Exhibit 99.2
Execution Copy
NOVUS FINANCIAL CORPORATION,
as Servicer
NOVUS HELOC TRUST 1999-1,
as Issuer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Indenture Trustee
----------------------
SERVICING AGREEMENT
Dated as of May 1, 1999
----------------------
Revolving Credit Loans
TABLE OF CONTENTS
Page
ARTICLE I.
Definitions
Section 1.01. Definitions................................................1
Section 1.02. Other Definitional Provisions..............................1
Section 1.03. Interest Calculations......................................2
ARTICLE II.
Representations and Warranties
Section 2.01. Representations and Warranties Regarding the Servicer......3
Section 2.02. Representations and Warranties of the Issuer...............4
Section 2.03. Enforcement of Representations and Warranties..............4
ARTICLE III.
Administration and Servicing of Revolving Credit Loans
Section 3.01. The Servicer...............................................6
Section 3.02. Collection of Certain Revolving Credit Loan Payments.......9
Section 3.03. Withdrawals from the Collection Account...................11
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses..................................................12
Section 3.05. Modification Agreements...................................13
Section 3.06. Trust Estate; Related Documents...........................13
Section 3.07. Realization Upon Defaulted Revolving Credit Loans.........14
Section 3.08. Issuer and Indenture Trustee to Cooperate.................15
Section 3.09. Servicing Compensation; Payment of Certain Expenses by
Servicer..................................................16
Section 3.10. Annual Statement as to Compliance.........................17
Section 3.11. Annual Servicing Report...................................17
Section 3.12. Access to Certain Documentation and Information
Regarding the Revolving Credit Loans......................18
Section 3.13. Maintenance of Certain Servicing Insurance Policies.......18
Section 3.14. Information Required by the Internal Revenue
Service and Reports of Foreclosures and Abandonments
of Mortgaged Property.....................................18
Section 3.15. Optional Repurchase of Defaulted Revolving Credit
Loans.....................................................18
Section 3.16. Payment of Taxes, Insurance and Other Charges.............18
Section 3.17. Optional Retransfers of Revolving Credit Loans............19
ARTICLE IV.
Servicing Certificate
Section 4.01. Statements to Securityholders.............................20
Section 4.02. Tax Reporting.............................................21
ARTICLE V.
Payment Account
Section 5.01. Payment Account...........................................22
ARTICLE VI.
The Servicer
Section 6.01. Liability of the Servicer.................................23
Section 6.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer.........23
Section 6.03. Limitation on Liability of the Servicer and Others........23
Section 6.04. Servicer Not to Resign....................................24
Section 6.05. Delegation of Duties......................................24
Section 6.06. Servicer to Pay Indenture Trustee's and Owner
Trustee's Fees and Expenses; Indemnification..............25
ARTICLE VII.
Default
Section 7.01. Servicing Default.........................................26
Section 7.02. Indenture Trustee to Act; Appointment of Successor........27
Section 7.03. Notification to Securityholders...........................29
ARTICLE VIII.
Miscellaneous Provisions
Section 8.01. Amendment.................................................30
Section 8.02. GOVERNING LAW.............................................30
Section 8.03. Notices...................................................30
Section 8.04. Severability of Provisions................................30
Section 8.05. Third-Party Beneficiaries.................................31
Section 8.06. Counterparts..............................................31
Section 8.07. Effect of Headings and Table of Contents..................31
Section 8.08. Termination Upon Purchase by the Servicer or Liquidation
of All Revolving Credit Loans.............................31
Section 8.09. Certain Matters Affecting the Indenture Trustee...........32
Section 8.10. Owner Trustee Not Liable for Related Documents............32
EXHIBIT A - REVOLVING CREDIT LOAN SCHEDULE.................................A-1
EXHIBIT B - POWER OF ATTORNEY..............................................B-1
EXHIBIT C - FORM OF REQUEST FOR RELEASE....................................D-1
Execution Copy This Servicing Agreement, dated as of May 1, 1999,
among NOVUS Financial Corporation (the "Servicer"), the NOVUS HELOC Trust 1999-1
(the "Issuer"), and Norwest Bank Minnesota, National Association (the "Indenture
Trustee").
W I T N E S S E T H T H A T:
----------------------------
WHEREAS, pursuant to the terms of the Revolving Credit Loan Purchase
Agreement, NOVUS Financial Corporation (in its capacity as Seller) will sell to
the Depositor the Revolving Credit Loans together with the Related Documents on
the Closing Date, and thereafter all Additional Balances created on or after the
Cut-off Date;
WHEREAS, the Depositor will transfer the Revolving Credit Loans and
all of its rights under the Revolving Credit Loan Purchase Agreement to the
Issuer, together with the Related Documents on the Closing Date, and thereafter
all Additional Balances created on or after the Cut-off Date;
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer will
issue and transfer to or at the direction of the Depositor, the Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer will issue
and transfer to or at the direction of the Depositor, the Notes; and
WHEREAS, pursuant to the terms of this Servicing Agreement, the
Servicer will service the Revolving Credit Loans directly;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I.
Definitions
Section 1.01. Definitions. For all purposes of this Servicing Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Definitions contained in Appendix A to the
Indenture dated as of May 1, 1999 (the "Indenture"), between NOVUS HELOC Trust
1999-1, as issuer, and Norwest Bank Minnesota, National Association, as
indenture trustee, which is incorporated by reference herein. All other
capitalized terms used herein shall have the meanings specified herein.
Section 1.02. Other Definitional Provisions.
(a) All terms defined in this Servicing Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(b) As used in this Servicing Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Servicing Agreement or in any such certificate or other
document, and accounting terms partly defined in this Servicing Agreement or in
any such certificate or other document, to the extent not defined, shall have
the respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Servicing Agreement or in any such certificate or other document are
inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Servicing Agreement or in any such
certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Servicing Agreement shall refer to this Servicing Agreement as
a whole and not to any particular provision of this Servicing Agreement; Section
and Exhibit references contained in this Servicing Agreement are references to
Sections and Exhibits in or to this Servicing Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation".
(d) The definitions contained in this Servicing Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
Section 1.03. Interest Calculations. All calculations of interest hereunder
that are made in respect of the Loan Balance of a Revolving Credit Loan shall be
made on a daily basis using a 365/366-day year. All calculations of interest on
the Securities shall be made on the basis of the actual number of days in an
Interest Period and a year assumed to consist of 360 days. The calculation of
the Servicing Fee shall be made on the basis of a 360-day year consisting of
twelve 30-day months. All dollar amounts calculated hereunder shall be rounded
to the nearest xxxxx with one-half of one xxxxx being rounded up.
ARTICLE II.
Representations and Warranties
Section 2.01. Representations and Warranties Regarding the Servicer. The
Servicer represents and warrants to the Issuer and for the benefit of the
Indenture Trustee, as pledgee of the Revolving Credit Loans and the Credit
Enhancer, as of the Cut-off Date:
(i) The Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
has the corporate power to own its assets and to transact the business in
which it is currently engaged. The Servicer is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which
the failure to so qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the
Servicer;
(ii) The Servicer has the power and authority to make, execute,
deliver and perform this Servicing Agreement and all of the transactions
contemplated under this Servicing Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance of
this Servicing Agreement. When executed and delivered, this Servicing
Agreement will constitute the legal, valid and binding obligation of the
Servicer enforceable in accordance with its terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies;
(iii) The Servicer is not required to obtain the consent of any
other Person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Servicing Agreement, except for such consent,
license, approval or authorization, or registration or declaration, as
shall have been obtained or filed, as the case may be;
(iv) The execution and delivery of this Servicing Agreement and
the performance of the transactions contemplated hereby by the Servicer
will not violate any provision of any existing law or regulation or any
order or decree of any court applicable to the Servicer or any provision of
the Certificate of Incorporation or Bylaws of the Servicer, or constitute a
material breach of any mortgage, indenture, contract or other agreement to
which the Servicer is a party or by which the Servicer may be bound;
(v) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the
knowledge of the Servicer threatened, against the Servicer or any of its
properties or with respect to this Servicing Agreement or the Securities
which in the opinion of the Servicer has a reasonable likelihood of
resulting in a material adverse effect on the transactions contemplated by
this Servicing Agreement; and
(vi) The Servicer's computer and other systems used in servicing
the Revolving Credit Loans will be modified to operate in a manner such
that on and after January 1, 2000 (i) the Servicer can service the
Revolving Credit Loans in accordance with the terms of this Servicing
Agreement and (ii) the Servicer can operate its business in the same manner
as it is operating on the date hereof.
The foregoing representations and warranties shall survive any termination
of the Servicer hereunder.
Section 2.02. Representations and Warranties of the Issuer. The Issuer
hereby represents and warrants to the Servicer and for the benefit of the
Indenture Trustee, as pledgee of the Revolving Credit Loans and the Credit
Enhancer, as of the Cut-off Date:
(i) The Issuer is a business trust duly formed and in good
standing under the laws of the State of Delaware and has full power,
authority and legal right to execute and deliver this Servicing Agreement
and to perform its obligations under this Servicing Agreement, and has
taken all necessary action to authorize the execution, delivery and
performance by it of this Servicing Agreement; and
(ii) The execution and delivery by the Issuer of this Servicing
Agreement and the performance by the Issuer of its obligations under this
Servicing Agreement will not violate any provision of any law or regulation
governing the Issuer or any order, writ, judgment or decree of any court,
arbitrator or governmental authority or agency applicable to the Issuer or
any of its assets. Such execution, delivery, authentication and performance
will not require the authorization, consent or approval of, the giving of
notice to, the filing or registration with, or the taking of any other
action with respect to, any governmental authority or agency regulating the
activities of limited liability companies. Such execution, delivery,
authentication and performance will not conflict with, or result in a
breach or violation of, any mortgage, deed of trust, lease or other
agreement or instrument to which the Issuer is bound.
Section 2.03. Enforcement of Representations and Warranties. The Servicer,
on behalf of and subject to the direction of the Indenture Trustee, as pledgee
of the Revolving Credit Loans, the Credit Enhancer or the Issuer, shall enforce
the representations and warranties of the Seller pursuant to the Revolving
Credit Loan Purchase Agreement. Upon the discovery by the Seller, the Depositor,
the Servicer, the Indenture Trustee, the Credit Enhancer, the Issuer, or any
Custodian of a breach of any of the representations and warranties made in the
Revolving Credit Loan Purchase Agreement, in respect of any Revolving Credit
Loan which materially and adversely affects the interests of the Securityholders
or the Credit Enhancer, the party discovering such breach shall give prompt
written notice to the other parties (any Custodian being so obligated under a
Custodial Agreement). The Servicer shall promptly notify the Seller of such
breach and request that, pursuant to the terms of the Revolving Credit Loan
Purchase Agreement, the Seller either (i) cure such breach in all material
respects within 45 days (with respect to a breach of the representations and
warranties contained in Section 3.1(a) of the Revolving Credit Loan Purchase
Agreement) or 90 days (with respect to a breach of the representations and
warranties contained in Section 3.1(b) of the Revolving Credit Loan Purchase
Agreement) from the date the Seller was notified of such breach or (ii) purchase
such Revolving Credit Loan from the Issuer at the Repurchase Price and in the
manner set forth in Section 3.1(b) of the Revolving Credit Loan Purchase
Agreement; provided that the Seller shall, subject to compliance with all the
conditions set forth in the Revolving Credit Loan Purchase Agreement, have the
option to substitute an Eligible Substitute Loan or Loans, together with any
Substitution Adjustment Amounts, for such Revolving Credit Loan. In the event
that the Seller elects to substitute one or more Eligible Substitute Loans
pursuant to Section 3.1(b) of the Revolving Credit Loan Purchase Agreement, the
Seller shall deliver to the Issuer with respect to such Eligible Substitute
Loans, the original Credit Line Agreement, the Mortgage, and such other
documents and agreements as are required by the Revolving Credit Loan Purchase
Agreement. Payments due with respect to Eligible Substitute Loans in the month
of substitution shall not be transferred to the Issuer and will be retained by
the Servicer and remitted by the Servicer to the Seller on the next succeeding
Payment Date provided a payment at least equal to the applicable Minimum Monthly
Payment has been received by the Issuer for the month of substitution in respect
of the Revolving Credit Loan to be removed. The Servicer shall amend or cause to
be amended the Revolving Credit Loan Schedule to reflect the removal of such
Revolving Credit Loan and the substitution of the Eligible Substitute Loans and
the Servicer shall promptly deliver the amended Revolving Credit Loan Schedule
to the Owner Trustee and Indenture Trustee.
It is understood and agreed that the obligation of the Seller to cure such
breach or purchase or substitute for such Revolving Credit Loan as to which such
a breach has occurred and is continuing shall constitute the sole remedy
respecting such breach available to the Issuer and the Indenture Trustee, as
pledgee of the Revolving Credit Loans, against the Seller. In connection with
the purchase of or substitution for any such Revolving Credit Loan by the
Seller, the Issuer shall assign to the Seller all of its right, title and
interest in respect of the Revolving Credit Loan Purchase Agreement applicable
to such Revolving Credit Loan. Upon receipt of the Repurchase Price, or upon
completion of such substitution, the Servicer shall notify the Custodian and
then the Custodian shall deliver the Mortgage Files to the Servicer, together
with all relevant endorsements and assignments prepared by the Servicer which
the Indenture Trustee shall execute.
ARTICLE III.
Administration and Servicing
of Revolving Credit Loans
Section 3.01. The Servicer.
(a) The Servicer shall service and administer the Revolving Credit Loans in
a manner consistent with the terms of this Servicing Agreement and which shall
be normal and usual in its general mortgage servicing activities and shall have
full power and authority, acting alone or through a subservicer, to do any and
all things in connection with such servicing and administration which it may
deem necessary or desirable, it being understood, however, that the Servicer
shall at all times remain responsible to the Issuer and the Indenture Trustee,
as pledgee of the Revolving Credit Loans, for the performance of its duties and
obligations hereunder in accordance with the terms hereof. Without limiting the
generality of the foregoing, the Servicer shall continue, and is hereby
authorized and empowered by the Issuer and the Indenture Trustee, as pledgee of
the Revolving Credit Loans, to execute and deliver, on behalf of itself, the
Issuer, the Indenture Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and all
other comparable instruments with respect to the Revolving Credit Loans and with
respect to the Mortgaged Properties. The Issuer, the Indenture Trustee and the
Custodian, as applicable, 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 hereunder. In addition, the Servicer
may, at its own discretion and on behalf of the Indenture Trustee, obtain credit
information in the form of a Credit Score from a credit repository. On the
Closing Date, the Indenture Trustee shall deliver to the Servicer a limited
power of attorney substantially in the form of Exhibit B hereto.
If the Mortgage relating to a Revolving Credit Loan did not have a lien
senior to the Revolving Credit Loan on the related Mortgaged Property as of the
Cut-off Date, then the Servicer, in such capacity, may not consent to the
placing of a lien senior to that of the Mortgage on the related Mortgaged
Property. If the Mortgage relating to a Revolving Credit Loan had a lien senior
to the Revolving Credit Loan on the related Mortgaged Property as of the Cut-off
Date, then the Servicer, in such capacity, may consent to the refinancing of the
prior senior lien, provided that the following requirements are met:
(i) the resulting Combined Loan-to-Value Ratio ("CLTV) of such
Revolving Credit Loan is no higher than the greater of the Combined
Loan-to-Value Ratio prior to such refinancing or a 70% CLTV (or a 80% CLTV
for those borrowers with a Credit Score as of the Cut-off Date of 712 or
greater); provided, however, if such refinanced mortgage loan is a "rate
and term" mortgage loan (meaning, the borrower does not receive any cash
from the refinancing), the CLTV may increase to the extent of either (a)
the reasonable closing costs of such refinancing (up to a maximum of 5% of
the CLTV) or (b) any decrease in the value of the related Mortgaged
Property, if the borrower is in good standing;
(ii) the interest rate for the loan evidencing the refinanced
senior lien is no higher than the interest rate on the loan evidencing the
existing senior lien immediately prior to the date of such refinancing
(meaning, in the case of an adjustable rate loan, a substantially similar
index and a gross margin no higher than that of the existing senior lien);
provided however if the loan evidencing the existing -----------------
senior lien prior to the date of refinancing is an adjustable rate loan and
the loan evidencing the refinanced senior lien is a fixed rate loan, then
the interest rate on the loan evidencing the refinanced senior lien may be
up to 2.0% higher than the then-current mortgage rate of the loan
evidencing the existing senior lien; and
(iii) the loan evidencing the refinanced senior lien is not
subject to negative amortization.
The Servicer may also, without prior approval of the Rating Agencies or the
Credit Enhancer, increase the Credit Limits on Revolving Credit Loans, provided
that (i) a new appraisal in accordance with the Servicer's underwriting or
servicing guidelines is obtained, (ii) the new CLTV of any such Revolving Credit
Loan after giving effect to such increase is less than or equal to the CLTV of
the Revolving Credit Loan as of the Cut-off Date, (iii) the Servicer receives
verbal verification of employment of the related Mortgagor and (iv) the payment
history of the related borrower is within the underwriting parameters of the
Guide. In addition, the Servicer may increase the Credit Limits on Revolving
Credit Loans without obtaining new appraisals provided that clauses (ii) through
(iv) of the preceding sentence are satisfied and the CLTV of the Revolving
Credit Loan following the increase in the Credit Limit is less than or equal to
100.00%. In addition, such increases without new appraisals shall be limited to
no greater than 10% of the current Pool Balance, provided, that the principal
balances of such Revolving Credit Loans with CLTVs greater than 80% will be
limited to 3% of the current Pool Balance.
In connection with servicing the Revolving Credit Loans, the Servicer may
take reasonable actions to encourage or effect the termination of Loan
Agreements that have become dormant.
The relationship of the Servicer (and of any successor to the Servicer as
servicer under this Servicing Agreement) to the Issuer under this Servicing
Agreement is intended by the parties to be that of an independent contractor and
not that of a joint venturer, partner or agent.
(b) The Servicer may enter into Subservicing Agreements with Subservicers
for the servicing and administration of certain of the Revolving Credit Loans.
References in this Servicing Agreement to actions taken or to be taken by the
Servicer in servicing the Revolving Credit Loans include actions taken or to be
taken by a Subservicer on behalf of the Servicer and any amount actually
received by such Subservicer in respect of a Revolving Credit Loan shall be
deemed to have been received by the Servicer whether or not actually received by
the Servicer. Each Subservicing Agreement will be upon such terms and conditions
as are not inconsistent with this Servicing Agreement and as the Servicer and
the Subservicer have agreed. With the approval of the Servicer, a Subservicer
may delegate its servicing obligations to third-party servicers, but such
Subservicers will remain obligated under the related Subservicing Agreements.
The Servicer and the Subservicer may enter into amendments to the related
Subservicing Agreements; provided, however, that any such amendments shall not
cause the Revolving Credit Loans to be serviced in a manner that would be
materially inconsistent with the standards set forth in this Servicing
Agreement. The Servicer shall be entitled to terminate any Subservicing
Agreement in accordance with the terms and conditions thereof and without any
limitation by virtue of this Servicing Agreement; provided, however, that in the
event of termination of any Subservicing Agreement by the Servicer or the
Subservicer, the Servicer shall either act as servicer of the related Revolving
Credit Loan or enter into a Subservicing Agreement with a successor Subservicer
which will be bound by the terms of the related Subservicing Agreement. The
Servicer shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Servicer and nothing contained in this Servicing
Agreement shall be deemed to limit or modify such indemnification.
In the event that the rights, duties and obligations of the Servicer are
terminated hereunder, any successor to the Servicer in its sole discretion may,
to the extent permitted by applicable law, terminate the existing Subservicing
Agreement with any Subservicer in accordance with the terms of the applicable
Subservicing Agreement or assume the terminated Servicer's rights and
obligations under such subservicing arrangements which termination or assumption
will not violate the terms of such arrangements.
Notwithstanding any Subservicing Agreement or any of the provisions of this
Servicing Agreement relating to agreements or arrangements between the Servicer
and a Subservicer or reference to actions taken through a Subservicer or
otherwise, the Servicer shall remain obligated and primarily liable for the
servicing and administering of the Revolving Credit Loans in accordance with the
provisions of this Servicing Agreement without diminution of such obligation or
liability by virtue of such Subservicing Agreements or arrangements or by virtue
of indemnification from the Subservicer and to the same extent and under the
same terms and conditions as if the Servicer alone were servicing and
administering the Revolving Credit Loans. For purposes of this Servicing
Agreement, the Servicer shall be deemed to have received payments on Revolving
Credit Loans when the Subservicer has received such payments.
Any Subservicing Agreement that may be entered into and any transactions or
services relating to the Revolving Credit Loans involving a Subservicer in its
capacity as such and not as an originator shall be deemed to be between the
Subservicer and the Servicer alone, and none of the Indenture Trustee, the
Credit Enhancer or the Securityholders shall be deemed parties thereto or shall
have any claims, rights, obligations, duties or liabilities with respect to the
Subservicer. The Servicer shall be solely liable for all fees owed by it to any
Subservicer irrespective of whether the Servicer's compensation pursuant to this
Servicing Agreement is sufficient to pay such fees.
As part of its servicing activities hereunder, the Servicer, for the
benefit of the Trust and the Securityholders, shall use reasonable efforts to
enforce the obligations of each Subservicer under the related Subservicing
Agreement, to the extent that the non-performance of any such obligation would
have a material adverse effect on a Revolving Credit Loan. Such enforcement,
including, without limitation, the legal prosecution of claims, termination of
Subservicing Agreements and the pursuit of other appropriate remedies, shall be
in such form and carried out to such an extent and at such time as the Servicer,
in its good faith business judgment, would require were it the owner of the
related Revolving Credit Loans. The Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor only (i) from a
general recovery resulting from such enforcement to the extent, if any, that
such recovery exceeds all amounts due in respect of the related Revolving Credit
Loan or (ii) from a specific recovery of costs, expenses or attorneys fees
against the party against whom such enforcement is directed.
Section 3.02. Collection of Certain Revolving Credit Loan Payments.
(a) The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Revolving Credit Loans, and
shall, to the extent such procedures shall be consistent with this Servicing
Agreement follow such collection procedures as shall be normal and usual in its
general mortgage servicing activities. Consistent with the foregoing, and
without limiting the generality of the foregoing, the Servicer may in its
discretion (i) waive any late payment charge, penalty interest or other fees
which may be collected in the ordinary course of servicing such Revolving Credit
Loan and (ii) arrange with a Mortgagor a schedule for the payment of principal
and interest due and unpaid; provided such arrangement is generally consistent
with the Servicer's policies with respect to home equity revolving credit loans;
provided, further, that notwithstanding such arrangement such Revolving Credit
Loans will be included in the information regarding delinquent Revolving Credit
Loans set forth in the Servicing Certificate. The Servicer may also extend the
Due Date for payment due on a Revolving Credit Loan in accordance with its
standard servicing procedures, provided, however, that the Servicer shall first
determine that any such waiver or extension will not impair the coverage of any
related insurance policy or materially adversely affect the lien of the related
Mortgage or the interests of the Securityholders or the Credit Enhancer.
Consistent with the terms of this Servicing Agreement, the Servicer may also
waive, modify or vary any term of any Revolving Credit Loan (including reduce
the Credit Limit with respect to any Revolving Credit 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 determination such waiver,
modification, postponement or indulgence is not materially adverse to the
interests of the Securityholders or the Credit Enhancer, provided, however, that
the Servicer may not modify or permit any Subservicer to modify any Revolving
Credit Loan (including without limitation any modification that would change the
Loan Rate, forgive the payment of any principal or interest (unless in
connection with the liquidation of the related Revolving Credit Loan) or extend
the final maturity date of such Revolving Credit Loan) unless such Revolving
Credit Loan is in default or, in the judgment of the Servicer, such default is
reasonably foreseeable. The general terms of any waiver, modification,
postponement or indulgence with respect to any of the Revolving Credit Loans
will be included in the Servicing Certificate, and such Revolving Credit Loans
will not be considered "delinquent" for the purposes of the Basic Documents, so
long as the Mortgagor complies with the terms of such waiver, modification,
postponement or indulgence. Notwithstanding the foregoing, the Servicer in its
sole discretion (i) may permit the Mortgagor (or may enter into a modification
agreement which will allow the Mortgagor) to make monthly payments, with respect
to any Billing Cycle during the related Draw Period, in a minimum amount that
will be equal to the related finance charge for such Billing Cycle and (ii) may
reduce the amount of the Credit Limit (to an amount no less than the then
current Principal Balance of such Revolving Credit Loan) in connection with any
refinancing of a senior lien pursuant to the second paragraph of Section 3.01(a)
of this Agreement.
(b) The Servicer shall establish a Collection Account in its and on behalf
of the Noteholders and the Credit Enhancer, which shall be an Eligible Account
in which the Servicer shall deposit or cause to be deposited any amounts
representing payments and collections in respect of the Revolving Credit Loans
received by it subsequent to the Cut-off Date (other than in respect of the
payments referred to in the following paragraph) within two Business Days
following receipt thereof (or otherwise on or prior to the Closing Date),
including the following payments and collections received or made by it (without
duplication):
(i) all payments of principal or interest on the Revolving Credit
Loans received by the Servicer from the respective Subservicer, net of any
portion of the interest thereof retained by the Subservicer as Subservicing
Fees;
(ii) the aggregate Repurchase Price of the Revolving Credit Loans
purchased by the Servicer pursuant to Section 3.15;
(iii) Net Liquidation Proceeds net of any related Foreclosure
Profit;
(iv) all proceeds of any Revolving Credit Loans repurchased by
the Seller pursuant to the Revolving Credit Loan Purchase Agreement, and
all Substitution Adjustment Amounts required to be deposited in connection
with the substitution of an Eligible Substitute Loan pursuant to the
Revolving Credit Loan Purchase Agreement;
(v) insurance proceeds, other than Net Liquidation Proceeds,
resulting from any insurance policy maintained on a Mortgaged Property; and
(vi) amounts required to be paid by the Servicer pursuant to
Section 8.08.
provided, however, that with respect to each Collection Period, the Servicer
shall be permitted to retain from payments in respect of interest on the
Revolving Credit Loans, the Servicing Fee for such Collection Period. All
amounts deposited in the Collection Account shall be held by the Servicer in
trust for the Noteholders and the Credit Enhancer until disbursed in accordance
with this Agreement. The foregoing requirements respecting deposits to the
Collection Account are exclusive, it being understood that, without limiting the
generality of the foregoing, the Servicer need not deposit in the Collection
Account amounts representing Foreclosure Profits, fees (including annual fees)
or late charge penalties, payable by Mortgagors, or amounts received by the
Servicer for the accounts of Mortgagors for application towards the payment of
taxes, insurance premiums, assessments and similar items. In the event any
amount not required to be deposited in the Collection Account is so deposited,
the Servicer may at any time withdraw such amount from the Collection Account,
any provision herein to the contrary notwithstanding. The Servicer shall retain
all Foreclosure Profits as additional servicing compensation.
The Servicer may cause the institution maintaining the Collection Account
to invest any funds in the Collection Account in Permitted Investments
(including obligations of the Servicer or any of its Affiliates, if such
obligations otherwise qualify as Permitted Investments), which shall mature not
later than the Determination Date related to the following Payment Date and
shall not be sold or disposed of prior to its maturity. Except as provided
above, all income and gain realized from any such investment shall inure to the
benefit of the Servicer and shall be subject to its withdrawal or order from
time to time. The amount of any losses incurred in respect of the principal
amount of any such investments shall be deposited in the Collection Account by
the Servicer out of its own funds immediately as realized.
(c) The Servicer will require each Subservicer to hold all funds
constituting collections on the Revolving Credit Loans, pending remittance
thereof to the Servicer, in one or more accounts meeting the requirements of an
Eligible Account, and invested in Permitted Investments.
Section 3.03. Withdrawals from the Collection Account. The Servicer shall,
from time to time as provided herein, make withdrawals from the Collection
Account of amounts on deposit therein pursuant to Section 3.02 that are
attributable to the Revolving Credit Loans for the following purposes:
(i) to deposit in the Payment Account, on the related
Determination Date for each Payment Date, an amount equal to the Interest
Collections and Principal Collections required to be distributed on such
Payment Date;
(ii) prior to either a Rapid Amortization Event or the Collection
Period preceding the end of the Managed Amortization Period, to pay to the
Seller, the amount of any Additional Balances as and when created during
the related Collection Period, provided, that the aggregate amount so paid
to the Seller in respect of Additional Balances at any time during any
Collection Period shall not exceed the amount of Principal Collections
theretofore received for such Collection Period;
(iii) to the extent deposited to the Collection Account, to
reimburse itself or the related Subservicer for previously unreimbursed
expenses incurred in maintaining individual insurance policies pursuant to
Section 3.04, or Liquidation Expenses, paid pursuant to Section 3.07 or
otherwise reimbursable pursuant to the terms of this Servicing Agreement
(to the extent not payable pursuant to Section 3.09), such withdrawal right
being limited to amounts received on particular Revolving Credit Loans
(other than any Repurchase Price in respect thereof) which represent late
recoveries of the payments for which such advances were made, or from
related Liquidation Proceeds or the proceeds of the purchase of such
Revolving Credit Loan;
(iv) to pay to itself out of each payment received on account of
interest on a Revolving Credit Loan as contemplated by Section 3.09, an
amount equal to the Servicing Fee (to the extent not retained pursuant to
Section 3.02);
(v) to the extent deposited in the Collection Account to pay to
itself as additional servicing compensation any interest or investment
income earned on funds deposited in the Collection Account that it is
entitled to withdraw pursuant to Sections 3.02(b) and 5.01;
(vi) to the extent deposited in the Collection Account, to pay to
itself as additional servicing compensation any Foreclosure Profits (to the
extent permitted by law);
(vii) to pay to itself or the Seller, with respect to any
Revolving Credit Loan or property acquired in respect thereof that has been
purchased or otherwise transferred to the Seller, the Servicer or other
entity, all amounts received thereon and not required to be distributed to
Securityholders as of the date on which the related Purchase Price or
Repurchase Price is determined; and
(viii) to withdraw any other amount deposited in the Collection
Account that was not required to be deposited therein pursuant to Section
3.02.
Since, in connection with withdrawals pursuant to clauses (iii), (iv), (vi) and
(vii), the Servicer's entitlement thereto is limited to collections or other
recoveries on the related Revolving Credit Loan, the Servicer shall keep and
maintain separate accounting, on a Revolving Credit Loan by Revolving Credit
Loan basis, for the purpose of justifying any withdrawal from the Collection
Account pursuant to such clauses. Notwithstanding any other provision of this
Servicing Agreement, the Servicer shall be entitled to reimburse itself for any
previously unreimbursed expenses incurred pursuant to Section 3.07 or otherwise
reimbursable pursuant to the terms of this Servicing Agreement that the Servicer
determines to be otherwise nonrecoverable (except with respect to any Revolving
Credit Loan as to which the Repurchase Price has been paid), by withdrawal from
the Collection Account of amounts on deposit therein attributable to the
Revolving Credit Loans on any Business Day prior to the Determination Date
following the date of such calculation.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicer shall cause to be maintained for each Revolving Credit
Loan that is either (a) in a first lien position or (b) has a Credit Limit at
origination in excess of $50,000 hazard insurance naming the Servicer or related
Subservicer as loss payee thereunder providing extended coverage in an amount
which is at least equal to the lesser of (i) the maximum insurable value of the
improvements securing such Revolving Credit Loan from time to time or (ii) the
combined principal balance owing on such Revolving Credit Loan and any mortgage
loan senior to such Revolving Credit Loan from time to time; provided, however,
that such coverage may not be less than the minimum amount required to fully
compensate for any loss or damage on a replacement cost basis. The Servicer
shall also cause to be maintained on property acquired upon foreclosure, or deed
in lieu of foreclosure, of any Revolving Credit Loan, fire insurance with
extended coverage in an amount sufficient to cover the value of the related
Mortgaged Property (less the amount of any deductible). Amounts collected by the
Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Servicer's
normal servicing procedures) shall be deposited in the Collection Account to the
extent called for by Section 3.02. The Servicer shall be under no obligation to
require any Mortgagor to, nor shall it be under any obligation itself to,
maintain flood insurance with respect to the Revolving Credit Loans. The
Servicer shall be under no obligation to require that any Mortgagor maintain
earthquake or other additional insurance and shall be under no obligation itself
to maintain any such additional insurance on property acquired in respect of a
Revolving Credit 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. If the Servicer shall obtain and maintain a blanket policy
consistent with its general mortgage servicing activities insuring against
hazard losses on all of the Revolving Credit Loans, it shall conclusively be
deemed to have satisfied its obligations as set forth in the first sentence of
this Section 3.04, 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 a policy
complying with the first sentence of this Section 3.04 and there shall have been
a loss which would have been covered by such policy, deposit in the Collection
Account the amount not otherwise payable under the blanket policy because of
such deductible clause. Any such deposit by the Servicer shall be made on the
last Business Day of the Collection Period in the month in which payments under
any such policy would have been deposited in the Collection Account. In
connection with its activities as servicer of the Revolving Credit Loans, the
Servicer agrees to present, on behalf of itself, the Issuer and the Indenture
Trustee, claims under any such blanket policy.
Section 3.05. Modification Agreements. The Servicer or the related
Subservicer, as the case may be, shall be entitled to (A) execute assumption
agreements, substitution agreements, and instruments of satisfaction or
cancellation or of partial or full release or discharge, or any other document
contemplated by this Servicing Agreement and other comparable instruments with
respect to the Revolving Credit Loans and with respect to the Mortgaged
Properties subject to the Mortgages (and the Issuer and the Indenture Trustee
each shall promptly execute any such documents on request of the Servicer) and
(B) approve the granting of an easement thereon in favor of another Person, any
alteration or demolition of the related Mortgaged Property or other similar
matters, if it has determined, exercising its good faith business judgment in
the same manner as it would if it were the owner of the related Revolving Credit
Loan, that the security for, and the timely and full collectability of, such
Revolving Credit Loan would not be adversely affected thereby. A partial release
pursuant to this Section 3.05 shall be permitted only if the Combined
Loan-to-Value Ratio for such Revolving Credit Loan after such partial release
does not exceed the Combined Loan-to-Value Ratio for such Revolving Credit Loan
as of the Cut-off Date. Any fee collected by the Servicer or the related
Subservicer for processing such request will be retained by the Servicer or such
Subservicer as additional servicing compensation.
Section 3.06. Trust Estate; Related Documents.
(a) When required by the provisions of this Servicing Agreement, the Issuer
or the Indenture Trustee shall execute instruments to release property from the
terms of the Trust Agreement, Indenture or Custodial Agreement, as applicable,
or convey the Issuer's or the Indenture Trustee's interest in the same, in a
manner and under circumstances which are not inconsistent with the provisions of
this Servicing Agreement. No party relying upon an instrument executed by the
Issuer or the Indenture Trustee as provided in this Section 3.06 shall be bound
to ascertain the Issuer's or the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
(b) If from time to time the Servicer shall deliver to the Custodian copies
of any written assurance, assumption agreement or substitution agreement or
other similar agreement pursuant to Section 3.05, the Custodian shall check that
each of such documents purports to be an original executed copy (or a copy of
the original executed document if the original executed copy has been submitted
for recording and has not yet been returned) and, if so, shall file such
documents, and upon receipt of the original executed copy from the applicable
recording office or receipt of a copy thereof certified by the applicable
recording office shall file such originals or certified copies with the Related
Documents. If any such documents submitted by the Servicer do not meet the above
qualifications, such documents shall promptly be returned by the Custodian to
the Servicer, with a direction to the Servicer to forward the correct
documentation.
(c) Upon receipt of two copies (one of which will be returned to the
Servicer with the related Mortgage File) of a Request for Release from the
Servicer, substantially in the form of Exhibit C which shall be signed by a
Servicing Officer or in a mutually agreeable format, which in lieu of a
signature on its face will originate from a Servicing Officer, to the effect
that a Revolving Credit Loan has been the subject of a final payment or a
prepayment in full and the related Revolving Credit Loan has been terminated or
that substantially all Liquidation Proceeds which have been determined by the
Servicer in its reasonable judgment to be finally recoverable have been
recovered, and upon deposit to the Collection Account of such final monthly
payment, prepayment in full together with accrued and unpaid interest to the
date of such payment with respect to such Revolving Credit Loan or, if
applicable, Liquidation Proceeds, the Custodian shall promptly release the
related Mortgage File to the Servicer, upon request of the Servicer. If from
time to time and as appropriate for the servicing or foreclosure of any
Revolving Credit Loan, the Servicer requests the Custodian to release the
Mortgage File and delivers to the Custodian two copies of a Request for Release
reasonably satisfactory to the Custodian and signed by a Responsible Officer of
the Servicer, the Custodian shall release the related Mortgage File to the
Servicer. If such Revolving Credit Loans shall be liquidated and the Custodian
receives a certificate from the Servicer as provided above, then, upon request
of the Servicer, the Custodian shall release the Mortgage File to the Servicer.
Section 3.07. Realization Upon Defaulted Revolving Credit Loans. With
respect to those of the Revolving Credit Loans which become and continue in
default, the Servicer will decide whether to (i) foreclose upon the Mortgaged
Properties securing such Revolving Credit Loans, (ii) write off the unpaid
principal balance of the Revolving Credit Loans as bad debt, (iii) take a deed
in lieu of foreclosure, (iv) accept a short sale, (v) arrange for a repayment
plan, (vi) agree to a modification in accordance with this Servicing Agreement,
or (vii) take an unsecured note or substitute a new lien, in each case subject
to the rights of any related first lien holder; provided that in connection with
the foregoing if the Servicer has actual knowledge that any Mortgaged Property
is affected by hazardous or toxic wastes or substances and that the acquisition
of such Mortgaged Property would not be commercially reasonable, then the
Servicer will not cause the Issuer or the Indenture Trustee to acquire title to
such Mortgaged Property in a foreclosure or similar proceeding. In connection
with such decision, the Servicer shall follow such practices (including, in the
case of any default on a related senior mortgage loan, the advancing of funds to
correct such default if deemed to be appropriate by the Servicer) and procedures
as it shall deem necessary or advisable and as shall be normal and usual in its
general mortgage servicing activities; provided that the Servicer shall not be
liable in any respect hereunder if the Servicer is acting in connection with any
such foreclosure or attempted foreclosure which is not completed or other
conversion in a manner that is consistent with the provisions of this Servicing
Agreement. The foregoing is subject to the proviso that the Servicer shall not
be required to expend its own funds in connection with any foreclosure or
attempted foreclosure which is not completed or towards the correction of any
default on a related senior mortgage loan or restoration of any property unless
it shall determine that such expenditure will increase Net Liquidation Proceeds.
In the event of a determination by the Servicer that any such expenditure
previously made pursuant to this Section 3.07 will not be reimbursable from Net
Liquidation Proceeds, the Servicer shall be entitled to reimbursement of its
funds so expended pursuant to Section 3.03.
Notwithstanding any provision of this Servicing Agreement, a Revolving
Credit Loan may be deemed to be finally liquidated if substantially all amounts
expected by the Servicer to be received in connection with the related defaulted
Revolving Credit Loan have been received; provided, however, that any subsequent
collections with respect to any such Revolving Credit Loan shall be deposited to
the Collection Account. For purposes of determining the amount of any
Liquidation Proceeds or Insurance Proceeds, or other unscheduled collections,
the Servicer may take into account minimal amounts of additional receipts
expected to be received or any estimated additional liquidation expenses
expected to be incurred in connection with the related defaulted Revolving
Credit Loan.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Indenture Trustee, who shall hold the same on behalf of
the Issuer in accordance with Section 3.13 of the Indenture. Notwithstanding any
such acquisition of title and cancellation of the related Revolving Credit Loan,
such Mortgaged Property shall (except as otherwise expressly provided herein) be
considered to be an outstanding Revolving Credit Loan held as an asset of the
Issuer until such time as such property shall be sold. Consistent with the
foregoing for purposes of all calculations hereunder, so long as such Mortgaged
Property shall be considered to be an outstanding Revolving Credit Loan it shall
be assumed that, notwithstanding that the indebtedness evidenced by the related
Credit Line Agreement shall have been discharged, such Credit Line Agreement in
effect at the time of any such acquisition of title before any adjustment
thereto by reason of any bankruptcy or similar proceeding or any moratorium or
similar waiver or grace period will remain in effect.
Any proceeds from foreclosure proceedings or the purchase or repurchase of
any Revolving Credit Loan pursuant to the terms of this Servicing Agreement, as
well as any recovery resulting from a collection of Liquidation Proceeds or
Insurance Proceeds, will be applied in the following order of priority: first,
to reimburse the Servicer or the related Subservicer in accordance with this
Section 3.07; second, to the Servicer or the related Subservicer, all Servicing
Fees payable therefrom; third, to the extent of accrued and unpaid interest to
the Payment Date on the related Revolving Credit Loan, at the Loan Rate (less
the Servicing Fee Rate) on which such amounts are to be deposited in the Payment
Account; fourth, as a recovery of principal on the Revolving Credit Loan; and
fifth, to Foreclosure Profits.
Section 3.08. Issuer and Indenture Trustee to Cooperate. On or before each
Determination Date, the Servicer will notify the Indenture Trustee or the
Custodian, with a copy to the Issuer, of the termination of or the payment in
full and the termination of any Revolving Credit Loan during the preceding
Collection Period. Upon receipt of payment in full, the Servicer is authorized
to execute, pursuant to the authorization contained in Section 3.01, if the
assignments of Mortgage have been recorded if required under the Revolving
Credit Loan Purchase Agreement, an instrument of satisfaction regarding the
related Mortgage, which instrument of satisfaction shall be recorded by the
Servicer if required by applicable law and be delivered to the Person entitled
thereto. It is understood and agreed that no expenses incurred in connection
with such instrument of satisfaction or transfer shall be reimbursed from
amounts deposited in the Collection Account. From time to time and as
appropriate for the servicing or foreclosure of any Revolving Credit Loan, the
Indenture Trustee or the Custodian shall, upon request of the Servicer and
delivery to the Indenture Trustee or Custodian, with a copy to the Issuer, of
two copies (one of which will be returned to the Servicer with the related
Mortgage File) of a Request for Release, in the form annexed hereto as Exhibit
C, which shall be signed by a Servicing Officer or in a mutually agreeable
electronic format which in lieu of a signature on its face will originate from a
Servicing Officer, release or cause to be released the related Mortgage File to
the Servicer and the Issuer or Indenture Trustee shall promptly execute such
documents, in the forms provided by the Servicer, as shall be necessary for the
prosecution of any such proceedings or the taking of other servicing actions.
Such trust receipt shall obligate the Servicer to return the Mortgage File to
the Indenture Trustee or the Custodian (as specified in such receipt) when the
need therefor by the Servicer no longer exists unless the Revolving Credit Loan
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that hereinabove specified, the trust receipt shall be
released to the Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Revolving Credit Loan that is in default following recordation of the
assignments of Mortgage in accordance with the provisions of the Revolving
Credit Loan Purchase Agreement, the Indenture Trustee or the Issuer shall, if so
requested in writing by the Servicer, promptly execute an appropriate assignment
in the form provided by the Servicer to assign such Revolving Credit Loan for
the purpose of collection to the Servicer (any such assignment shall
unambiguously indicate that the assignment is for the purpose of collection
only), and, upon such assignment, such assignee for collection will thereupon
bring all required actions in its own name and otherwise enforce the terms of
the Revolving Credit Loan and deposit or credit the Net Liquidation Proceeds,
exclusive of Foreclosure Profits, received with respect thereto in the
Collection Account. In the event that all delinquent payments due under any such
Revolving Credit Loan are paid by the Mortgagor and any other defaults are
cured, then the assignee for collection shall promptly reassign such Revolving
Credit Loan to the Indenture Trustee and return the related Mortgage File to the
Custodian.
In connection with the Issuer's obligation to cooperate as provided in this
Section 3.08 and all other provisions of this Servicing Agreement requiring the
Issuer to authorize or permit any actions to be taken with respect to the
Revolving Credit Loans, the Indenture Trustee, as pledgee of the Revolving
Credit Loans and as assignee of record of the Revolving Credit Loans on behalf
of the Issuer pursuant to Section 3.13 of the Indenture, expressly agrees, on
behalf of the Issuer, to take all such actions on behalf of the Issuer and to
promptly execute and return all instruments reasonably required by the Servicer
in connection therewith; provided that if the Servicer shall request a signature
of the Indenture Trustee, on behalf of the Issuer, the Servicer will deliver to
the Indenture Trustee an Officer's Certificate stating that such signature is
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Servicing Agreement.
Section 3.09. Servicing Compensation; Payment of Certain Expenses by
Servicer. The Servicer shall be entitled to receive the Servicing Fee in
accordance with Section 3.03 as compensation for its services in connection with
servicing the Revolving Credit Loans. Moreover, additional servicing
compensation in the form of late payment charges and other receipts not required
to be deposited in the Collection Account as specified in Section 3.02 shall be
retained by the Servicer. The Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder (including payment of
all other fees and expenses not expressly stated hereunder to be for the account
of the Securityholders, including, without limitation, the fees and expenses of
the Owner Trustee, Indenture Trustee and any Custodian) and shall not be
entitled to reimbursement therefor.
Section 3.10. Annual Statement as to Compliance.
(a) The Servicer will deliver to the Issuer, the Underwriter and the
Indenture Trustee, with a copy to the Credit Enhancer, on or before the last day
of February of each year, beginning February 28, 2000, an Officer's Certificate
stating that (i) a review of the activities of the Servicer during the preceding
fiscal year and of its performance under servicing agreements, including this
Servicing Agreement has been made under such officer's supervision and (ii) to
the best of such officer's knowledge, based on such review, the Servicer has
complied in all material respects with the minimum servicing standards set forth
in the Uniform Single Attestation Program for Mortgage Bankers and has fulfilled
all of its material obligations in all material respects throughout such year,
or, if there has been material noncompliance with such servicing standards or a
default in the fulfillment in all material respects of any such obligation
relating to this Servicing Agreement, such statement shall include a description
of such noncompliance or specify each such default, as the case may be, known to
such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Issuer and the Indenture Trustee,
with a copy to the Credit Enhancer, promptly after having obtained knowledge
thereof, but in no event later than five Business Days thereafter, written
notice by means of an Officer's Certificate of any event which with the giving
of notice or the lapse of time or both, would become a Servicing Default.
(c) Upon the reasonable request of the Indenture Trustee, the Servicer will
provide to the Indenture Trustee a copy of its financial statements for the most
recent fiscal year; provided that such financial statements are available for
distribution.
Section 3.11. Annual Servicing Report. On or before the last day of
February of each year, beginning February 28, 2000, the Servicer at its expense
shall cause a firm of nationally recognized independent public accountants (who
may also render other services to the Servicer) to furnish a report to the
Issuer, the Indenture Trustee, the Depositor, the Underwriter, the Credit
Enhancer and each Rating Agency stating its opinion that, on the basis of an
examination conducted by such firm substantially in accordance with standards
established by the American Institute of Certified Public Accountants, the
assertions made pursuant to Section 3.10 regarding compliance with the minimum
servicing standards set forth in the Uniform Single Attestation Program for
Mortgage Bankers during the preceding fiscal year are fairly stated in all
material respects, subject to such exceptions and other qualifications that, in
the opinion of such firm, such accounting standards require it to report. In
rendering such statement, such firm may rely, as to matters relating to the
direct servicing of revolving credit loans by Subservicers, upon comparable
statements for examinations conducted by independent public accountants
substantially in accordance with standards established by the American Institute
of Certified Public Accountants (rendered within one year of such statement)
with respect to such Subservicers.
Section 3.12. Access to Certain Documentation and Information Regarding the
Revolving Credit Loans. Whenever required by statute or regulation, the Servicer
shall provide to the Credit Enhancer, any Securityholder upon reasonable request
(or a regulator for a Securityholder) or the Indenture Trustee, reasonable
access to the documentation regarding the Revolving Credit Loans such access
being afforded without charge but only upon reasonable request and during normal
business hours at the offices of the Servicer. Nothing in this Section 3.12
shall derogate from the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors and the failure
of the Servicer to provide access as provided in this Section 3.12 as a result
of such obligation shall not constitute a breach of this Section 3.12.
Section 3.13. Maintenance of Certain Servicing Insurance Policies. The
Servicer shall during the term of its service as servicer maintain in force (i)
a policy or policies of insurance covering errors and omissions in the
performance of its obligations as Servicer hereunder and (ii) a fidelity bond in
respect of its officers, employees or agents. Each such policy or policies and
bond shall be at least equal to the coverage that would be required by FNMA or
FHLMC, whichever is greater, for Persons performing servicing for revolving
credit loans purchased by such entity.
Section 3.14. Information Required by the Internal Revenue Service and
Reports of Foreclosures and Abandonments of Mortgaged Property. The Servicer
shall prepare and deliver all federal and state information reports with respect
to the Revolving Credit Loans when and as required by all applicable state and
federal income tax laws. In particular, with respect to the requirement under
Section 6050J of the Code to the effect that the Servicer or Subservicer shall
make reports of foreclosures and abandonments of any mortgaged property for each
year beginning in 1999, the Servicer or Subservicer shall file reports relating
to each instance occurring during the previous calendar year in which the
Servicer (i) on behalf of the Issuer, acquires an interest in any Mortgaged
Property through foreclosure or other comparable conversion in full or partial
satisfaction of a Revolving Credit Loan, or (ii) knows or has reason to know
that any Mortgaged Property has been abandoned. The reports from the Servicer or
Subservicer shall be in form and substance sufficient to meet the reporting
requirements imposed by Section 6050J and Section 6050H (reports relating to
mortgage interest received) of the Code.
Section 3.15. Optional Repurchase of Defaulted Revolving Credit Loans.
Notwithstanding any provision in Section 3.07 to the contrary, the Servicer, at
its option and in its sole discretion, may repurchase any Revolving Credit Loan
delinquent in payment for a period of 60 days or longer for a price equal to the
Repurchase Price.
Section 3.16. Payment of Taxes, Insurance and Other Charges. With respect
to each Revolving Credit Loan, the Servicer will maintain accurate records
reflecting fire and hazard insurance coverage to the extent required by Section
3.04.
With respect to each Revolving Credit Loan as to which the Servicer
maintains escrow accounts, the Servicer shall maintain accurate records
reflecting the status of ground taxes, assessments, water rates and other
charges which are or may become a lien upon the Mortgaged Property and the
status of primary mortgage guaranty premiums, if any, fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
applicable penalty or termination date and at a time appropriate for securing
the maximum amounts allowable, employing for such purpose deposits of the
Mortgagor in any escrow account which shall have been estimated and accumulated
by the Servicer in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage. To the extent that a Mortgage does not provide for escrow
payments, the Servicer shall, if it has received notice of a default or a
deficiency, monitor such payments to determine if they are made by the
Mortgagor.
Section 3.17. Optional Retransfers of Revolving Credit Loans. Pursuant to
Section 2.3 of the Revolving Credit Loan Purchase Agreement, the Servicer, in
its capacity as Seller, may, but shall not be obligated to, require the
retransfer of Revolving Credit Loans from the Trust to the Seller as of the
close of business on a Transfer Date after giving notice to the Indenture
Trustee on the Notice Transfer Date. Any such retransfers shall be permissible
only upon the satisfaction of the conditions set forth in Section 2.3 of the
Revolving Credit Loan Purchase Agreement.
ARTICLE IV.
Servicing Certificate
Section 4.01. Statements to Securityholders.
(a) With respect to each Payment Date, on the related Determination Date,
the Servicer shall forward to the Indenture Trustee monthly Servicing Reports in
a mutually agreeable electronic format and the Indenture Trustee pursuant to
Section 3.26 of the Indenture shall prepare its monthly statement based solely
on the Servicing Reports and shall provide such Statements to each
Certificateholder, Noteholder, the Credit Enhancer, the Depositor, the Owner
Trustee, the Certificate Paying Agent and each Rating Agency. The Indenture
Trustee may conclusively rely on the correctness of the Servicing Reports,
without independent verification thereof. The Servicing Reports shall set forth
the following information to the extent applicable:
(i) the aggregate amount of (a) Interest Collections, (b)
Principal Collections, (c) Substitution Adjustment Amounts and (d) Investor
P&I Collections;
(ii) the amount of such distribution as principal to the
Noteholders;
(iii) the amount of such distribution as interest to the
Noteholders, separately stating the portion thereof in respect of overdue
accrued interest;
(iv) the amount of any Credit Enhancement Draw Amount, if any,
for such Payment Date and the aggregate amount of prior draws thereunder
not yet reimbursed;
(v) the amount of such distribution as principal and interest to
the Certificateholders of the Certificates, separately stating the portion
thereof which resulted in a reduction of the Certificate Principal Balance
thereof;
(vi) the aggregate Loan Balance of the Revolving Credit Loans as
of the end of the preceding Collection Period and the Investor Amount;
(vii) the aggregate amount of Additional Balances created during
the previous Collection Period conveyed to the Issuer;
(viii) the number and aggregate Loan Balances of Revolving Credit
Loans (a) as to which the Minimum Monthly Payment is delinquent for 30-59
days, 60-89 days and 90 or more days, respectively, (b) that are foreclosed
and (c) that have become REO, in each case as of the end of the preceding
Collection Period; provided, however, that such information will not be
provided on the statements relating to the first Payment Date;
(ix) the weighted average Net Loan Rate for the related
Collection Period;
(x) the aggregate Liquidation Loss Amounts with respect to the
related Collection Period, the amount of any Liquidation Loss Distribution
Amounts with respect to the Notes, and the aggregate of the Liquidation
Loss Amounts from all Collection Periods to date expressed as dollars and
as a percentage of the aggregate Cut-off Date Loan Balance;
(xi) the Note Balance of each Class of Notes and the Certificate
Principal Balance of the Certificates after giving effect to the
distribution of principal on such Payment Date; and
(xii) the aggregate Servicing Fees for the related Collection
Period and the aggregate amount of Draws for the related Collection Period.
In the case of information furnished pursuant to clauses (ii) and (iii)
above, the amounts shall be expressed as an aggregate dollar amount per Note or
Certificate, as applicable, with a $1,000 denomination.
The Indenture Trustee may make available each month, to any interested
party, the monthly statement to Noteholders and Certificateholders via the
Indenture Trustee's website, electronic bulletin board and its fax-on-demand
service. The Indenture Trustee's website will be located at "xxx.xxxxxxx.xxx".
The Indenture Trustee's electronic bulletin board may be accessed by calling
(000) 000-0000, and its fax-on-demand service may be accessed by calling (301)
815-6610.
In addition, the Servicer shall forward to the Indenture Trustee any other
information reasonably requested by the Indenture Trustee necessary to make
distributions pursuant to Section 3.05 of the Indenture. Prior to the close of
business on each Determination Date, the Servicer shall furnish a written
statement to the Certificate Paying Agent and the Indenture Trustee setting
forth the aggregate amounts required to be withdrawn from the Collection Account
and deposited into the Payment Account on such Determination Date pursuant to
Section 3.03. The determination by the Servicer of such amounts shall, in the
absence of obvious error, be presumptively deemed to be correct for all purposes
hereunder and the Owner Trustee and Indenture Trustee shall be protected in
relying upon the same without any independent check or verification. In
addition, upon the Issuer's written request, the Servicer shall promptly furnish
information reasonably requested by the Issuer that is reasonably available to
the Servicer to enable the Issuer to perform its federal and state income tax
reporting obligations.
Section 4.02. Tax Reporting. So long as NOVUS Financial Corporation or any
affiliate thereof owns 100% of the Certificates, then no separate federal and
state income tax returns and information returns or reports will be filed with
respect to the Issuer, and the Issuer will be treated for tax purposes as an
entity wholly owned by NOVUS Financial Corporation or an affiliate thereof.
ARTICLE V.
Payment Account
Section 5.01. Payment Account. The Indenture Trustee shall establish and
maintain a Payment Account titled "Norwest Bank Minnesota, National Association,
as Indenture Trustee, for the benefit of the Securityholders, the Certificate
Paying Agent and the Credit Enhancer pursuant to the Indenture, dated as of May
1, 1999, between NOVUS HELOC Trust 1999-1 and Norwest Bank Minnesota, National
Association". The Payment Account shall be an Eligible Account. On each Payment
Date, amounts on deposit in the Payment Account will be distributed by the
Indenture Trustee in accordance with Section 3.05 of the Indenture. The
Indenture Trustee shall, invest or cause the institution maintaining the Payment
Account to invest the funds in the Payment Account as determined by the
Indenture Trustee in its sole discretion, but only in Permitted Investments
designated in the name of the Indenture Trustee, which shall mature not later
than the Business Day next preceding the Payment Date next following the date of
such investment (except that (i) any investment in the institution with which
the Payment Account is maintained may mature on such Payment Date and (ii) any
other investment may mature on such Payment Date if the Indenture Trustee shall
advance funds on such Payment Date to the Payment Account in the amount payable
on such investment on such Payment Date, pending receipt thereof to the extent
necessary to make distributions on the Securities) and shall not be sold or
disposed of prior to maturity. All income and gain realized from any such
investment shall be for the benefit of the Indenture Trustee and shall be
subject to its withdrawal or order from time to time. The amount of any losses
incurred in respect of any such investments shall be deposited in the Payment
Account by the Indenture Trustee out of its own funds immediately as realized.
ARTICLE VI.
The Servicer
Section 6.01. Liability of the Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Servicer herein.
Section 6.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer. Any corporation into which the Servicer may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Servicer shall be a
party, or any corporation succeeding to the business of the Servicer, shall be
the successor of the Servicer, hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
The Servicer may assign its rights and delegate its duties and obligations
under this Servicing Agreement; provided that the Person accepting such
assignment or delegation shall be a Person which is qualified to service
revolving credit loans, is reasonably satisfactory to the Indenture Trustee (as
pledgee of the Revolving Credit Loans), the Issuer and the Credit Enhancer (as
evidenced in writing which consent shall not be unreasonably withheld), is
willing to service the Revolving Credit Loans and executes and delivers to the
Indenture Trustee and the Issuer an agreement, in form and substance reasonably
satisfactory to the Credit Enhancer, the Indenture Trustee and the Issuer, which
contains an assumption by such Person of the due and punctual performance and
observance of each covenant and condition to be performed or observed by the
Servicer under this Servicing Agreement; provided further that each Rating
Agency's rating of the Securities in effect immediately prior to such assignment
and delegation will not be qualified, reduced, or withdrawn as a result of such
assignment and delegation (as evidenced by a letter to such effect from each
Rating Agency), if determined without regard to the Credit Enhancement
Instrument; and provided further that the Owner Trustee receives an Opinion of
Counsel to the effect that such assignment or delegation shall not cause the
Owner Trust to be treated as a corporation for federal or state income tax
purposes.
Section 6.03. Limitation on Liability of the Servicer and Others. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Issuer, the Owner Trustee, the
Indenture Trustee or the Securityholders for any action taken or for refraining
from the taking of any action in good faith pursuant to this Servicing
Agreement, provided, however, that this provision shall not protect the Servicer
or any such Person against any liability which would otherwise be imposed by
reason of its willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder or by reason of its reckless disregard of
its obligations and duties hereunder. The Servicer and any director or officer
or employee or agent of the Servicer may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder. The Servicer and any director or officer or
employee or agent of the Servicer shall be indemnified by the Issuer and held
harmless against any loss, liability or expense incurred in connection with any
legal action relating to this Servicing Agreement or the Securities, including
any amount paid to the Owner Trustee or the Indenture Trustee pursuant to
Section 6.06(b), other than any loss, liability or expense incurred by reason of
its willful misfeasance, bad faith or negligence in the performance of its
duties hereunder or by reason of its reckless disregard of its obligations and
duties hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties to
service the Revolving Credit Loans in accordance with this Servicing Agreement,
and which in its opinion may involve it in any expense or liability; provided,
however, that the Servicer may in its sole discretion undertake any such action
which it may deem necessary or desirable in respect of this Servicing Agreement,
and the rights and duties of the parties hereto and the interests of the
Securityholders. In such event, the reasonable legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Issuer, and the Servicer shall be entitled to be reimbursed
therefor. The Servicer's right to indemnity or reimbursement pursuant to this
Section 6.03 shall survive any resignation or termination of the Servicer
pursuant to Section 6.04 or 7.01 with respect to any losses, expenses, costs or
liabilities arising prior to such resignation or termination (or arising from
events that occurred prior to such resignation or termination).
Section 6.04. Servicer Not to Resign. Subject to the provisions of Section
6.02, the Servicer shall not resign from the obligations and duties hereby
imposed on it except (i) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer or its subsidiaries or Affiliates at the date of this
Servicing Agreement or (ii) upon satisfaction of the following conditions: (a)
the Servicer has proposed a successor servicer to the Issuer and the Indenture
Trustee in writing and such proposed successor servicer is reasonably acceptable
to the Issuer, the Indenture Trustee and the Credit Enhancer; (b) each Rating
Agency shall have delivered a letter to the Issuer, the Credit Enhancer and the
Indenture Trustee prior to the appointment of the successor servicer stating
that the proposed appointment of such successor servicer as Servicer hereunder
will not result in the reduction or withdrawal of the then current rating of the
Securities, if determined without regard to the Credit Enhancement Instrument;
and (c) such proposed successor servicer is reasonably acceptable to the Credit
Enhancer, as evidenced by a letter to the Issuer and the Indenture Trustee;
provided, however, that no such resignation by the Servicer shall become
effective until such successor servicer or, in the case of (i) above, the
Indenture Trustee, as pledgee of the Revolving Credit Loans, shall have assumed
the Servicer's responsibilities and obligations hereunder or the Indenture
Trustee, as pledgee of the Revolving Credit Loans, shall have designated a
successor servicer in accordance with Section 7.02. Any such resignation shall
not relieve the Servicer of responsibility for any of the obligations specified
in Sections 7.01 and 7.02 as obligations that survive the resignation or
termination of the Servicer. Any such determination permitting the resignation
of the Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered to the Indenture Trustee and the Credit Enhancer.
Section 6.05. Delegation of Duties. In the ordinary course of business, the
Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, who agrees to conduct such duties in accordance
with standards comparable to those with which the Servicer complies pursuant to
Section 3.01. Such delegation shall not relieve the Servicer of its liabilities
and responsibilities with respect to such duties and shall not constitute a
resignation within the meaning of Section 6.04.
Section 6.06. Servicer to Pay Indenture Trustee's and Owner Trustee's Fees
and Expenses; Indemnification.
(a) The Servicer covenants and agrees to pay to the Owner Trustee, the
Indenture Trustee and any co-trustee of the Indenture Trustee or the Owner
Trustee from time to time, and the Owner Trustee, the Indenture Trustee and any
such co-trustee shall be entitled to, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by each of them in the execution of
the trusts created under the Trust Agreement and the Indenture and in the
exercise and performance of any of the powers and duties under the Trust
Agreement or the Indenture, as the case may be, of the Owner Trustee, the
Indenture Trustee and any co-trustee, and the Servicer will pay or reimburse the
Indenture Trustee and any co-trustee upon request for all reasonable expenses,
disbursements and advances incurred or made by the Indenture Trustee or any
co-trustee in accordance with any of the provisions of this Servicing Agreement
except any such expense, disbursement or advance as may arise from its
negligence, wilful misfeasance or bad faith.
(b) The Servicer shall indemnify and hold harmless the Trust, the Credit
Enhancer, the Indenture Trustee and the Owner Trustee from and against any loss,
liability, expense, damage or injury suffered or sustained by reason of the
Servicer's willful misfeasance, bad faith or negligence in the performance of
its activities in any material respect in servicing or administering the
Revolving Credit Loans pursuant to this Servicing Agreement, including, but not
limited to, any judgment, award, settlement, reasonable attorneys' fees and
other costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim related to the Servicer's willful
misfeasance, bad faith or negligence in the performance of its activities in any
material respect in servicing or administering the Revolving Credit Loans
pursuant to this Servicing Agreement. Any such indemnification shall not be
payable from the assets of the Trust. The provisions of this Section 6.06 shall
survive the termination of this Agreement.
ARTICLE VII.
Default
Section 7.01. Servicing Default. If any one of the following events
("Servicing Default") shall occur and be continuing:
(i) Any failure by the Servicer to deposit in the Collection
Account or Payment Account any deposit required to be made under the terms
of this Servicing Agreement or to make payments to be made under the terms
of the Insurance Agreement which continues unremedied for a period of five
Business Days after the date upon which written notice of such failure
shall have been given to the Servicer by the Issuer or the Indenture
Trustee, or to the Servicer, the Issuer and the Indenture Trustee by the
Credit Enhancer; or
(ii) Failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in the Securities or in this Servicing Agreement or the
Insurance Agreement, which failure, in each case, materially and adversely
affects the interests of Securityholders or the Credit Enhancer and which
continues unremedied for a period of 45 days or 60 days, respectively,
after the date on which written notice of such failure, requiring the same
to be remedied, and stating that such notice is a "Notice of Default"
hereunder, shall have been given to the Servicer by the Issuer or the
Indenture Trustee, or to the Servicer, the Issuer and the Indenture Trustee
by the Credit Enhancer; or
(iii) The entry against the Servicer of a decree or order by a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership, readjustment
of debt, marshalling of assets and liabilities or similar proceedings, or
for the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60
consecutive days; or
(iv) The Servicer shall voluntarily go into liquidation, consent
to the appointment of a conservator, receiver, liquidator or similar person
in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Servicer or of or
relating to all or substantially all of its property, or a decree or order
of a court, agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver, liquidator or
similar person in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force undischarged,
unbonded or unstayed for a period of 60 days; or the Servicer shall admit
in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its creditors
or voluntarily suspend payment of its obligations; or
(v) the occurrence of any Performance Trigger Events,
then, and in every such case, so long as a Servicing Default shall not have been
remedied by the Servicer, either the Issuer or the Indenture Trustee, with the
prior written consent of the Credit Enhancer, or the Credit Enhancer, by notice
then given in writing to the Servicer (and to the Issuer and the Indenture
Trustee if given by the Credit Enhancer) may terminate all of the rights and
obligations of the Servicer as servicer under this Servicing Agreement other
than its right to receive servicing compensation and expenses for servicing the
Revolving Credit Loans hereunder during any period prior to the date of such
termination and the Issuer or the Indenture Trustee, with the prior written
consent of the Credit Enhancer, or the Credit Enhancer may exercise any and all
other remedies available at law or equity. Any such notice to the Servicer shall
also be given to each Rating Agency, the Credit Enhancer and the Issuer. On or
after the receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Servicing Agreement, whether with respect to
the Securities or the Revolving Credit Loans or otherwise, shall pass to and be
vested in the Indenture Trustee as pledgee of the Revolving Credit Loans,
pursuant to and under this Section 7.01; and, without limitation, the Indenture
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
the Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Revolving Credit Loan and related
documents, or otherwise. The Servicer agrees to cooperate with the Indenture
Trustee in effecting the termination of the responsibilities and rights of the
Servicer hereunder, including, without limitation, the transfer to the Indenture
Trustee for the administration by it of all cash amounts relating to the
Revolving Credit Loans that shall at the time be held by the Servicer and to be
deposited by it in the Collection Account, or that have been deposited by the
Servicer in the Collection Account or thereafter received by the Servicer with
respect to the Revolving Credit Loans. All reasonable costs and expenses
(including, but not limited to, attorneys' fees) incurred in connection with
amending this Servicing Agreement to reflect such succession as Servicer
pursuant to this Section 7.01 shall be paid by the predecessor Servicer (or if
the predecessor Servicer is the Indenture Trustee, the initial Servicer) upon
presentation of reasonable documentation of such costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance under
Section 7.01(i) or under Section 7.01(ii) after the applicable grace periods
specified in such Sections, shall not constitute a Servicing Default if such
delay or failure could not be prevented by the exercise of reasonable diligence
by the Servicer and such delay or failure was caused by an act of God or the
public enemy, acts of declared or undeclared war, public disorder, rebellion or
sabotage, epidemics, landslides, lightning, fire, hurricanes, earthquakes,
floods or similar causes. The preceding sentence shall not relieve the Servicer
from using reasonable efforts to perform its respective obligations in a timely
manner in accordance with the terms of this Servicing Agreement and the Servicer
shall provide the Indenture Trustee, the Credit Enhancer and the Securityholders
with notice of such failure or delay by it, together with a description of its
efforts to so perform its obligations. The Servicer shall immediately notify the
Indenture Trustee, the Credit Enhancer and the Owner Trustee in writing of any
Servicing Default.
Section 7.02. Indenture Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 or sends a notice pursuant to Section 6.04, the
Indenture Trustee, in a period not to exceed 90 days shall appoint a successor
Servicer or shall itself become the successor in all respects to the Servicer in
its capacity as servicer under this Servicing Agreement and the transactions set
forth or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof. Nothing in this Servicing Agreement or in the Trust Agreement
shall be construed to permit or require the Indenture Trustee to (i) succeed to
the responsibilities, duties and liabilities of the initial Servicer in its
capacity as Seller under the Revolving Credit Loan Purchase Agreement, (ii) be
responsible or accountable for any act or omission of the Servicer prior to the
issuance of a notice of termination hereunder, (iii) require or obligate the
Indenture Trustee, in its capacity as successor Servicer, to purchase,
repurchase or substitute any Revolving Credit Loan, (iv) fund any Additional
Balances with respect to any Revolving Credit Loan, (v) fund any losses on any
Permitted Investment directed by any other Servicer, or (vi) be responsible for
the representations and warranties of the Servicer. As compensation therefor,
the Indenture Trustee shall be entitled to such compensation as the Servicer
would have been entitled to hereunder if no such notice of termination had been
given. The predecessor Servicer shall also pay the Transition Costs of the
Indenture Trustee or other servicer as successor Servicer. Notwithstanding the
above, (i) if the Indenture Trustee is unwilling to act as successor Servicer
itself or appoint a successor to act as successor Servicer, or (ii) if the
Indenture Trustee is legally unable so to act, the Indenture Trustee may (in the
situation described in clause (i)) or shall (in the situation described in
clause (ii)) appoint or petition a court of competent jurisdiction to appoint
any established housing and home finance institution, bank or other mortgage
loan or home equity loan servicer having a net worth of not less than
$10,000,000 as the successor to the Servicer hereunder in the assumption of all
or any part of the responsibilities, duties or liabilities of the Servicer
hereunder; provided that any such successor Servicer shall be acceptable to the
Credit Enhancer, as evidenced by the Credit Enhancer's prior written consent
which consent shall not be unreasonably withheld and provided further that the
appointment of any such successor Servicer will not result in the qualification,
reduction or withdrawal of the ratings assigned to the Securities by the Rating
Agencies, if determined without regard to the Credit Enhancement Instrument.
Pending appointment of a successor to the Servicer hereunder, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee, in
a period not to exceed 90 days, shall itself succeed or appoint a successor to
succeed to all of the rights and duties of the Servicer hereunder hereinabove
provided. In connection with such appointment and assumption, the successor
shall be entitled to receive compensation out of payments on Revolving Credit
Loans in an amount equal to the compensation which the Servicer would otherwise
have received pursuant to Section 3.09 (or such other compensation as the
Indenture Trustee and such successor shall agree, together with the Transition
Costs of the successor Servicer, which shall be paid by the predecessor
Servicer). The appointment of a successor Servicer shall not affect any
liability of the predecessor Servicer which may have arisen under this Servicing
Agreement prior to its termination as Servicer (including, without limitation,
the obligation to purchase Revolving Credit Loans pursuant to Section 3.01, to
pay any deductible under an insurance policy pursuant to Section 3.04 or to
indemnify the Indenture Trustee pursuant to Section 6.06), nor shall any
successor Servicer be liable for any acts or omissions of the predecessor
Servicer or for any breach by such Servicer of any of its representations or
warranties contained herein or in any related document or agreement. The
Indenture Trustee and such successor shall take such action, consistent with
this Servicing Agreement, as shall be necessary to effectuate any such
succession.
(b) Any successor, including the Indenture Trustee, to the Servicer as
servicer shall during the term of its service as servicer (i) continue to
service and administer the Revolving Credit Loans for the benefit of the
Securityholders, (ii) maintain in force a policy or policies of insurance
covering errors and omissions in the performance of its obligations as Servicer
hereunder and a fidelity bond in respect of its officers, employees and agents
to the same extent as the Servicer is so required pursuant to Section 3.13 and
(iii) be bound by the terms of the Insurance Agreement.
(c) Any successor Servicer, including the Indenture Trustee, shall not be
deemed in default or to have breached its duties hereunder if the predecessor
Servicer shall fail to deliver any required deposit to the Collection Account or
otherwise cooperate with any required servicing transfer or succession
hereunder.
Section 7.03. Notification to Securityholders. Upon any termination of or
appointment of a successor to the Servicer pursuant to this Article VII or
Section 6.04, the Indenture Trustee shall give prompt written notice thereof to
the Securityholders, the Credit Enhancer, the Issuer and each Rating Agency.
ARTICLE VIII.
Miscellaneous Provisions
Section 8.01. Amendment. This Servicing Agreement may be amended from time
to time by the parties hereto, with the prior written consent of the Credit
Enhancer, provided that any amendment shall be accompanied by a letter from the
Rating Agencies that the amendment will not result in the downgrading or
withdrawal of the rating then assigned to the Securities, if determined without
regard to the Credit Enhancement Instrument.
Section 8.02. GOVERNING LAW. THIS SERVICING AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 8.03. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by certified mail, return receipt requested, to (a) in
the case of the Servicer, NOVUS Financial Corporation, 0000 Xxxx Xxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxxx, Vice President and
Assistant General Counsel and Xxxxxxx X. Xxxxxx, Senior Vice President and
Treasurer, (b) in the case of the Credit Enhancer, Ambac Assurance Corporation,
Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Structured
Finance-Mortgage Backed Securities; Fax (000) 000-0000; Confirmation (212)
208-3387 (c) in the case of Moody's, Home Mortgage Loan Monitoring Group, 4th
Floor, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (d) in the case of Standard &
Poor's, 00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Residential Mortgage Surveillance Group, (e) in the case of the Owner Trustee,
Wilmington Trust Company, Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000-0000, and (f) in the case of the Issuer, to NOVUS
HELOC Trust 1999-1, c/o Owner Trustee, Wilmington Trust Company, Xxxxxx Square
North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000, (g) in the
case of the Indenture Trustee, to : Norwest Bank Minnesota, National
Association, 00000 Xxxxxx Xxxx Xxxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention:
NOVUS 1999-1, with a copy to the Indenture Trustee's Corporate Trust Office and
(h) in the case of the Underwriter, Xxxxxx Xxxxxxx & Co. Incorporated, 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: General Counsel; or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party. Any notice required or permitted to be mailed to a
Securityholder shall be given by first class mail, postage prepaid, at the
address of such Securityholder as shown in the Register. Any notice so mailed
within the time prescribed in this Servicing Agreement shall be conclusively
presumed to have been duly given, whether or not the Securityholder receives
such notice. Any notice or other document required to be delivered or mailed by
the Indenture Trustee to any Rating Agency shall be given on a reasonable
efforts basis and only as a matter of courtesy and accommodation and the
Indenture Trustee shall have no liability for failure to delivery such notice or
document to any Rating Agency.
Section 8.04. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Servicing Agreement shall be
for any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Servicing Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Servicing
Agreement or of the Securities or the rights of the Securityholders thereof.
Section 8.05. Third-Party Beneficiaries. This Servicing Agreement will
inure to the benefit of and be binding upon the parties hereto, the
Securityholders, the Credit Enhancer, the Owner Trustee and their respective
successors and permitted assigns. Except as otherwise provided in this Servicing
Agreement, no other Person will have any right or obligation hereunder.
Section 8.06. Counterparts. This instrument may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 8.07. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 8.08. Termination Upon Purchase by the Servicer or Liquidation of
All Revolving Credit Loans.
(a) The respective obligations and responsibilities of the Servicer, the
Issuer and the Indenture Trustee created hereby shall terminate upon the last
action required to be taken by the Issuer pursuant to the Trust Agreement and by
the Indenture Trustee pursuant to the Indenture following the earlier of:
(i) the date on or before which the Indenture or Trust Agreement
is terminated, or
(ii) the purchase by the Servicer from the Issuer of all
Revolving Credit Loans and all property acquired in respect of any
Revolving Credit Loan at a price equal to 100% of the unpaid Loan Balance
of each Revolving Credit Loan, plus accrued and unpaid interest thereon at
the Weighted Average Net Loan Rate up to the day preceding the Payment Date
on which such amounts are to be distributed to Securityholders, plus any
amounts due and owing to the Credit Enhancer under the Insurance Agreement
(any unpaid Servicing Fee shall be deemed paid at such time).
The right of the Servicer to purchase the assets of the Issuer pursuant to
clause (ii) above is conditioned upon the Pool Balance as of such date being
less than ten percent of the aggregate of the Cut-off Date Loan Balances of the
Revolving Credit Loans. If such right is exercised by the Servicer, the Servicer
shall deposit the amount calculated pursuant to clause (ii) above with the
Indenture Trustee pursuant to Section 4.10 of the Indenture and, upon the
receipt of such deposit, the Indenture Trustee or Custodian shall release to the
Servicer, the files pertaining to the Revolving Credit Loans being purchased.
(b) The Servicer, at its expense, shall prepare and deliver to the
Indenture Trustee for execution, at the time the Revolving Credit Loans are to
be released to the Servicer, appropriate documents assigning each such Revolving
Credit Loan from the Indenture Trustee or the Issuer to the Servicer or the
appropriate party.
Section 8.09. Certain Matters Affecting the Indenture Trustee. For all
purposes of this Servicing Agreement, in the performance of any of its duties or
in the exercise of any of its powers hereunder, the Indenture Trustee shall be
subject to and entitled to the benefits of Article VI of the Indenture.
Section 8.10. Owner Trustee Not Liable for Related Documents. The recitals
contained herein shall be taken as the statements of the Depositor, and the
Owner Trustee assumes no responsibility for the correctness thereof. The Owner
Trustee makes no representations as to the validity or sufficiency of this
Servicing Agreement, of any Basic Document or of the Certificates (other than
the signatures of the Owner Trustee on the Certificates) or the Notes, or of any
Related Documents. The Owner Trustee shall at no time have any responsibility or
liability with respect to the sufficiency of the Owner Trust Estate or its
ability to generate the payments to be distributed to Certificateholders under
the Trust Agreement or the Noteholders under the Indenture, including, the
compliance by the Depositor or the Seller with any warranty or representation
made under any Basic Document or in any related document or the accuracy of any
such warranty or representation, or any action of the Certificate Paying Agent,
the Certificate Registrar or the Indenture Trustee taken in the name of the
Owner Trustee.
IN WITNESS WHEREOF, the Servicer, the Indenture Trustee and the Issuer have
caused this Servicing Agreement to be duly executed by their respective officers
or representatives all as of the day and year first above written.
NOVUS FINANCIAL CORPORATION,
as Servicer
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Title: Vice President
NOVUS HELOC TRUST 1999-1
By: Wilmington Trust Company, not in
its individual capacity but solely
as Owner Trustee
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Title: Vice President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Indenture Trustee
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Title: Trust Officer
EXHIBIT A
REVOLVING CREDIT LOAN SCHEDULE
TO BE PROVIDED UPON REQUEST
EXHIBIT B
LIMITED POWER OF ATTORNEY
Norwest Bank Minnesota, National Association, (the "Principal"), in its capacity
as indenture trustee under that certain Servicing Agreement relating to NOVUS
HELOC Trust 1999-1, HELOC Asset Backed Notes, Series 1999-1, dated as of May 1,
1999 (the "Agreement") by and among NOVUS HELOC Trust 1999-1(Issuer), NOVUS
Financial Corporation (Servicer) and Norwest Bank Minnesota, N.A. (Indenture
Trustee).
hereby constitutes and appoints:
NOVUS Financial Corporation
its true and lawful attorney-in-fact (the "Attorney-in-Fact"), acting by and
through its officers and employees, with full authority and power to execute and
deliver on behalf of Principal any and all of the following instruments to the
extent consistent with the terms and conditions of the Agreement:
(i) All documents with respect to any of the mortgages or deeds of
trust securing the Revolving Credit Loans (as defined in the
Agreement) serviced for Principal by said attorney-in-fact which are
customarily and reasonably necessary and appropriate to the
satisfaction, cancellation, or partial or full release of mortgages,
deeds of trust or deeds to secure debt upon payment and discharge of
all sums secured thereby;
(ii) Instruments appointing one or more substitute trustees to act in
place of the trustees named in Deeds of Trust;
(iii) Affidavits of debt, notice of default, declaration of default,
notices of foreclosure, and all such contracts, agreements, deeds,
assignments and instruments as are appropriate to effect any sale,
transfer or disposition of real property acquired through foreclosure
or otherwise;
(iv) All other comparable instruments.
This Limited Power of Attorney is effective as of the date below and shall
remain in full force and effect until revoked in writing by the undersigned or
termination of the Agreement, whichever is earlier.
Dated: XXXXXXXXXX Norwest Bank Minnesota, National Association
As Indenture Trustee under the Agreement
By: _________________________________________
By:
Its:
Attest:
---------------------
By:
-------------------
Its: Asst. Secretary
Unofficial Witnesses:
______________________
______________________
STATE OF MARYLAND
COUNTY OF XXXXXX xx:
On the ____ day of __________, 1999 before me, a Notary Public in and for
said State, personally appeared Xxxxx X. XxxXxxxxx, known to me to be Vice
President of Norwest Bank Minnesota, N.A., and also known to me to be the person
who executed this Power of Attorney on behalf of said bank, and acknowledged to
me that such bank executed this Power of Attorney.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my office seal
the day and year written above.
-----------------------
Notary Public
My commission expires
STATE OF _________ )
_________ SS.
COUNTY OF_________ )
On this __th day of May, 1999, before me the undersigned, Notary Public of
said State, personally appeared _______________________________ personally known
to me to be duly authorized officers of Norwest Bank Minnesota, National
Association that executed the within instrument and personally known to me to be
the persons who executed the within instrument on behalf of Norwest Bank
Minnesota, National Association therein named, and acknowledged to me such
Norwest Bank Minnesota, National Association executed the within instrument
pursuant to its by-laws.
WITNESS my hand and official seal.
Notary Public in and for the
State of
After recording, please mail to:
Attn:
EXHIBIT 4
FORM OF REQUEST FOR RELEASE
To: Norwest Bank Minnesota, N.A.
0000 00xx Xxxxxx X.X.
Xxxxxxxxxxx, XX 00000-0000
Attn: Inventory Control
Re: Custodial Agreement dated as of ____, among ___________________
and Norwest Bank Minnesota, N.A., as Custodian
In connection with the administration of the Revolving Credit Loans held by
you as Custodian for the Owner pursuant to the above-captioned Custodial
Agreement, we request the release, and hereby acknowledge receipt, of the
Custodian's Mortgage File for the Revolving Credit Loan described below, for the
reason indicated.
Revolving Credit Loan Number
----------------------------
Mortgagor Name, Address & Zip Code
----------------------------------
Reason for Requesting Documents (check one):
-------------------------------
_______ 1. Mortgage Paid in Full
_______ 2. Foreclosure
_______ 3. Substitution
_______ 4. Other Liquidation (Repurchases, etc.)
_______ 5. Nonliquidation Reason:___________________________
Address to which Custodian should
Deliver the Custodian's Mortgage File: ____________________________________
____________________________________
____________________________________
By:____________________________________
(authorized signer)
Issuer:________________________________
Address:_______________________________
_______________________________
Date:__________________________________
Custodian
---------
Norwest Bank Minnesota, N.A.
Please acknowledge the execution of the above request your signature and date
below:
-------------------------------------- ---------------------
Signature Date
Documents returned to Custodian:
--------------------------------------
Custodian Date
