loans or the
Sellers.
42
IN WITNESS WHEREOF, the Initial Purchaser, the Sellers and the
Servicer have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the date first above written.
DLJ MORTGAGE CAPITAL, INC.
(Initial Purchaser)
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
AMERICAN BUSINESS CREDIT, INC.
(Seller and Servicer)
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
HOMEAMERICAN CREDIT, INC., D/B/A
UPLAND MORTGAGE
(Seller)
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
AMERICAN BUSINESS MORTGAGE
SERVICES, INC.
(Seller)
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
43
EXHIBIT 1A
FORM OF COMPANY'S OFFICER'S CERTIFICATE
I, ________________________, hereby certify that I am a duly elected
______________ of [Seller Name], a [Incorporation State] corporation (the
"Seller"), and further certify, on behalf of the Seller as follows:
1. Attached hereto as Attachment I are a true and correct copy of the
Articles of Incorporation and by-laws of the Seller as are in full force and
effect on the date hereof. No event has occurred since ___________________,
which has affected the good standing of the Seller under the laws of the State
of [Incorporation State].
2. No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Seller are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the Seller,
signed (a) the Mortgage Loan Purchase and Interim Servicing Agreement (the
"Purchase Agreement"), dated as of July 22, 2003 by and among each Seller, the
Initial Purchaser and the Servicer (the "Servicer"), (b) the Commitment Letter,
dated July 1, 2003, among each Seller, the Initial Purchaser and the Servicer
(the "Commitment Letter"), and (c) any other document delivered prior hereto or
on the date hereof in connection with the sale and servicing of the Mortgage
Loans in accordance with the Purchase Agreement and the Commitment Letter was,
at the respective times of such signing and delivery, and is as of the date
hereof, duly elected or appointed, qualified and acting as such officer or
attorney-in-fact, and the signatures of such persons appearing on such documents
are their genuine signatures.
4. Attached hereto as Attachment II is a true and correct copy of the
resolutions duly adopted by the board of directors of the Seller on
_______________, (the "Resolutions") with respect to the authorization and
approval of the sale and servicing of the Mortgage Loans; said Resolutions have
not been amended, modified, annulled or revoked and are in full force and effect
on the date hereof.
5. Attached hereto as Attachment III is a Certificate of Good Standing
of the Seller dated
____________________.
6. All of the representations and warranties of the Seller contained in
Subsections 7.01 and 7.03 of the Purchase Agreement were true and correct in all
material respects as of the date of the Purchase Agreement and are true and
correct in all material respects as of the date hereof.
7. The Seller has performed all of its duties and has satisfied all the
material conditions on its part to be performed or satisfied prior to the
related Closing Date pursuant to the Purchase Agreement and the Commitment
Letter.
All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Purchase Agreement.
1A-1
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Seller.
Dated: _______________
[Seal]
[COMPANY]
By: __________________________________
Name:
Title:
I, ___________________, a ____________ of [Seller], hereby certify that
______________________ is a duly elected, qualified and acting __________ of the
Seller and that the signature appearing above is his/her genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: _______________
[Seal]
[COMPANY]
By: __________________________________
Name:
Title:
1A-2
EXHIBIT 1B
FORM OF SERVICER'S OFFICER'S CERTIFICATE
I, ________________________, hereby certify that I am a duly elected
______________ of [Servicer], a [Incorporation State] corporation (the
"Servicer"), and further certify, on behalf of the Servicer as follows:
1. Attached hereto as Attachment I are a true and correct copy of the
Articles of Incorporation and by-laws of the Servicer as are in full force and
effect on the date hereof. No event has occurred since ___________________,
which has affected the good standing of the Servicer under the laws of the State
of [Incorporation State].
2. No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Servicer are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the Servicer,
signed (a) the Mortgage Loan Purchase and Interim Servicing Agreement (the
"Purchase Agreement"), dated as of July 22, 2003 by and among each Seller, the
Initial Purchaser and the Servicer, (b) the Commitment Letter, July 1, 2003,
among each Seller, the Initial Purchaser and the Servicer (the "Commitment
Letter"), and (c) any other document delivered prior hereto or on the date
hereof in connection with the sale and servicing of the Mortgage Loans in
accordance with the Purchase Agreement was, at the respective times of such
signing and delivery, and is as of the date hereof, duly elected or appointed,
qualified and acting as such officer or attorney-in-fact, and the signatures of
such persons appearing on such documents are their genuine signatures.
4. Attached hereto as Attachment II is a true and correct copy of the
resolutions duly adopted by the board of directors of the Servicer on
_______________, (the "Resolutions") with respect to the authorization and
approval of the servicing of the Mortgage Loans; said Resolutions have not been
amended, modified, annulled or revoked and are in full force and effect on the
date hereof.
5. Attached hereto as Attachment III is a Certificate of Good Standing
of the Servicer dated
____________________.
6. All of the representations and warranties of the Servicer contained
in Subsections 7.02 and 7.03 of the Purchase Agreement were true and correct in
all material respects as of the date of the Purchase Agreement and are true and
correct in all material respects as of the date hereof.
7. The Servicer has performed all of its duties and has satisfied all
the material conditions on its part to be performed or satisfied prior to the
related Closing Date pursuant to the Purchase Agreement.
1B-1
All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Purchase Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Servicer.
Dated: _______________
[Seal]
[SERVICER]
By: __________________________________
Name:
Title:
I, ___________________, a ____________ of [Servicer], hereby certify
that ______________________ is a duly elected, qualified and acting __________
of the Seller and that the signature appearing above is his/her genuine
signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: _______________
[Seal]
[SERVICER]
By: __________________________________
Name:
Title:
1B-2
EXHIBIT 2
[FORM OF OPINION OF COUNSEL TO THE SELLERS AND THE [_____], 200[_]
DLJ Mortgage Capital, Inc.
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Mortgage Loan Purchase and Interim Servicing Agreement,
dated as of July 22, 2003
Ladies and Gentlemen:
I am the general counsel of American Business Credit, Inc. ("ABC"), HomeAmerican
Credit, Inc. d/b/a Upland Mortgage ("HAC") and American Business Mortgage
Services, Inc. ("ABMS," and, collectively, with HAC and ABC, the "Sellers"). You
have requested my opinion with respect to certain matters in connection with the
sale by the Sellers of certain mortgage loans (the "Mortgage Loans"), pursuant
to the Mortgage Loan Purchase and Interim Servicing Agreement dated as of July
22, 2003 (the "MLPISA"), and the related Commitment Letter dated July 1, 2003,
(the "Commitment Letter" and together with the MLPISA, the "Purchase
Agreement"), between the Sellers and DLJ Mortgage Capital, Inc. as purchaser
(the "Purchaser"). Capitalized terms not otherwise defined herein have the
meanings set forth in the Purchase Agreement.
I have examined the following documents:
1. the MLPISA;
2. the Commitment Letter;
3. good standing affidavits or certificates, for each of
the Sellers dated within two weeks of the date of this
opinion letter;
4. a sample Assignment of Mortgage;
5. a sample endorsement of the Mortgage Note;
6. the certificate or articles of incorporation and bylaws
for each of the Sellers; and
7. the minutes and resolutions of each of the Sellers'
Board of Directors.
Based upon the foregoing, and subject to the qualifications and
assumptions contained elsewhere in this letter, it is my opinion that:
2-1
1. ABC and HAC are duly organized, validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania and ABMS is duly
organized, validly existing and in good standing under the laws of the
State of New Jersey. Each Seller has the corporate power and authority
to sell and, in the case of ABMS, service the Mortgage Loans and to
execute, deliver and perform its obligations under the Agreements.
2. The Purchase Agreement has been duly authorized, executed and delivered
by each of the Sellers and ABMS in the capacity of servicer and is a
legal, valid and binding agreement enforceable against each Seller and
ABMS in the capacity of servicer in accordance with its terms, subject
to bankruptcy laws and other similar laws of general application
affecting rights of creditors and subject to the application of the
rules of equity, including those respecting the availability of specific
performance, none of which will materially interfere with the
realization of the benefits provided thereunder or with the Purchaser's
ownership of the Mortgage Loans.
3. Either (i) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Sellers of or compliance by the Sellers with the
Purchase Agreement, or the consummation of the transactions contemplated
by the Purchase Agreement or (ii) any required consent, approval,
authorization or order has been obtained by the Sellers.
4. Neither the consummation of the transactions contemplated by, nor the
fulfillment of the terms of, the Purchase Agreement conflicts or will
conflict with or results or will result in a breach of or constitutes or
will constitute a default under the charter or by-laws of any of the
Sellers, the terms of any indenture or other agreement or instrument to
which any of the Sellers is a party or by which it is bound or to which
it is subject, or any statute or order, rule, regulations, writ,
injunction or decree of any court, governmental authority or regulatory
body to which any of the Sellers is subject or by which any of them are
bound.
5. To my knowledge, no proceedings looking toward merger, liquidation,
dissolution or bankruptcy of the Sellers are pending or contemplated.
6. To my knowledge, except as has been separately disclosed to Purchaser,
there is no action, suit, proceeding or investigation pending or
threatened against the Sellers which, in my judgment, 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 Sellers or in any material impairment of the right or ability of
the Sellers to carry on its business substantially as now conducted or
in any material liability on the part of the Sellers or which would draw
into question the validity of the Purchase Agreement or of any action
taken or to be taken in connection with the transactions contemplated
hereby, or which would be likely to impair materially the ability of the
Sellers to perform under the terms of the Purchase Agreement.
2-2
7. Assuming Purchaser and/or its agent has received or obtained custody of
executed Assignments of Mortgage with respect to each Mortgage, in for
the form provided to me as a representative sample, and a Mortgage Note
duly endorsed in the form provided to me as a representative sample,
each Assignment of Mortgage is in recordable form and each Mortgage Note
will be duly endorsed under applicable law. The endorsement and delivery
of each Mortgage Note, and the preparation, delivery and recording of an
Assignment of Mortgage with respect to each Mortgage is sufficient fully
to transfer to Purchaser all right, title and interest of the Sellers in
the Mortgage Note and Mortgage, as noteholder and mortgagee or assignee
thereof.
________________
My opinions set forth in this letter are qualified and limited in the
following respects and are subject to the following exclusions, qualifications
and limitations, in addition to those assumptions, exceptions, qualifications,
limitations and exclusions set forth above:
a. This opinion is limited to the laws of the Commonwealth of
Pennsylvania and the State of New Jersey. Furthermore, recognizing that the
parties to the Purchase Agreement have selected the law of the State of New York
to govern the Purchase Agreement, with your permission I have assumed,
notwithstanding such provision, the application of the law of the Commonwealth
of Pennsylvania to matters described in opinion paragraph 2 above. I have also
assumed application of the law of the Commonwealth of Pennsylvania to the
matters described in opinion paragraph 7, notwithstanding that the laws of the
several states in which the Mortgaged Properties are located may govern such
issues. In rendering this opinion, I have assumed compliance with all other
laws, including, without limitation, all federal and state securities laws.
b. As to matters of both fact and mixed fact and law, I have assumed
and relied upon the truth and completeness of the good standing certificates or
affidavits for each of the Sellers which I have obtained, the representations,
warranties, covenants and agreements of the Sellers and the Purchaser given
pursuant to or in connection with the Purchase Agreement and the representations
set forth in the officer's certificates delivered to Purchaser on the Closing
Date. I have not made any independent investigation in rendering this opinion
other than the document examination described above. My opinion is therefore
qualified in all respects by the scope of that document examination. I make no
representation as to the sufficiency of my investigation for your purposes.
c. I have also assumed that the Purchase Agreement is valid and legally
binding upon and enforceable in accordance with its terms against the Purchaser.
Whenever my opinions in this opinion letter, with respect to the existence or
absence of facts, is intended to be based on my knowledge or attention, it is
intended to signify that during the course of executing my duties as General
Counsel, no information came to my attention which gave me actual knowledge of
the existence or absence of those facts.
d. Notwithstanding anything in this opinion to the contrary, I express
no opinion whatsoever regarding the following:
(1) the validity or enforceability of any indemnity to the
extent it would protect an indemnitee from the negligence, willful misconduct or
other wrong doing of such indemnitee, its predecessor in interest or its agent;
or
2-3
(2) (a) the availability of equitable remedies, including,
without limitation, specific performance, appointment of a receiver and
injunctive relief, or (b) the effect of applicable laws and court decisions
which may hereafter be enacted, promulgated or made and which may limit or
render unenforceable certain rights and remedies under the Agreements
(including, without limitation, remedies involving self-help or acceleration of
indebtedness).
e. I express no opinion herein concerning any statutes, ordinances,
administrative decisions, rules or regulations of any county, town, municipality
or special political subdivision (whether created or enabled through legislative
action at the federal, state or regional level).
f. I express no opinion whatsoever regarding the validity,
enforceability or effectiveness of provisions: (i) that purport to establish
evidentiary standards or render ineffective any waiver or modification not in
writing; (ii) related to the waiver of rights or remedies (or the delay or
omission of enforcement thereof) (including, without limitation, waivers of
notices and hearing, waivers of defenses, waivers of jury trials, waivers of
rights of marshalling, waivers of exemptions and stays of execution, waivers of
statutes of limitations); (iii) that provide for the release or waiver of
liability, or exculpation or nonliability for negligence, misconduct, bad faith
or similar conduct; (iv) that purport to waive or discharge defenses; (v)
providing for liquidated damages; (vi) allowing the institution of judicial or
non-judicial proceedings or the exercise of any other rights without notice to
the person or entity against whom enforcement is sought; (vii) implying that a
person or entity may act in a commercially unreasonable manner or where absolute
discretion is reserved; (viii) relating to court costs, attorneys' fees and
expenses which may be chargeable or recoverable in any judicial proceedings; and
(ix) other remedies or provisions which may be limited by the application of
constitutional or public policy principles or standards of unconscionability, or
requirements of commercial reasonableness and good faith.
g. This opinion is strictly limited to the matters stated herein and no
other or more extensive opinion is intended, implied or to be inferred beyond
the matters expressly stated herein. This opinion is not a guarantee and should
not be construed or relied on as such.
h. This opinion is given as of the date hereof. I assume no obligation
to update or supplement this opinion to reflect any facts or circumstances which
may hereafter come to my attention or any changes in laws which may hereafter
occur.
________________
This opinion is given to you for your sole benefit, and no other person
or entity is entitled to rely hereon except that purchasers to which you
initially and directly resell the Mortgage Loans may rely on this opinion as if
it were addressed to them as of its date.
Very truly yours,
2-4
EXHIBIT 3
SECURITY RELEASE CERTIFICATION
I. Release of Security Interest
___________________________, hereby relinquishes any and all right,
title and interest it may have in and to the Mortgage Loans described in Exhibit
A attached hereto upon purchase thereof by DLJ Mortgage Capital, Inc. from the
Seller named below pursuant to that certain Mortgage Loan Purchase and Interim
Servicing Agreement, dated as of July 22, 2003, as of the date and time of
receipt by ______________________________ of $__________ for such Mortgage Loans
(the "Date and Time of Sale"), and certifies that all notes, mortgages,
assignments and other documents in its possession relating to such Mortgage
Loans have been delivered and released to the Seller named below or its
designees as of the Date and Time of Sale.
Name and Address of Financial Institution
__________________________________
(Name)
__________________________________
(Address)
By: ______________________________
3-1
II. Certification of Release
The Seller named below hereby certifies to DLJ Mortgage Capital, Inc.
that, as of the Date and Time of Sale of the above mentioned Mortgage Loans to
DLJ Mortgage Capital, Inc., the security interests in the Mortgage Loans
released by the above named corporation comprise all security interests relating
to or affecting any and all such Mortgage Loans. The Seller warrants that, as of
such time, there are and will be no other security interests affecting any or
all of such Mortgage Loans.
[COMPANY]
By: __________________________________
Name:
Title:
3-2
EXHIBIT 4
ASSIGNMENT AND CONVEYANCE
On this __ day of _______________, (each a "Seller" and collectively,
the "Sellers") as the Sellers under that certain Mortgage Loan Purchase and
Interim Servicing Agreement dated as of July 22, 2003 (the "Agreement") among
the Sellers, [SERVICER] (the "Servicer") and DLJ Mortgage Capital, Inc. (the
"Initial Purchaser") does hereby sell, transfer, assign, set over and convey to
DLJ Mortgage Capital, Inc. as Initial Purchaser under the Agreement, without
recourse, but subject to the terms of the Agreement, all rights, title and
interest of the Sellers in and to the Mortgage Loans listed on the Mortgage Loan
Schedule attached hereto together with the related Mortgage Files and all rights
and obligations arising under the documents contained therein, including the
right to any prepayment penalties or other charges payable by the related
Mortgagors in connection with any principal prepayments on the Mortgage Loans.
Pursuant to Subsection 6.03 of the Agreement, each Seller has delivered to the
Custodian the documents for each Mortgage Loan to be purchased as set forth in
the Custodial Agreement. The contents of each related Servicing File required to
be delivered to the Servicer to service the Mortgage Loans pursuant to the
Agreement and thus not delivered to the Initial Purchaser are and shall be held
in trust for the benefit of the Initial Purchaser as the owner thereof. The
Servicer's possession of any portion of each such Servicing File is at the will
of the Initial Purchaser for the sole purpose of facilitating servicing of the
related Mortgage Loan pursuant to the Agreement, and such retention and
possession by the Servicer shall be in a custodial capacity only. The ownership
of each Mortgage Note, Mortgage, and the contents of the Mortgage File and
Servicing File is vested in the Initial Purchaser and the ownership of all
records and documents with respect to the related Mortgage Loan prepared by or
which come into the possession of each Seller or the Servicer shall immediately
vest in the Initial Purchaser and shall be retained and maintained, in trust, by
each Seller or the Servicer at the will of the Purchaser in such custodial
capacity only.
The Sellers and the Servicer confirm to the Purchaser that the
representations and warranties set forth in Subsection 7.01, 7.02 and 7.03, as
applicable, of the Agreement are true and correct as of the date hereof, and
that all statements made in the related Officer's Certificate and all
attachments thereto remain complete, true and correct in all respects as of the
date hereof, and confirm that all statements made in the Commitment Letter are
true and correct as of the date hereof.
4-1
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement.
AMERICAN BUSINESS CREDIT, INC.
(Seller and Servicer)
By:_________________________________
Name:
Title:
HOMEAMERICAN CREDIT, INC., D/B/A
UPLAND MORTGAGE
(Seller)
By:_________________________________
Name:
Title:
AMERICAN BUSINESS MORTGAGE
SERVICES, INC.
(Seller)
By:_________________________________
Name:
Title:
4-2
EXHIBIT 5
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and which shall be retained by the Seller or delivered to the
Custodian:
1. Mortgage Loan Documents.
2. Residential loan application.
3. Mortgage Loan closing statement.
4. Verification of employment and income.
5. Verification of acceptable evidence of source and amount of
down payment.
6. Credit report on Mortgagor.
7. Residential appraisal report.
8. Photograph of the Mortgaged Property, if available.
9. Survey of the Mortgaged Property, if available.
10. Copy of each instrument necessary to complete
identification of any exception set forth in the exception schedule in the title
policy, i.e., map or plat, restrictions, easements, sewer agreements, home
association declarations, etc.
11. All required disclosure statements and statement of
Mortgagor confirming receipt thereof.
12. If available, termite report, structural engineer's
report, water potability and septic certification.
13. Sales Contract.
14. Hazard insurance policy.
15. Tax receipts, insurance premium receipts, ledger sheets,
payment history from date of origination, insurance claim files, correspondence,
current and historical computerized data files, and all other processing,
underwriting and closing papers and records which are customarily contained in a
mortgage loan file and which are required to document the Mortgage Loan or to
service the Mortgage Loan.
16. Amortization schedule, if available.
5-1
17. Payment history for Mortgage Loans that have been closed
for more than 90 days.
18. The original policy of primary mortgage guaranty insurance
or, if such insurance is provided by a master policy, the original certificate
of insurance and a copy of such master policy, if available.
5-2
EXHIBIT 6
CUSTODIAL AGREEMENT
[ON FILE]
6-1
EXHIBIT 7
FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
_______________
To:
(the "Depository")
As Servicer under the Mortgage Loan Purchase and Interim Servicing
Agreement (Fixed Rate Mortgage Loans), dated as of July 22, 2003, we hereby
authorize and request you to establish an account, as a Custodial Account, to be
designated as "[SERVICER], as servicer, in trust for the Purchaser (Fixed Rate
Mortgage Loans)." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. You may refuse any deposit that would
result in violation of the requirement that the account be fully insured as
described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
[SERVICER]
By: __________________________________
Name:
Title:
Date:
The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number ___________ at
the office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The Federal Deposit Insurance Corporation
("FDIC"), through the Bank Insurance Fund ("BIF") or the Savings Association
Insurance Fund ("SAIF"), will insure the full amount deposited at any time in
the account, provided that such amount does not exceed the limits on insured
deposits set by the FDIC.
[Depository]
By: ___________________________
Name:
Title:
Date:
7-1
EXHIBIT 8
FORM OF ESCROW ACCOUNT LETTER AGREEMENT
_______________
To:
(the "Depository")
As Servicer under the Mortgage Loan Purchase and Interim Servicing
Agreement (Fixed Rate Mortgage Loans), dated as of July 22, 2003, we hereby
authorize and request you to establish an account, as an Escrow Account, to be
designated as "[SERVICER], as servicer, in trust for the Purchaser and various
Mortgagors (Fixed Rate Mortgage Loans)." All deposits in the account shall be
subject to withdrawal therefrom by order signed by the Servicer. You may refuse
any deposit which would result in violation of the requirement that the account
be fully insured as described below. This letter is submitted to you in
duplicate. Please execute and return one original to us.
[SERVICER]
By: __________________________________
Name:
Title:
Date:
The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number ___________ at
the office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The Federal Deposit Insurance Corporation
("FDIC"), through the Bank Insurance Fund ("BIF") or the Savings Association
Insurance Fund ("SAIF"), will insure the full amount deposited at any time in
the account, provided that such amount does not exceed the limits on insured
deposits set by the FDIC.
[Depository]
By: ____________________________
Name:
Title:
Date:
8-1
EXHIBIT 9
COMMITMENT LETTER
[ON FILE]
9-1
EXHIBIT 10
[RESERVED]
10-1
EXHIBIT 11
SERVICING ADDENDUM
Section 11.01 Servicer to Act as Servicer.
The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans in accordance with this Agreement and 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 which the Servicer
may deem necessary or desirable and consistent with the terms of this Agreement.
The Servicer shall administer the Mortgage Loans on behalf of the
Purchaser (as determined by the Servicer in its reasonable judgment) in
accordance with the terms of this Agreement and the respective Mortgage Loans
and, to the extent consistent with such terms, in the same manner in which it
administers similar mortgage loans for its own portfolio, giving due
consideration to customary and usual standards of practice of prudent mortgage
lenders and loan servicers administering similar mortgage loans but without
regard to: (i) any relationship that the Servicer or any Affiliate of the
Servicer may have with the related Mortgagor and (ii) the Servicer's right to
receive compensation for its services hereunder.
To the extent consistent with the foregoing, the Servicer (a) shall
seek to maximize the timely and complete recovery of principal and interest on
the Mortgage Notes and (b) shall waive (or permit a subservicer to waive) a
Prepayment Charge only under the following circumstances: (i) such waiver is
standard and customary in servicing similar Mortgage Loans or required to comply
with applicable law and (ii) either (A) such waiver would, in the reasonable
judgment of the Servicer, maximize recovery of total proceeds taking into
account the value of such Prepayment Charge and the related Mortgage Loan and,
if such waiver is made in connection with a refinancing of the related Mortgage
Loan, such refinancing is related to a default or a reasonably foreseeable
default or (B) such waiver is made in connection with a refinancing of the
related Mortgage Loan unrelated to a default or a reasonably foreseeable default
where (x) the related mortgagor has stated to the Servicer or an applicable
subservicer an intention to refinance the related Mortgage Loan and (y) the
Servicer has concluded in its reasonable judgment that the waiver of such
Prepayment Charge would induce such mortgagor to refinance with the Servicer. If
a Prepayment Charge is waived as permitted by meeting the standards described in
clauses (i) and (ii)(B) above, then the Servicer is required to pay the amount
of such waived Prepayment Charge by depositing such amount into the Collection
Account together with and at the time that the amount prepaid on the related
Mortgage Loan is required to be deposited into the Custodial Account; provided
however, that if such Prepayment Charge is waived within the first ninety days
after the Closing Date, the Servicer is required to pay only the greater of the
amount required in the preceding sentence and the amount required under Section
7.05 of the Mortgage Loan Purchase and Interim Servicing Agreement.
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Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Servicer's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser; provided, however, that the Servicer shall not permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Interest Rate, defer or forgive the payment thereof or of any principal or
interest payments, reduce the outstanding principal amount (except for actual
payments of principal), make additional advances of additional principal or
extend the final maturity date on such Mortgage Loan, in each case unless the
Purchaser consents in writing. 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 Purchaser, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Property. If reasonably required by the Servicer, the
Purchaser shall furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures including collection procedures and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account giving due consideration to accepted mortgage
servicing practices of prudent lending institutions and the Purchaser's reliance
on the Servicer ("Accepted Servicing Practices").
The Servicer may enter into subservicing arrangements with other
sellers or any subservicers acceptable to the Purchaser, pursuant to
subservicing agreements which are acceptable to the Purchaser, provided the
Servicer shall be responsible for any costs or expenses payable to such
subservicers, such subservicing agreements shall not be inconsistent with this
Agreement, and any such subservicing agreements shall be immediately terminable
upon the direction of the Purchaser. The Servicer shall remain obligated and
liable to the Purchaser for the servicing and administering of the Mortgage
Loans without diminution of such obligation or liability by virtue of such
subservicing agreements or arrangements or by virtue of indemnification from the
subservicer for any acts or omissions and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans and any other transactions or services relating to the
Mortgage Loans involving the subservicer shall be deemed to be between the
subservicer and the Servicer alone and the Purchaser shall have no obligations,
duties or liabilities with respect to the subservicer including no obligation,
duty or liability of the Purchaser to pay the subservicer's fees and expenses or
the obligation to pay any termination fees and expenses of the subservicer. The
Servicer shall pay all fees and expenses of the subservicer from its own funds
or other amounts permitted to be retained by or reimbursed to the Servicer
hereunder.
Section 11.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on
all Mortgage Loans are paid in full, the Servicer shall proceed diligently to
collect all payments due under each Mortgage Loan when the same shall become due
and payable and shall, to the extent such procedures shall be consistent with
this Agreement and the terms and provisions of any related Primary Insurance
Policy, follow such collection procedures as it follows with respect to mortgage
loans comparable to the Mortgage Loans and held for its own account. Further,
the Servicer shall take special care in ascertaining and estimating Escrow
Payments and all other charges that will become due and payable to the end that
the installments payable by the Mortgagors will be sufficient to pay such
charges as and when they become due and payable.
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Section 11.03 Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall use its best efforts, consistent with Accepted
Servicing Practices to foreclose upon or otherwise comparably convert the
ownership of such Mortgaged Properties as come into and continue in default and
as to which no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Subsection 11.01. The Servicer shall use its
best efforts to realize upon defaulted Mortgage Loans in such a manner as will
maximize the receipt of principal and interest by the Purchaser, taking into
account, among other things, the timing of foreclosure proceedings. The
foregoing is subject to the provisions that, in any case in which Mortgaged
Property shall have suffered damage, the Servicer shall not be required to
expend its own funds toward the restoration of such property in excess of $2,000
unless it shall determine in its discretion (i) that such restoration will
increase the proceeds of liquidation of the related Mortgage Loan to the
Purchaser after reimbursement to itself for such expenses, and (ii) that such
expenses will be recoverable by the Servicer through Insurance Proceeds or
Liquidation Proceeds from the related Mortgaged Property, as contemplated in
Subsection 11.05. In the event that any payment due under any Mortgage Loan is
not paid when the same becomes due and payable, or in the event the Mortgagor
fails to perform any other covenant or obligation under the Mortgage Loan and
such failure continues beyond any applicable grace period, the Servicer shall
take such action as it shall deem to be in the best interest of the Purchaser.
In the event that any payment due under any Mortgage Loan remains delinquent for
a period of 90 days or more, the Servicer shall commence foreclosure
proceedings, provided that prior to commencing foreclosure proceedings by
delivering notice of default to Mortgagor and initiating the filing of a
complaint, the Servicer shall notify the Purchaser in writing of the Servicer's
intention to do so, and the Servicer shall not commence foreclosure proceedings
if the Purchaser objects to such action within ten (10) Business Days of
receiving such notice. The Servicer shall notify the Purchaser in writing of the
commencement of foreclosure proceedings. In such connection, the Servicer shall
be responsible for all costs and expenses incurred by it in any such
proceedings; provided, however, that it shall be entitled to reimbursement
thereof from the related Mortgaged Property, as contemplated in Subsection
11.05.
(b) Notwithstanding the foregoing provisions of this Subsection 11.03,
with respect to any Mortgage Loan as to which the Servicer has received actual
notice of, or has actual knowledge of, the presence of any toxic or hazardous
substance on the related Mortgaged Property, the Servicer shall not either (i)
obtain title to such Mortgaged Property as a result of or in lieu of foreclosure
or otherwise, or (ii) otherwise acquire possession of, or take any other action,
with respect to, such Mortgaged Property if, as a result of any such action, the
Purchaser would be considered to hold title to, to be a mortgagee-in-possession
of, or to be an owner or operator of such Mortgaged Property within the meaning
of the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, or any comparable law, unless the Servicer
has also previously determined, based on his reasonable judgment and a prudent
report prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:
11-3
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best
economic interest of the Purchaser to take such actions as are
necessary to bring the Mortgaged Property into compliance
therewith; and
(2) there are no circumstances present at such Mortgaged
Property relating to the use, management or disposal of any
hazardous substances, hazardous materials, hazardous wastes,
or petroleum-based materials for which investigation, testing,
monitoring, containment, clean-up or remediation could be
required under any federal, state or local law or regulation,
or that if any such materials are present for which such
action could be required, that it would be in the best
economic interest of the Purchaser to take such actions with
respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this
Subsection 11.03 shall be advanced by the Servicer, subject to the Servicer's
right to be reimbursed therefor from the Custodial Account as provided in
Subsection 11.05(vi).
If the Servicer determines, as described above, that it is in the best
economic interest of the Purchaser to take such actions as are necessary to
bring any such Mortgaged Property into compliance with applicable environmental
laws, or to take such action with respect to the containment, clean-up or
remediation of hazardous substances, hazardous materials, hazardous wastes, or
petroleum-based materials affecting any such Mortgaged Property, then the
Servicer shall take such action as it deems to be in the best economic interest
of the Purchaser. The cost of any such compliance, containment, cleanup or
remediation shall be advanced by the Servicer, subject to the Servicer's right
to be reimbursed therefor from the Custodial Account as provided in Subsection
11.05(vi).
(c) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds in respect of any Mortgage Loan, will
be applied in the following order of priority: first, to reimburse the Servicer
for any related unreimbursed Servicing Advances, pursuant to Subsection
11.05(iii); second, to accrued and unpaid interest on the Mortgage Loan, to the
date of the Final Recovery Determination, or to the Due Date prior to the
Distribution Date on which such amounts are to be distributed if not in
connection with a Final Recovery Determination; and third, as a recovery of
principal of the Mortgage Loan. If the amount of the recovery so allocated to
interest is less than the full amount of accrued and unpaid interest due on such
Mortgage Loan, the amount of such recovery will be allocated by the Servicer as
follows: first, to unpaid Servicing Fees; and second, to the balance of the
interest then due and owing. The portion of the recovery so allocated to unpaid
Servicing Fees shall be reimbursed to the Servicer pursuant to Subsection
11.05(iii). The portion of the recovery allocated to interest (net of unpaid
Servicing Fees) and the portion of the recovery allocated to principal of the
Mortgage Loan shall be applied as part of the amounts to be distributed to the
Purchaser in accordance with Subsection 11.14.
11-4
Section 11.04 Establishment of Custodial Accounts; Deposits in
Custodial Accounts.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit, demand accounts or other Eligible Accounts. The
creation of any Custodial Account shall be evidenced by a Custodial Account
Letter Agreement in the form of Exhibit 7.
The Servicer shall deposit in the Custodial Account on a daily basis,
and retain therein the following payments and collections received by it
subsequent to the Cut-off Date:
(i) all payments on account of principal on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans;
(iii) all Liquidation Proceeds and income from REO Property;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Subsections 11.10 and 11.11, other than proceeds to be held in the
Escrow Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with the Servicer's normal
servicing procedures, the loan documents or applicable law;
(v) all Condemnation Proceeds affecting any Mortgaged Property which
are not released to the Mortgagor in accordance with the Servicer's normal
servicing procedures, the loan documents or applicable law;
(vi) reserved;
(vii) all proceeds of any Mortgage Loan repurchased in accordance with
Subsections 7.03 and 7.04 and all amounts required to be deposited by the
Servicer in connection with shortfalls in principal amount of Qualified
Substitute Mortgage Loans pursuant to Subsection 7.03;
(viii) any amounts required to be deposited by the Servicer pursuant to
Subsection 11.11 in connection with the deductible clause in any blanket hazard
insurance policy. Such deposit shall be made from the Servicer's own funds,
without reimbursement therefor;
(ix) any amounts required to be deposited by the Servicer in connection
with any REO Property pursuant to Subsection 11.13;
(x) any amounts required to be deposited in the Custodial Account
pursuant to Subsection 11.20, and
(xi) any amounts relating to Prepayment Charges as described in
Subsection 7.05.
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The foregoing requirements for deposit in the Custodial Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of Servicing Fees and
Ancillary Income, to the extent permitted by Subsection 11.01, need not be
deposited by the Servicer in the Custodial Account. Such Custodial Account shall
be an Eligible Account. Any interest or earnings on funds deposited in the
Custodial Account by the depository institution shall accrue to the benefit of
the Servicer and the Servicer shall be entitled to retain and withdraw such
interest from the Custodial Account pursuant to Subsection 11.05(iii). The
Servicer shall give notice to the Purchaser of the location of the Custodial
Account when established and prior to any change thereof.
If the balance on deposit in the Custodial Account exceeds $75,000 as
of the commencement of business on any Business Day and the Custodial Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of Eligible Account, the Servicer shall, on or before twelve o'clock noon
Eastern time on such Business Day, withdraw from the Custodial Account any and
all amounts payable to the Purchaser and remit such amounts to the Purchaser by
wire transfer of immediately available funds.
Section 11.05 Permitted Withdrawals From the Custodial Account.
The Servicer may, from time to time, withdraw from the Custodial
Account for the following purposes:
(i) to make distributions to the Purchaser in the amounts and in the
manner provided for in Subsection 11.14;
(ii) reserved;
(iii) to reimburse itself for unreimbursed Servicing Advances, the
Servicer's right to reimburse itself pursuant to this subclause (iii) with
respect to any Mortgage Loan being limited to related Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Servicer from the Mortgagor or otherwise relating to the
Mortgage Loan, it being understood that, in the case of such reimbursement, the
Servicer's right thereto shall be prior to the rights of the Purchaser, except
that, where the Seller is required to repurchase a Mortgage Loan, pursuant to
Subsection 7.04, the Servicer's right to such reimbursement shall be subsequent
to the payment to the Purchaser of the repurchase price pursuant to Subsection
7.04 and all other amounts required to be paid to the Purchaser with respect to
such Mortgage Loans;
(iv) to pay to itself pursuant to Subsection 11.22 as servicing
compensation (a) any interest earned on funds in the Custodial Account (all such
interest to be withdrawn monthly not later than each Distribution Date), (b) the
Servicing Fee from that portion of any payment or recovery as to interest on a
particular Mortgage Loan and (c) Ancillary Income to the extent not previously
retained;
(v) reserved;
(vi) reserved;
(vii) to pay, or to reimburse the Servicer for advances in respect of,
expenses incurred in connection with any Mortgage Loan pursuant to Subsection
11.03(b), but only to the extent of amounts received in respect of the Mortgage
Loans to which such expense is attributable;
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(vii) to clear and terminate the Custodial Account on the termination
of this Agreement; and
(viii) to withdraw funds deposited in error.
The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Custodial Account pursuant to such subclauses (ii), (iii), (v), (vi) and
(vii) above. The Servicer shall provide written notification in the form of an
Officers' Certificate to the Purchaser, on or prior to the next succeeding
Distribution Date, upon making any withdrawals from the Custodial Account
pursuant to subclause (iv) above.
Section 11.06 Establishment of Escrow Accounts; Deposits in Escrow
Accounts.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts, in the form of time deposit, demand
accounts or the Eligible Accounts. The creation of any Escrow Account shall be
evidenced by Escrow Account Letter Agreement in the form of Exhibit 8.
The Servicer shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein, (i) all Escrow Payments collected on account of the
Mortgage Loans, for the purpose of effecting timely payment of any such items as
required under the terms of this Agreement, and (ii) all Insurance Proceeds
which are to be applied to the restoration or repair of any Mortgaged Property.
The Servicer shall make withdrawals therefrom only to effect such payments as
are required under this Agreement, and for such other purposes as shall be as
set forth or in accordance with Subsection 11.08. The Servicer shall be entitled
to retain any interest paid on funds deposited in the Escrow Account by the
depository institution other than interest on escrowed funds required by law to
be paid to the Mortgagor and, to the extent required by law, the Servicer shall
pay interest on escrowed funds to the Mortgagor notwithstanding that the Escrow
Account is non interest bearing or that interest paid thereon is insufficient
for such purposes.
Section 11.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the Servicer (i) to
effect timely payments of ground rents, taxes, assessments, water rates, hazard
insurance premiums, Primary Insurance Policy premiums, if applicable, and
comparable items, (ii) to reimburse the Servicer for any Servicing Advance made
by the Servicer with respect to a related Mortgage Loan but only from amounts
received on the related Mortgage Loan which represent late payments or
collections of Escrow Payments thereunder, (iii) to refund to the Mortgagor any
funds as may be determined to be overages, (iv) for transfer to the Custodial
Account in accordance with the terms of this Agreement, (v) for application to
restoration or repair of the Mortgaged Property, (vi) to pay to the Servicer, or
to the Mortgagor to the extent required by law, any interest paid on the funds
deposited in the Escrow Account, or (vii) to clear and terminate the Escrow
Account on the termination of this Agreement.
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Section 11.08 Payment of Taxes, Insurance and Other Charges;
Collections Thereunder.
With respect to each Mortgage Loan, the Servicer shall maintain (itself
or through third party services customarily used by similar servicers) accurate
records reflecting the status of ground rents, taxes, assessments, water rates
and other charges which are or may become a lien upon the Mortgaged Property and
the status of fire and hazard insurance coverage and shall obtain, from time to
time, all bills for the payment of such charges, including insurance renewal
premiums and shall effect payment thereof prior to the applicable penalty or
termination date and at a time appropriate for securing maximum discounts
allowable, employing for such purpose deposits of the Mortgagor in the Escrow
Account which shall have been estimated and accumulated by the Servicer in
amounts sufficient for such purposes, as allowed under the terms of the Mortgage
and applicable law. To the extent that any such Mortgage does not provide for
Escrow Payments, the Servicer shall determine that any such payments are made by
the Mortgagor at the time they first become due. The Servicer assumes full
responsibility for the timely payment of all such bills and shall effect timely
payments of all such bills irrespective of the Mortgagor's faithful performance
in the payment of same or the making of the Escrow Payments and shall make
advances from its own funds to effect such payments.
Section 11.09 Transfer of Accounts.
The Servicer may transfer the Custodial Account or the Escrow Account
to a different depository institution from time to time. Such transfer shall be
made only upon obtaining the consent of the Purchaser, which consent shall not
be unreasonably withheld. In any case, the Custodial Account and Escrow Account
shall be Eligible Accounts.
Section 11.10 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage Loan fire
and hazard insurance with extended coverage as is customary in the area where
the Mortgaged Property is located in an amount which is at least equal to the
lesser of (i) the amount necessary to fully compensate for any damage or loss to
the improvements which are a part of such property on a replacement cost basis
or (ii) the outstanding principal balance of the Mortgage Loan, in each case in
an amount not less than such amount as is necessary to prevent the Mortgagor
and/or the Mortgagee from becoming a co-insurer. In the case of second liens,
the Servicer may request the first lienholder to address any insurance
discrepancies prior to taking corrective action itself. If the Mortgaged
Property is in an area identified on a Flood Hazard Boundary Map or Flood
Insurance Rate Map issued by the Flood Emergency Management Agency as having
special flood hazards and flood insurance has been made available, the Servicer
will cause to be maintained a flood insurance policy meeting the requirements of
the current guidelines of the Federal Insurance Administration with a generally
acceptable insurance carrier, in an amount representing coverage not less than
the lesser of (i) the outstanding principal balance of the Mortgage Loan or (ii)
the maximum amount of insurance which is available under the National Flood
Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as amended.
The Servicer also shall maintain on any REO Property, fire and hazard insurance
with extended coverage in an amount which is at least equal to the lesser of (i)
the maximum insurable value of the improvements which are a part of such
property and (ii) the outstanding principal balance of the related Mortgage Loan
at the time it became an REO Property plus accrued interest at the Mortgage
11-8
Interest Rate and related Servicing Advances, liability insurance and, to the
extent required and available under the National Flood Insurance Act of 1968 and
the Flood Disaster Protection Act of 1973, as amended, flood insurance in an
amount as provided above. Pursuant to Subsection 11.04, any amounts collected by
the Servicer under any such policies other than amounts to be deposited in the
Escrow Account and applied to the restoration or repair of the Mortgaged
Property or REO Property, or released to the Mortgagor in accordance with the
Servicer's normal servicing procedures, shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Subsection 11.05. Any cost incurred
by the Servicer in maintaining any such insurance shall not, for the purpose of
calculating distributions to the Purchaser, be added to the unpaid principal
balance of the related Mortgage Loan, notwithstanding that the terms of such
Mortgage Loan so permit. It is understood and agreed that no earthquake or other
additional insurance need be required by the Servicer of the Mortgagor or
maintained on property acquired in respect of the Mortgage Loan, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. All such policies shall be
endorsed with standard mortgagee clauses with loss payable to the Servicer, or
upon request to the Purchaser, and shall provide for at least thirty days prior
written notice of any cancellation, reduction in the amount of, or material
change in, coverage to the Servicer. The Servicer shall not interfere with the
Mortgagor's freedom of choice in selecting either his insurance carrier or
agent, provided, however, that the Servicer shall not accept any such insurance
policies from insurance companies unless such companies currently reflect a
General Policy Rating of A:X or better in Best's Key Rating Guide and are
licensed to do business in the state wherein the property subject to the policy
is located.
Section 11.11 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Servicer shall obtain and maintain a mortgage
impairment or blanket policy issued by an issuer that has a Best rating of A:VI
insuring against hazard losses on all of Mortgaged Properties securing the
Mortgage Loans, then, to the extent such policy provides coverage in an amount
equal to the amount required pursuant to Subsection 11.10 and otherwise complies
with all other requirements of Subsection 11.10, the Servicer shall conclusively
be deemed to have satisfied its obligations as set forth in Subsection 11.10, it
being understood and agreed that such policy may contain a deductible clause, in
which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property or REO Property a policy complying
with Subsection 11.10, and there shall have been one or more losses which would
have been covered by such policy, deposit in the Custodial Account the amount
not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as servicer of the Mortgage Loans, the
Servicer agrees to prepare and present, on behalf of the Purchaser, claims under
any such blanket policy in a timely fashion in accordance with the terms of such
policy. Upon request of the Purchaser, the Servicer shall cause to be delivered
to the Purchaser a certified true copy of such policy and a statement from the
insurer thereunder that such policy shall in no event be terminated or
materially modified without thirty days prior written notice to the Purchaser.
11-9
Section 11.12 Fidelity Bond, Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket fidelity
bond and an errors and omissions insurance policy, with broad coverage with
responsible companies that meet the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac on
all officers, employees or other persons acting in any capacity with regard to
the Mortgage Loan to handle funds, money, documents and papers relating to the
Mortgage Loan. The fidelity bond and errors and omissions insurance shall be in
the form of the Mortgage Banker's Blanket Bond and shall protect and insure the
Servicer against losses, including forgery, theft, embezzlement, fraud, errors
and omissions and negligent acts of such persons. Such fidelity bond shall also
protect and insure the Servicer against losses in connection with the failure to
maintain any insurance policies required pursuant to this Agreement and the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Subsection 11.12
requiring the fidelity bond and errors and omissions insurance shall diminish or
relieve the Servicer from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such bond and insurance policy shall
be at least equal to the corresponding amounts required by ▇▇▇▇▇▇ Mae in the
▇▇▇▇▇▇ ▇▇▇ Servicing Guide or by ▇▇▇▇▇▇▇ Mac in the ▇▇▇▇▇▇▇ Mac Servicers' and
Servicers' Guide. Upon request of the Purchaser, the Servicer shall cause to be
delivered to the Purchaser a certified true copy of the fidelity bond and
insurance policy and a statement from the surety and the insurer that such
fidelity bond or insurance policy shall in no event be terminated or materially
modified without thirty days' prior written notice to the Purchaser.
Section 11.13 Title, Management and Disposition of REO Property.
In the event that title to the 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 person designated by the Purchaser, or in the
event such person is not authorized or permitted to hold title to real property
in the state where the REO Property is located, or would be adversely affected
under the "doing business" or tax laws of such state by so holding title, the
deed or certificate of sale shall be taken in the name of such Person or Persons
as shall be consistent with an opinion of counsel obtained by the Servicer from
an attorney duly licensed to practice law in the state where the REO Property is
located. Any Person or Persons holding such title other than the Purchaser shall
acknowledge in writing that such title is being held as nominee for the benefit
of the Purchaser.
The Servicer shall either itself or through an agent selected by the
Servicer, manage, conserve, protect and operate each REO Property (and may
temporarily rent the same) in the same manner that it manages, conserves,
protects and operates other foreclosed property for its own account, and in the
same manner that similar property in the same locality as the REO Property is
managed. If a REMIC election is or is to be made with respect to the arrangement
under which the Mortgage Loans and any REO property are held, the Servicer shall
manage, conserve, protect and operate each REO Property in a manner which does
not cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code or result in the receipt by such
REMIC of any "income from non permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" within
the meaning of Section 860G(c)(2) of the Code. The Servicer shall cause each REO
Property to be inspected promptly upon the acquisition of title thereto and
shall cause each REO Property to be inspected at least annually thereafter. The
Servicer shall make or cause to be made a written report of each such
inspection. Such reports shall be retained in the Mortgage File and copies
thereof shall be forwarded by the Servicer to the Purchaser. The Servicer shall
use its best efforts to dispose of the REO Property as soon as possible and
shall sell such REO Property in any event within two years, or such other period
as may be permitted under Section 860(G)(a)(8) of the Code, after title has been
taken to such REO Property, unless the Servicer determines, and gives
appropriate notice to the Purchaser, that a longer period is necessary for the
orderly liquidation of such REO Property.
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With respect to each REO Property, the Servicer shall segregate and
hold all funds collected and received in connection with the operation of the
REO Property separate and apart from its own funds or general assets and shall
deposit such amounts in the Collection Account subject to withdrawal as provided
in this Agreement.
The Servicer shall deposit or cause to be deposited, on a daily basis
in the Collection Account all revenues received with respect to the REO Property
and shall withdraw therefrom funds necessary for the proper operation,
management and maintenance of the REO Property, including the cost of
maintaining any hazard insurance pursuant to Subsection 11.10 hereof and the
fees of any managing agent acting on behalf of the Servicer.
The Servicer shall furnish to the Purchaser on each Distribution Date,
an operating statement for each REO Property covering the operation of each REO
Property for the previous month. Such operating statement shall be accompanied
by such other information as the Purchaser shall reasonably request.
Each REO Disposition 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 Purchaser only with the prior written consent of the Purchaser.
If as of the date title to any REO Property was acquired by the Servicer there
were outstanding unreimbursed Servicing Advances with respect to the REO
Property, the Servicer, upon an REO Disposition of such REO Property, shall be
entitled to reimbursement for any related unreimbursed Servicing Advances from
proceeds received in connection with such REO Disposition. The proceeds from the
REO Disposition, net of any payment to the Servicer as provided above, and prior
to the Reconstitution Date, up to the outstanding principal balance of the
Mortgage Loan, shall be deposited in the Custodial Account on the Determination
Date in the month following receipt thereof for distribution on the succeeding
Distribution Date in accordance with Section 4.
Section 11.14 Distributions.
On each Distribution Date, the Servicer shall distribute to the
Purchaser all amounts credited to the Custodial Account as of the close of
business on the preceding Determination Date, net of charges against or
withdrawals from the Custodial Account pursuant to Subsection 11.05.
All distributions made to the Purchaser on each Distribution Date will
be made to the Purchaser of record on the preceding Record Date, and shall be
based on the Mortgage Loans owned and held by the Purchaser, and shall be made
by wire transfer of immediately available funds to the account of the Purchaser
at a bank or other entity having appropriate facilities therefor, if the
Purchaser shall have so notified the Servicer or by check mailed to the address
of the Purchaser.
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With respect to any remittance received by the Purchaser on or after
the second Business Day following the Business Day on which such payment was
due, the Servicer shall pay to the Purchaser interest on any such late payment
at an annual rate equal to the rate of interest as is publicly announced from
time to time at its principal office by Chase Manhattan Bank, N.A., New York,
New York, as its prime lending rate, adjusted as of the date of each change,
plus three percentage points, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be paid by the Servicer to the
Purchaser on the date such late payment is made and shall cover the period
commencing with the day following such second Business Day and ending with the
Business Day on which such payment is made, both inclusive. Such interest shall
be remitted along with such late payment. The payment by the Servicer of any
such interest shall not be deemed an extension of time for payment or a waiver
of any Event of Default by the Servicer.
Section 11.15 Remittance Reports.
No later than the fifth Business Day of each month, the Servicer shall
furnish to the Purchaser or its designee a computer tape containing, and a hard
copy of, the monthly data, as further described and set forth in Exhibit 9-1. On
the Business Day following each Determination Date, the Servicer shall deliver
to the Purchaser or its designee by telecopy (or by such other means as the
Servicer and the Purchaser may agree from time to time) a computer tape
containing, and a hard copy of, the determination data with respect to the
related Distribution Date, all as further described and set forth in Exhibit 9-1
hereto, together with such other information with respect to the Mortgage Loans
as the Purchaser may reasonably require to allocate distributions made pursuant
to this Agreement and provide appropriate statements with respect to such
distributions. On the same date, the Servicer shall forward to the Purchaser by
overnight mail a computer readable magnetic tape containing the information set
forth in the Remittance Report with respect to the related Distribution Date.
Section 11.16 Statements to the Purchaser.
Not later than fifteen days after each Distribution Date, the Servicer
shall forward to the Purchaser or its designee a statement prepared by the
Servicer setting forth the status of the Custodial Account as of the close of
business on such Distribution Date and showing, for the period covered by such
statement, the aggregate amount of deposits into and withdrawals from the
Custodial Account of each category of deposit specified in Subsection 11.04 and
each category of withdrawal specified in Subsection 11.05.
The Servicer shall provide the Purchaser with such information
concerning the Mortgage Loans for the period during which it is servicing the
Mortgage Loans for the Purchaser as is necessary for the Purchaser to prepare
its federal income tax return as any Purchaser may reasonably request from time
to time.
Section 11.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Subsection 11.02,
with respect to any REO Property, the Servicer shall furnish to the Purchaser a
statement covering the Servicer's efforts in connection with the sale of such
REO Property and any rental of such REO Property incidental to the sale thereof
for the previous month, together with the operating statement. Such statement
shall be accompanied by such other information as the Purchaser shall reasonably
request.
11-12
Section 11.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed in lieu of foreclosure, the Servicer
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Section 11.19 Assumption Agreements.
The Servicer shall, to the extent it has knowledge of any conveyance or
prospective conveyance by any Mortgagor of the Mortgaged Property (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under any
"due on sale" clause applicable thereto; provided, however, that the Servicer
shall not exercise any such rights if prohibited by law from doing so or if the
exercise of such rights would impair or threaten to impair any recovery under
the related Primary Insurance Policy, if any. If the Servicer reasonably
believes it is unable under applicable law to enforce such "due on sale" clause,
the Servicer shall enter into an assumption agreement with the person to whom
the Mortgaged Property has been conveyed or is proposed to be conveyed, pursuant
to which such person becomes liable under the Mortgage Note and, to the extent
permitted by applicable state law, the Mortgagor remains liable thereon. Where
an assumption is allowed pursuant to this Subsection 11.01, the Servicer is
authorized to enter into a substitution of liability agreement with the person
to whom the Mortgaged Property has been conveyed or is proposed to be conveyed
pursuant to which the original Mortgagor is released from liability and such
Person is substituted as Mortgagor and becomes liable under the related Mortgage
Note. Any such substitution of liability agreement shall be in lieu of an
assumption agreement.
In connection with any such assumption or substitution of liability,
the Servicer shall follow the underwriting practices and procedures of prudent
mortgage lenders in the state in which the related Mortgaged Property is
located. With respect to an assumption or substitution of liability, Mortgage
Interest Rate, the amount of the Monthly Payment, and the final maturity date of
such Mortgage Note may not be changed. The Servicer shall notify the Purchaser
that any such substitution of liability or assumption agreement has been
completed by forwarding to the Purchaser the original of any such substitution
of liability or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. Any fee collected by the Servicer for entering into
an assumption or substitution of liability agreement in excess of 1% of the
outstanding principal balance of the Mortgage Loan shall be deposited in the
Custodial Account pursuant to Subsection 11.04.
Notwithstanding the foregoing paragraphs of this Subsection or any
other provision of this Agreement, the Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason of
any assumption of a Mortgage Loan by operation of law or any assumption which
the Servicer may be restricted by law from preventing, for any reason
whatsoever. For purposes of this Subsection 11.19, the term "assumption" is
deemed to also include a sale of the Mortgaged Property subject to the Mortgage
that is not accompanied by an assumption or substitution of liability agreement.
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Section 11.20 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Purchaser
by a certification of a servicing officer, which certification shall include a
statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the Custodial
Account pursuant to Subsection 11.04 have been or will be so deposited, and
shall request execution of any document necessary to satisfy the Mortgage Loan
and delivery to it of the portion of the Mortgage File held by the Purchaser or
the Purchaser's designee. Upon receipt of such certification and request, the
Purchaser, shall promptly release the related mortgage documents to the Servicer
and the Servicer shall prepare and process any satisfaction or release. No
expense incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Custodial Account or the Purchaser.
In the event the Servicer satisfies or releases a Mortgage without
having obtained payment in full of the indebtedness secured by the Mortgage or
should it otherwise prejudice any right the Purchaser may have under the
mortgage instruments, the Servicer, upon written demand, shall remit to the
Purchaser the then outstanding principal balance of the related Mortgage Loan by
deposit thereof in the Custodial Account. The Servicer shall maintain the
fidelity bond insuring the Servicer against any loss it may sustain with respect
to any Mortgage Loan not satisfied in accordance with the procedures set forth
herein.
From time to time and as appropriate for the service or foreclosure of
the Mortgage Loan, including for this purpose collection under any Primary
Insurance Policy, the Purchaser shall, upon request of the Servicer and delivery
to the Purchaser of a servicing receipt signed by a Servicing Officer, release
the requested portion of the Mortgage File held by the Purchaser to the
Servicer. Such servicing receipt shall obligate the Servicer to return the
related Mortgage documents to the Purchaser when the need therefor by the
Servicer no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Custodial Account or the Mortgage File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non judicially, and
the Servicer has delivered to the Purchaser a certificate of a servicing officer
certifying as to the name and address of the Person to which such Mortgage File
or such document was delivered and the purpose or purposes of such delivery.
Upon receipt of a certificate of a servicing officer stating that such Mortgage
Loan was liquidated, the servicing receipt shall be released by the Purchaser to
the Servicer.
Section 11.21 Reserved.
Section 11.22 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall, subject
to Subsection 11.04(x), be entitled to withdraw from the Custodial Account or to
retain from interest payments on the Mortgage Loans the amounts provided for as
the Servicer's Servicing Fee. Additional servicing compensation in the form of
Ancillary Income shall be retained by the Servicer to the extent not required to
be deposited in the Custodial Account. The Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement therefor except as specifically
provided for.
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Section 11.23 Statement as to Compliance.
The Servicer will deliver to the Purchaser and the Servicer not later
than March 31, 2004, an Officers' Certificate stating, as to each signatory
thereof, that (i) a review of the activities of the Servicer during the interim
servicing period and of performance under this Agreement has been made under
such officers' supervision and (ii) to the best of such officers' knowledge,
based on such review, the Servicer has fulfilled all of its obligations under
this Agreement throughout such period, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof. Copies of such statement shall be
provided by the Purchaser to any Person identified as a prospective purchaser of
the Mortgage Loans.
Section 11.24 Independent Public Accountants' Servicing Report.
Not later than March 31, 2004, the Servicer at its expense shall cause
a firm of independent public accountants (which may also render other services
to the Servicer) which is a member of the American Institute of Certified Public
Accountants to furnish a statement to the Purchaser or its designee and the
Servicer to the effect that such firm has examined certain documents and records
relating to the servicing of the Mortgage Loans under this Agreement or of
mortgage loans under pooling and servicing agreements (including the Mortgage
Loans and this Agreement) substantially similar one to another (such statement
to have attached thereto a schedule setting forth the pooling and servicing
agreements covered thereby) and that, on the basis of such examination conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for ▇▇▇▇▇▇▇ Mac,
such firm confirms that such servicing has been conducted in compliance with
such pooling and servicing agreements except for such significant exceptions or
errors in records that, in the opinion of such firm, the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Program for Mortgages
serviced for ▇▇▇▇▇▇▇ Mac requires it to report. Copies of such statement shall
be provided by the Purchaser to any Person identified as a prospective purchaser
of the Mortgage Loans.
Section 11.25 Access to Certain Documentation.
The Servicer shall provide to the Office of Thrift Supervision, the
FDIC and any other federal or state banking or insurance regulatory authority
that may exercise authority over the Purchaser access to the documentation
regarding the Mortgage Loans serviced by the Servicer required by applicable
laws and regulations. Such access shall be afforded without charge, but only
upon reasonable request and during normal business hours at the offices of the
Servicer. In addition, access to the documentation will be provided to the
Purchaser and any Person identified to the Servicer by the Purchaser without
charge, upon reasonable request during normal business hours at the offices of
the Servicer.
11-15
Section 11.26 Recovery of Servicing Advances.
Prior to the transfer of servicing on any Servicing Transfer Date, the
Servicer shall be entitled to reimbursement from either (i) the Custodial
Account, if funds are available therefore, or (ii) from the successor servicer
or Purchaser for any unreimbursed Servicing Advances made by the Servicer during
the period from the related Closing Date through the Servicing Transfer Date, in
an amount not to exceed $50,000 in the aggregate; provided that the Servicer has
complied with its reporting obligations described in the following sentence. The
Servicer shall deliver promptly written notification to the Purchaser if the
amount of Servicing Advances made by the Servicer equals an aggregate of
$50,000, which notification shall set forth the amount and purpose of such
Servicing Advances and the related Mortgage Loans.
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SCHEDULE I
MORTGAGE LOAN SCHEDULE
[ON FILE]
I-1