Common use of Short Sales and Substitutions of Collateral Clause in Contracts

Short Sales and Substitutions of Collateral. In accordance with the Accepted Servicing Procedures, the Servicer may permit an Obligor, who is selling their Mortgaged Property that constitutes such Obligor's principal residence and relocating to another location, to substitute as collateral for the related Home Loan the Obligor's new single family residence in place of the Mortgaged Property being sold or any other real or personal property of the Obligor, which may include an interim substitution of personal property pending the Obligor's acquisition of a new residence. Other than the pledge of any incident or ancillary personal property in connection with the pledge of real property, any pledge of personal property by an Obligor as for the related Home Loan pursuant to this Subsection ("Substitute Collateral") shall be limited to personal property consisting of one or more of the following types: (1) a deposit account at any federally insured depository institution; (2) a certificate of deposit or time deposit of any federally insured depository institution; or (3) such other types of personal property that have been approved by the Grantor Trustee, the Indenture Trustee and each Rating Agency as a form of Substitute Collateral hereunder, which may include an instrument (within the meaning of Section 9-105(1) of the UCC) or a security (within the meaning of Section 8-102(1) of the UCC). Under certain circumstances, if such Obligor has received net proceeds from the sale of the prior residence that will not be applied to the purchase of the new residence, then the Servicer, in its discretion, may require that such Obligor either (i) make a partial prepayment in reduction of the principal balance of the Home Loan, or (ii) place such funds into a depository account or certificate of deposit as collateral for the related Home Loan. The Servicer shall undertake all actions, as deemed necessary or appropriate by the Servicer to effectuate the substitution of any real or personal property by an Obligor as collateral for the related Home Loan pursuant to this Subsection and the release of the then existing Mortgaged Property including all such actions to effectuate: (1) the inclusion of the security interests in such Substitute Collateral as part of the Grantor Trust Estate; (2) the delivery to the Custodian for inclusion in the related Grantor Trustee's Home Loan File of an appropriate security agreement with respect to such Substitute Collateral (including a new Mortgage with respect to any real property being substituted); (3) the delivery and pledge of the security interests in such Substitute Collateral to the Grantor Trustee under the Grantor Trust Agreement, including the delivery of any substitute Collateral consisting of primarily personal property in the same manner as provided by the definition of "Delivery" in Section 1.01 hereof; and (4) any other actions as reasonably requested by the Grantor Trustee or Indenture Trustee to accomplish such substitution of Substitute Collateral. In addition, if an Obligor is selling their Mortgaged Property and the circumstances relating to such sale involve compensating factors or a distressed situation, in each case as determined solely by the Servicer, then in accordance with the Accepted Servicing Procedures the Servicer may: (i) accept a partial prepayment by the Obligor of the Principal Balance in consideration for a release of the Mortgaged Property as security for the Home Loan, but with a continuation of the Debt Instrument and the Home Loan on an unsecured basis (i.e., a "short sale"); or (ii) accept a settlement involving a partial payment by the Obligor in consideration for the termination of the Home Loan, the cancellation of the Debt Instrument and the release of the Mortgaged Property (i.e., a "short pay-off").

Short Sales and Substitutions of Collateral. In accordance with the Accepted Servicing Procedures, the Servicer may permit an Obligor, who is selling their Mortgaged Property that constitutes such Obligor's principal residence and relocating to another location, to substitute as collateral for the related Home Loan the Obligor's new single family residence in place of the Mortgaged Property being sold or any other real or personal property of the Obligor, which may include an interim substitution of personal property pending the Obligor's acquisition of a new residence. Other than the pledge of any incident or ancillary personal property in connection with the pledge of real property, any pledge of personal property by an Obligor as for the related Home Loan pursuant to this Subsection ("Substitute CollateralSUBSTITUTE COLLATERAL") shall be limited to personal property consisting of one or more of the following types: (1) a deposit account at any federally insured depository institution; (2) a certificate of deposit or time deposit of any federally insured depository institution; or (3) such other types of personal property that have been approved by the Grantor Trustee, the Indenture Trustee and each Rating Agency as a form of Substitute Collateral hereunder, which may include an instrument (within the meaning of Section 9-105(1) of the UCC) or a security (within the meaning of Section 8-102(1) of the UCC). Under certain circumstances, if such Obligor has received net proceeds from the sale of the prior residence that will not be applied to the purchase of the new residence, then the Servicer, in its discretion, may require that such Obligor either (i) make a partial prepayment in reduction of the principal balance of the Home Loan, or (ii) place such funds into a depository account or certificate of deposit as collateral for the related Home Loan. The Servicer shall undertake all actions, as deemed necessary or appropriate by the Servicer to effectuate the substitution of any real or personal property by an Obligor as collateral for the related Home Loan pursuant to this Subsection and the release of the then existing Mortgaged Property including all such actions to effectuate: (1) the inclusion of the security interests in such Substitute Collateral as part of the Grantor Trust Estate; (2) the delivery to the applicable Custodian for inclusion in the related Grantor Trustee's Home Loan File of an appropriate security agreement with respect to such Substitute Collateral (including a new Mortgage or Manufactured Home Contract with respect to any real property being substituted); (3) the delivery and pledge of the security interests in such Substitute Collateral to the Grantor Trustee under the Grantor Trust Agreement, including the delivery of any substitute Collateral consisting of primarily personal property in the same manner as provided by the definition of "Delivery" in Section SECTION 1.01 hereof; and (4) any other actions as reasonably requested by the Grantor Trustee or Indenture Trustee to accomplish such substitution of Substitute Collateral. In addition, if an Obligor is selling their Mortgaged Property and the circumstances relating to such sale involve compensating factors or a distressed situation, in each case as determined solely by the Servicer, then in accordance with the Accepted Servicing Procedures the Servicer may: (i) accept a partial prepayment by the Obligor of the Principal Balance in consideration for a release of the Mortgaged Property as security for the Home Loan, but with a continuation of the Debt Instrument and the Home Loan on an unsecured basis (i.e., a "short sale"); or (ii) accept a settlement involving a partial payment by the Obligor in consideration for the termination of the Home Loan, the cancellation of the Debt Instrument and the release of the Mortgaged Property (i.e., a "short pay-off").

Short Sales and Substitutions of Collateral. In accordance with the Accepted Servicing Procedures, the Servicer may permit an Obligor, who is selling their Mortgaged Property that constitutes such Obligor's principal residence and relocating to another location, to substitute as collateral for the related Home Loan the Obligor's new single family residence in place of the Mortgaged Property being sold or any other real or personal property of the Obligor, which may include an interim substitution of personal property pending the Obligor's acquisition of a new residence; provided, however, that the Servicer shall obtain the prior written consent of the Securities Insurer to any such substitution of collateral. Other than the pledge of any incident or ancillary personal property in connection with the pledge of real property, any pledge of personal property by an Obligor as for the related Home Loan pursuant to this Subsection ("Substitute Collateral") shall be limited to personal property consisting of one or more of the following types: (1) a deposit account at any federally insured depository institution; (2) a certificate of deposit or time deposit of any federally insured depository institution; or (3) such other types of personal property that have been approved by the Grantor Trustee, the Indenture Trustee Trustee, the Securities Insurer and each Rating Agency as a form of Substitute Collateral hereunder, which may include an instrument (within the meaning of Section 9-105(1) of the UCC) or a security (within the meaning of Section 8-102(1) of the UCC). Under certain circumstances, if such Obligor has received net proceeds from the sale of the prior residence that will not be applied to the purchase of the new residence, then the Servicer, in its discretion, may require that such Obligor either (i) make a partial prepayment in reduction of the principal balance of the Home Loan, or (ii) place such funds into a depository account or certificate of deposit as collateral for the related Home Loan. The Servicer shall undertake all actions, as deemed necessary or appropriate by the Servicer to effectuate the substitution of any real or personal property by an Obligor as collateral for the related Home Loan pursuant to this Subsection and the release of the then existing Mortgaged Property including all such actions to effectuate: (1) the inclusion of the security interests in such Substitute Collateral as part of the Grantor Trust Estate; (2) the delivery to the Custodian for inclusion in the related Grantor Trustee's Home Loan File of an appropriate security agreement with respect to such Substitute Collateral (including a new Mortgage with respect to any real property being substituted); (3) the delivery and pledge of the security interests in such Substitute Collateral to the Grantor Trustee under the Grantor Trust Agreement, including the delivery of any substitute Collateral consisting of primarily personal property in the same manner as provided by the definition of "Delivery" in Section 1.01 hereof; and (4) any other actions as reasonably requested by the Grantor Trustee or Indenture Trustee to accomplish such substitution of Substitute Collateral. In addition, if an Obligor is selling their Mortgaged Property and the circumstances relating to such sale involve compensating factors or a distressed situation, in each case as determined solely by the Servicer, then in accordance with the Accepted Servicing Procedures the Servicer may: (i) accept a partial prepayment by the Obligor of the Principal Balance in consideration for a release of the Mortgaged Property as security for the Home Loan, but with a continuation of the Debt Instrument and the Home Loan on an unsecured basis (i.e., a "short sale"); or (ii) accept a settlement involving a partial payment by the Obligor in consideration for the termination of the Home Loan, the cancellation of the Debt Instrument and the release of the Mortgaged Property (i.e., a "short pay-off"); provided, however, that if the aggregate Principal Balances of Home Loans disposed of through short sales or short pay-offs exceeds 1% of the Original Pool Principal Balance, then the Servicer shall obtain the prior written consent of the Securities Insurer to any such short sale or short pay-off.