EXHIBIT 4.4
[NAME OF SERVICER],
as Servicer
_____ TRUST SERIES ____-__,
as Issuer
and
[NAME OF INDENTURE TRUSTEE]
as Indenture Trustee
----------------------
SERVICING AGREEMENT
Dated as of __________ 1, ____
----------------------
TABLE OF CONTENTS
ARTICLE I
Definitions
Section 1.01 Definitions...................................................................
Section 1.02 Other Definitional Provisions.................................................
Section 1.03 Interest Calculations.........................................................
ARTICLE II
Representations and Warranties
Section 2.01 Representations and Warranties Regarding the Servicer.........................
Section 2.02 Representations and Warranties of the Issuer..................................
Section 2.03 Enforcement of Representations and Warranties.................................
ARTICLE III
Administration and Servicing of Loans
Section 3.01 The Servicer..................................................................
Section 3.02 Collection of Certain Loan Payments...........................................
Section 3.03 Withdrawals from the Custodial Account........................................
Section 3.04 Maintenance of Hazard Insurance; Property Protection Expenses.................
Section 3.05 Modification Agreements.......................................................
Section 3.06 Trust Estate; Related Documents...............................................
Section 3.07 Realization Upon Defaulted Loans; Loss Mitigation.............................
Section 3.08 Issuer and Indenture Trustee to Cooperate.....................................
Section 3.09 Servicing Compensation; Payment of Certain Expenses by Servicer...............
Section 3.10 Annual Statement as to Compliance.............................................
Section 3.11 Assessments of Compliance and Attestation Reports.............................
Section 3.12 Access to Certain Documentation and Information Regarding the Loans...........
Section 3.13 Maintenance of Certain Servicing Insurance Policies...........................
Section 3.14 Information Required by the Internal Revenue Service
and Reports of Foreclosures and
Abandonments of Mortgaged Property............................................
Section 3.15 Optional Purchase of Loans by Servicer........................................
ARTICLE IV
Servicing Certificate
Section 4.01 Statements to Securityholders.................................................
Section 4.02 Tax Reporting.................................................................
ARTICLE V
Payment Account
Section 5.01 Payment Account...............................................................
ARTICLE VI
The Servicer
Section 6.01 Liability of the Servicer.....................................................
Section 6.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer .................................................
Section 6.03 Limitation on Liability of the Servicer and Others............................
Section 6.04 Servicer Not to Resign........................................................
Section 6.05 Delegation of Duties..........................................................
ARTICLE VII
Default
Section 7.01 Servicing Default.............................................................
Section 7.02 Indenture Trustee to Act; Appointment of Successor............................
Section 7.03 Notification to Securityholders...............................................
ARTICLE VIII
Miscellaneous Provisions
Section 8.01 Amendment.....................................................................
Section 8.02 GOVERNING LAW.................................................................
Section 8.03 Notices.......................................................................
Section 8.04 Severability of Provisions....................................................
Section 8.05 Third-Party Beneficiaries.....................................................
Section 8.06 Counterparts..................................................................
Section 8.07 Effect of Headings and Table of Contents......................................
Section 8.08 Termination Upon Purchase by the Servicer or Liquidation
of All Loans; Partial Redemption .............................................
Section 8.09 Certain Matters Affecting the Indenture Trustee...............................
Section 8.10 Owner Trustee Not Liable for Related Documents................................
EXHIBIT A - LOAN SCHEDULE...............................................................
EXHIBIT B - POWER OF ATTORNEY...........................................................
EXHIBIT C - FORM OF REQUEST FOR RELEASE.................................................
EXHIBIT D - SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE..............
This is a Servicing Agreement, dated as of _________ 1, ____, among [Name
of Servicer] (the "Servicer"), the _____ Trust Series ____-__ (the "Issuer") and
[Name of Indenture Trustee] (the "Indenture Trustee").
W I T N E S S E T H T H A T:
WHEREAS, pursuant to the terms of the Loan Purchase Agreement, [Name of
Seller] (in its capacity as Seller) will sell to the Depositor the Loans
together with the Related Documents on the Closing Date;
WHEREAS, the Depositor will sell the Loans and all of its rights under the
Loan Purchase Agreement to the Issuer, together with the Related Documents on
the Closing 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 Loans directly or through one or more Subservicers;
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 _______________ (the "Indenture"), between ______ Trust
Series ____-__, as issuer, and [Name of Indenture Trustee], 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 Stated Principal Balance of a Loan shall be made
in accordance with the Mortgage Note. All calculations of interest on the
Securities (other than the Class A, M-2 and B-1 Notes) shall be made on the
basis of a 30-day month and a year assumed to consist of 360 days. Calculation
of interest on the Class A, M-2 and B-1 Notes shall be made on the basis of the
actual number of days in the Accrual Period and a year assumed to consist of 360
days. The calculation of the Servicing Fee shall be made on the basis of a
30-day month and a year assumed to consist of 360 days. 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 Loans, as of the Cut-off Date:
(i) The Servicer is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of _____________
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 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; and
(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.
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 Loans, 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 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 Loans, or the Issuer, shall enforce the representations and warranties of
the Seller pursuant to the Loan Purchase Agreement. Upon the discovery by the
Seller, the Depositor, the Servicer, the Indenture Trustee, the Issuer, or any
Custodian of a breach of any of the representations and warranties made in the
Loan Purchase Agreement, in respect of any Loan which materially and adversely
affects the interests of the Securityholders, the party discovering such breach
or existence shall give prompt written notice to the other parties. The Servicer
shall promptly notify the Seller of such breach and request that, pursuant to
the terms of the Loan Purchase Agreement, the Seller either (i) cure such breach
in all material respects within 90 days from the date the Seller was notified of
such breach or (ii) purchase such Loan from the Issuer at the price and in the
manner set forth in Section 4 of the Loan Purchase Agreement; provided that the
Seller shall, subject to compliance with all the conditions set forth in the
Loan Purchase Agreement, have the option to substitute an Eligible Substitute
Loan or Loans for such Loan. In the event that the Seller elects to substitute
one or more Eligible Substitute Loans pursuant to Section 4 of the Loan Purchase
Agreement, the Seller shall deliver to the Issuer with respect to such Eligible
Substitute Loans, the original Mortgage Note, the Mortgage, and such other
documents and agreements as are required by the 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 Monthly Payment
has been received by the Issuer for such month in respect of the Loan to be
removed. The Servicer shall amend or cause to be amended the Loan Schedule to
reflect the removal of such Loan and the substitution of the Eligible Substitute
Loans and the Servicer shall promptly deliver the amended Loan Schedule to the
Owner Trustee and the Indenture Trustee.
It is understood and agreed that the obligation of the Seller to cure such
breach or purchase or substitute for such 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
Loans, against the Seller. In connection with the purchase of or substitution
for any such Loan by the Seller, the Issuer shall assign to the Seller all of
its right, title and interest in respect of the Loan Purchase Agreement
applicable to such 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 Loans
Section 3.01 The Servicer. (a) The Servicer shall service and administer
the Loans in accordance with the terms of this Servicing Agreement, following
such procedures as it would employ in its good faith business judgment and which
are 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
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 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, or of consent to modification in connection with a proposed
conveyance, or of assignment of any Mortgage and Mortgage Note in connection
with the repurchase of a Loan and all other comparable instruments with respect
to the Loans and with respect to the Mortgaged Properties, or with respect to
the modification or re-recording of a Mortgage for the purpose of correcting the
Mortgage, the subordination of the lien of the Mortgage in favor of a public
utility company or government agency or unit with powers of eminent domain, the
taking of a deed in lieu of foreclosure, the commencement, prosecution or
completion of judicial or non-judicial foreclosure, the acquisition of any
property acquired by foreclosure or deed in lieu of foreclosure, or the
management, marketing and conveyance of any property acquired by foreclosure or
deed in lieu of foreclosure. 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. 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 Loan did not have a lien senior to the 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 Loan
had a lien senior to the 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) (A) the Mortgagor's debt-to-income ratio resulting from such
refinancing is less than the original debt-to-income ratio as set forth on
the Mortgage Loan Schedule; or
(B) the resulting Combined Loan-to-Value Ratio of such Loan is
no higher than the Combined Loan-to-Value Ratio prior to such refinancing;
provided, however, if such refinanced mortgage loan is a "rate and term"
mortgage loan (meaning, the Mortgagor does not receive any cash from the
refinancing), the Combined Loan-to-Value Ratio may increase to the extent
of the reasonable closing costs of such refinancing;
(ii) the interest rate, or, in the case of an adjustable rate
existing senior lien, the maximum interest rate, for the loan evidencing
the refinanced senior lien is no more than 2.0% higher than the interest
rate or the maximum interest rate, as the case may be, on the loan
evidencing the existing senior lien immediately prior to the date of such
refinancing; provided, however (a) if the loan evidencing the existing
senior lien prior to the date of refinancing has an adjustable rate and
the loan evidencing the refinanced senior lien has a fixed rate, then the
current interest rate on the loan evidencing the refinanced senior lien
may be up to 2.0% higher than the then-current loan rate of the loan
evidencing the existing senior lien and (b) if the loan evidencing the
existing senior lien prior to the date of refinancing has a fixed rate and
the loan evidencing the refinanced senior lien has an adjustable rate,
then the maximum interest rate on the loan evidencing the refinanced
senior lien shall be less than or equal to (x) the interest rate on the
loan evidencing the existing senior lien prior to the date of refinancing
plus (y) 2.0%; and
(iii) the loan evidencing the refinanced senior lien is not subject
to negative amortization.
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 continue in effect Subservicing Agreements entered
into by the Seller and Subservicers prior to the execution and delivery of this
Agreement, and may enter into Subservicing Agreements with Subservicers for the
servicing and administration of certain of the Loans. Each Subservicer of a Loan
shall be entitled to receive and retain, as provided in the related Subservicing
Agreement and in Section 3.02, the related Subservicing Fee from payments of
interest received on such Loan after payment of all amounts required to be
remitted to the Servicer in respect of such Loan. For any Loan not subject to a
Subservicing Agreement, the Servicer shall be entitled to receive and retain an
amount equal to the Subservicing Fee from payments of interest. References in
this Servicing Agreement to actions taken or to be taken by the Servicer in
servicing the Loans include actions taken or to be taken by a Subservicer on
behalf of 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 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 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.
As part of its servicing activities hereunder, the Servicer, for the
benefit of 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 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 would employ in its good faith
business judgment and which are normal and usual in its general mortgage
servicing activities. 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 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 Loan Payments. (a) The Servicer
shall make reasonable efforts to collect all payments called for under the terms
and provisions of the Loans, and shall, to the extent such procedures shall be
consistent with this Servicing Agreement and generally consistent with any
related insurance policy, follow such collection procedures as it would employ
in its good faith business judgment and which are 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 waive any late payment charge, prepayment charge or penalty interest
or other fees which may be collected in the ordinary course of servicing such
Loan. The Servicer may also extend the Due Date for payment due on a Loan,
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 (except as
described below) or the interests of the Securityholders. Consistent with the
terms of this Servicing Agreement, the Servicer may also:
(i) waive, modify or vary any term of any Loan;
(ii) consent to the postponement of strict compliance with any such
term or in any manner grant indulgence to any Mortgagor;
(iii) arrange with a Mortgagor a schedule for the payment of
principal and interest due and unpaid;
(iv) forgive any portion of the amounts contractually owed under
the Loan;
(v) capitalize past due amounts owed under the Loan by adding any
amounts in arrearage to the existing principal balance of the Loan (a
"Capitalization Workout") of which will result in an increased Monthly
Payment amount, provided that: (A) the amount added to the existing
principal balance of the Loan (the "Capitalized Amount") shall be no
greater than five times the Mortgagor's current Monthly Payment amount;
and (B) the Servicer shall not enter into a Capitalization Workout unless
the Combined Loan-to-Value Ratio of the Loan prior to the Capitalization
Workout equals or exceeds 80% and the Mortgagor has qualified for the
Capitalization Workout under the Servicer's servicing guidelines;
(vi) reset the Due Date for the Loan, or any combination of the
foregoing;
if in the Servicer's determination such waiver, modification, postponement or
indulgence, arrangement or other action referred to above is not materially
adverse to the interests of the Securityholders and is generally consistent with
the Servicer's policies with respect to mortgage loans similar to the Loans;
provided, however, that the Servicer may not modify or permit any Subservicer to
modify any 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 Loan) or extend the final
maturity date of such Loan) unless such 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
Loans will be included in the Servicing Certificate, and such 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.
(b) The Servicer shall establish a Custodial Account, 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 Loans
received by it subsequent to the Cut-off Date (other than in respect of the
payments referred to in the following paragraph) within one Business Day
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 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 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 Loans repurchased by the Seller pursuant
to the Loan Purchase Agreement, and all Substitution Amounts required to
be deposited in connection with the substitution of an Eligible Substitute
Loan pursuant to the 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
Sections 3.04 and 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 Loans,
the Servicing Fee for such Collection Period. The foregoing requirements
respecting deposits to the Custodial Account are exclusive, it being understood
that, without limiting the generality of the foregoing, the Servicer need not
deposit in the Custodial Account amounts representing Foreclosure Profits,
prepayment penalties, fees (including annual fees) or late charge penalties
payable by Mortgagors (such amounts to be retained as additional servicing
compensation in accordance with Section 3.09 hereof), 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 Custodial Account is so deposited,
the Servicer may at any time withdraw such amount from the Custodial Account,
any provision herein to the contrary notwithstanding.
The Servicer may cause the institution maintaining the Custodial Account
to invest any funds in the Custodial Account in Permitted Investments, which
shall mature not later than the Business Day preceding the next Payment Date and
which 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 Custodial 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 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 Custodial Account. The Servicer shall,
from time to time as provided herein, make withdrawals from the Custodial
Account of amounts on deposit therein pursuant to Section 3.02 that are
attributable to the Loans for the following purposes:
(i) to deposit in the Payment Account, seven days prior to each
Payment Date (or if such day is not a Business Day, the immediately
preceding Business Day), an amount equal to the Interest Remittance Amount
(excluding any payments under the Yield Maintenance Agreement that were
received by the Indenture Trustee) and Principal Remittance Amount
required to be distributed on such Payment Date;
(ii) to the extent deposited to the Custodial 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 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 Loan;
(iii) to pay to itself out of each payment received on account of
interest on a Loan as contemplated by Section 3.09, an amount equal to the
related Servicing Fee (to the extent not retained pursuant to Section
3.02), and to pay to any Subservicer any Subservicing Fees not previously
withheld by the Subservicer;
(iv) to the extent deposited in the Custodial Account to pay to
itself as additional servicing compensation any interest or investment
income earned on funds deposited in the Custodial Account and Payment
Account that it is entitled to withdraw pursuant to Sections 3.02(b) and
5.01;
(v) to pay to itself or the Seller, with respect to any 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
(vi) to withdraw any other amount deposited in the Custodial
Account that was not required to be deposited therein pursuant to Section
3.02.
Since, in connection with withdrawals pursuant to clauses (ii), (iii), (iv) and
(v), the Servicer's entitlement thereto is limited to collections or other
recoveries on the related Loan, the Servicer shall keep and maintain separate
accounting, on a Loan by Loan basis, for the purpose of justifying any
withdrawal from the Custodial 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 Loan as to which the Repurchase Price has been
paid), by withdrawal from the Custodial Account of amounts on deposit therein
attributable to the Loans on any Business Day prior to the Payment Date
succeeding the date of such determination.
Section 3.04 Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicershall cause to be maintained for each Loan hazard
insurance naming the Servicer or related Subservicer as loss payee thereunder
providing extended coverage in an amount which is equal to at least 100% of the
insurable value of the improvements (guaranteed replacement) or the sum of the
unpaid principal balance of the first mortgage loan and the Loan amount. The
Servicer shall also cause to be maintained on property acquired upon
foreclosure, or deed in lieu of foreclosure, of any Loan, fire insurance with
extended coverage in an amount which is at least equal to the amount necessary
to avoid the application of any coinsurance clause contained in the related
hazard insurance policy. 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 Custodial Account to the extent called for by Section 3.02.
In cases in which any Mortgaged Property is located at any time during the life
of a Loan in a federally designated flood area, the hazard insurance to be
maintained for the related Loan shall include flood insurance (to the extent
available). All such flood insurance shall be in amounts equal to the lesser of
(i) the amount required to compensate for any loss or damage to the Mortgaged
Property on a replacement cost basis and (ii) the maximum amount of such
insurance available for the related Mortgaged Property under the national flood
insurance program (assuming that the area in which such Mortgaged Property is
located is participating in such program). 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 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 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 blanket 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 Custodial 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
Custodial Account. In connection with its activities as servicer of the 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, modification 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 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, in each case 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
Loan, that the security for, and the timely and full collectability of, such
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 Loan after such partial release does not exceed the Combined Loan-to-Value
Ratio for such 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 monies.
(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 pursuant to the related Custodial Agreement, with a
direction to the Servicer to forward the correct documentation.
(c) Upon receipt of a "Request for Release", in the form attached hereto
as Exhibit C, from the Servicer (a "Request for Release"), to the effect that a
Loan has been the subject of a final payment or a prepayment in full and the
related 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 Custodial
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 Loan or, if
applicable, Liquidation Proceeds, the Custodian shall promptly release the
Related Documents to the Servicer pursuant to the related Custodial Agreement,
which the Indenture Trustee shall execute, along with such documents as the
Servicer or the Mortgagor may request to evidence satisfaction and discharge of
such Loan, upon request of the Servicer. If from time to time and as appropriate
for the servicing or foreclosure of any Loan, the Servicer requests the
Custodian to release the Related Documents and delivers to the Custodian a
Request for Release to the Custodian signed by a Responsible Officer of the
Servicer, the Custodian shall release the Related Documents to the Servicer
pursuant to the related Custodial Agreement. The Servicer shall return promptly
to the Custodian the Related Documents when the Servicer's need therefor no
longer exists, unless the related Loan has been liquidated. If such Loans shall
be liquidated and the Custodian receives a Request for Release from the Servicer
as provided above, then, upon request of the Servicer, the Custodian shall
release the Request for Release to the Servicer pursuant to the related
Custodial Agreement.
Section 3.07 Realization Upon Defaulted Loans; Loss Mitigation. With
respect to such of the Loans as come into and continue in default, the Servicer
will decide whether to (i) foreclose upon the Mortgaged Properties securing such
Loans, (ii) write off the unpaid principal balance of the Loans as bad debt,
(iii) take a deed in lieu of foreclosure, (iv) accept a short sale (a payoff of
the Loan for an amount less than the total amount contractually owed in order to
facilitate a sale of the Mortgaged Property by the Mortgagor) or permit a short
refinancing (a payoff of the Loan for an amount less than the total amount
contractually owed in order to facilitate refinancing transactions by the
Mortgagor not involving a sale of the Mortgaged Property), (v) arrange for a
repayment plan, (vi) agree to a modification in accordance with this Servicing
Agreement, or (vii) take an unsecured note, in connection with a negotiated
release of the lien of the Mortgage in order to facilitate a settlement with the
Mortgagor; 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 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 Loan have been
received; provided, however, the Servicer shall treat any Loan that is 180 days
or more delinquent as having been finally liquidated. The Servicer may retain a
Subservicer to sell or perform collection activities with respect to a Loan that
is 180 days or more delinquent, and any subsequent collections (less the
applicable subservicing fee) with respect to any such Loan shall be deposited to
the Custodial 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 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 Loan, such Mortgaged
Property shall (except as otherwise expressly provided herein) be considered to
be an outstanding Loan held as an asset of the Issuer until such time as such
property shall be sold.
Any proceeds from the purchase or repurchase of any Loan pursuant to the
terms of this Servicing Agreement (including without limitation Sections 2.03
and 3.15) will be applied in the following order of priority: first, to the
Servicer or the related Subservicer, all Servicing Fees payable therefrom to the
Payment Date on which such amounts are to be deposited in the Payment Account;
second, as part of the Interest Remittance Amount, accrued and unpaid interest
on the related Loan, at the Net Loan Rate to the Payment Date on which such
amounts are to be deposited in the Payment Account; and third, as part of the
Principal Remittance Amount, as a recovery of principal on the Loan.
Liquidation Proceeds with respect to a Liquidated Loan 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 for any Liquidation Expenses;
second, to the Servicer or the related Subservicer, all unpaid Servicing Fees
through the date of receipt of the final Liquidation Proceeds; third as part of
the Interest Remittance Amount, accrued and unpaid interest on the related Loan
at the Net Loan Rate through the date of receipt of the final Liquidation
Proceeds; fourth as part of the Principal Remittance Amount, as a recovery of
principal on the Loan, up to an amount equal to the Loan Balance of the related
Loan immediately prior to the date it became a Liquidated Loan; and fifth, to
Foreclosure Profits.
Proceeds and other recoveries from a Loan after it becomes a Liquidated
Loan 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 for any
expenses previously unreimbursed from Liquidation Proceeds or otherwise; second,
to the Servicer or the related Subservicer, all unpaid Servicing Fees payable
thereto through the date of receipt of the proceeds previously unreimbursed from
Liquidation Proceeds or otherwise; third, as part of the Interest Remittance
Amount, up to an amount equal to the sum of (a) the Stated Principal Balance of
the related Loan immediately prior to the date it became a Liquidated Loan, less
any Net Liquidation Proceeds previously received with respect to such Loan and
applied as a recovery of principal, and (b) accrued and unpaid interest on the
related Loan at the Net Loan Rate through the date of receipt of the proceeds;
and fourth, to Foreclosure Profits.
Section 3.08 Issuer and Indenture Trustee to Cooperate. On or before each
Payment 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 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 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 any expenses
incurred in connection with such instrument of satisfaction or transfer shall be
reimbursed from amounts deposited in the Custodial Account. From time to time
and as appropriate for the servicing or foreclosure of any 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 a Request for
Release, signed by 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 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 Loan
that is in default following recordation of the assignments of Mortgage in
accordance with the provisions of the 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 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 Loan and deposit or credit the Net Liquidation Proceeds,
exclusive of Foreclosure Profits, received with respect thereto in the Custodial
Account. In the event that all delinquent payments due under any such Loan are
paid by the Mortgagor and any other defaults are cured, then the assignee for
collection shall promptly reassign such Loan to the Indenture Trustee and return
all Related Documents to the place where the related Mortgage File was being
maintained.
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
Loans, the Indenture Trustee, as pledgee of the Loans and as assignee of record
of the 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 Sections 3.02 and 3.03 as compensation for its services in
connection with servicing the Loans. Moreover, additional servicing compensation
in the form of late payment charges, prepayment charges, investment income on
amounts in the Custodial Account or the Payment Account and other receipts not
required to be deposited in the Custodial 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 and shall
not be entitled to reimbursement therefor.
Section 3.10 Annual Statement as to Compliance.
The Servicer will deliver to the Depositor, the Issuer and the Indenture
Trustee, not later than February 28 of each calendar year beginning in 2007, an
Officers' Certificate (an "Annual Statement of Compliance") stating, as to each
signatory thereof, that (i) a review of the activities of the Servicer during
the preceding calendar year and of performance under this Agreement or other
applicable servicing agreement has been made under such officers' supervision
and (ii) to the best of such officers' knowledge, based on such review, the
Servicer has fulfilled all of its obligations under this Agreement or other
applicable servicing agreement in all material respects throughout such year,
or, if there has been a failure to fulfill any such obligation in any material
respect, specifying each such failure known to such officer and the nature and
status of cure provisions thereof. Such Annual Statement of Compliance shall
contain no restrictions or limitations on its use. In the event that the
Servicer has delegated any servicing responsibilities with respect to the
Mortgage Loans to a subservicer, the Servicer shall deliver a similar Annual
Statement of Compliance by that subservicer to the Indenture Trustee as
described above as and when required with respect to the Servicer.
If the Servicer cannot deliver the related Annual Statement of Compliance
by February 28th of such year, the Indenture Trustee, at its sole option, may
permit a cure period for the Servicer to deliver such Annual Statement of
Compliance, but in no event later than March 10th of such year.
Section 3.11 Assessments of Compliance and Attestation Reports.
On and after January 1, 2006, the Servicer shall service and administer
the Mortgage Loans in accordance with all applicable requirements of the
Servicing Criteria. Pursuant to Rules 13a-18 and 15d-18 of the Exchange Act and
Item 1123 of Regulation AB, the Servicer shall deliver to the Depositor, the
Issuer, the Indenture Trustee and each Rating Agency on or before February 28 of
each calendar year beginning in 2007, a report regarding the Servicer's
assessment of compliance (an "Assessment of Compliance") with the Servicing
Criteria during the preceding calendar year. The Assessment of Compliance must
be reasonably satisfactory to the Indenture Trustee, and as set forth in
Regulation AB, the Assessment of Compliance must contain the following:
(a) A statement by such officer of its responsibility for assessing
compliance with the Servicing Criteria applicable to the Servicer;
(b) A statement by such officer that such officer used the Servicing
Criteria attached as Exhibit D hereto, and which will also be attached to the
Assement of Compliance, to assess compliance with the Servicing Criteria
applicable to the Servicer;
(c) An assessment by such officer of the Servicer's compliance with the
applicable Servicing Criteria for the period consisting of the preceding
calendar year, including disclosure of any material instance of noncompliance
with respect thereto during such period, which assessment shall be based on the
activities it performs with respect to asset-backed securities transactions
taken as a whole involving the Servicer, that are backed by the same asset type
as the Mortgage Loans;
(d) A statement that a registered public accounting firm has issued an
attestation report on the Servicer's Assessment of Compliance for the period
consisting of the preceding calendar year; and
(e) A statement as to which of the Servicing Criteria, if any, are not
applicable to the Servicer, which statement shall be based on the activities it
performs with respect to asset-backed securities transactions taken as a whole
involving the Servicer, that are backed by the same asset type as the Mortgage
Loans.
Such report at a minimum shall address each of the Servicing Criteria
specified on Exhibit D hereto which are indicated as applicable to the Servicer.
On or before February 28 of each calendar year beginning in 2007, the
Servicer shall furnish to the Depositor, the Issuer, the Indenture Trustee and
each Rating Agency a report (an "Attestation Report") by a registered public
accounting firm that attests to, and reports on, the Assessment of Compliance
made by the Company, as required by Rules 13a-18 and 15d-18 of the Exchange Act
and Item 1122(b) of Regulation AB, which Attestation Report must be made in
accordance with standards for attestation reports issued or adopted by the
Public Company Accounting Oversight Board.
The Servicer shall cause any subservicer, and each subcontractor
determined by the Servicer to be "participating in the servicing function"
within the meaning of Item 1122 of Regulation AB, to deliver to the Depositor,
the Issuer, the Indenture Trustee and each Rating Agency an Assessment of
Compliance and Attestation Report as and when provided above.
Such Assessment of Compliance, as to any subservicer, shall at a minimum
address each of the Servicing Criteria specified on Exhibit D hereto which are
indicated as applicable to any "primary servicer." Notwithstanding the
foregoing, as to any subcontractor, an Assessment of Compliance is not required
to be delivered unless it is required as part of a Form 10-K with respect to the
Trust Fund.
If the Servicer cannot deliver any Assessment of Compliance or Attestation
Report by February 28th of such year, the Indenture Trustee, at its sole option,
may permit a cure period for the Servicer to deliver such Assessment of
Compliance or Attestation Report, but in no event later than March 10th of such
year.
The Indenture Trustee shall also provide an Assessment of Compliance and
Attestation Report, as and when provided above, which shall at a minimum address
each of the Servicing Criteria specified on Exhibit D hereto which are indicated
as applicable to the "indenture trustee." In addition, the Indenture Trustee
shall cause the Custodian to deliver to the Indenture Trustee and the Depositor
an Assessment of Compliance and Attestation Report, as and when provided above,
which shall at a minimum address each of the Servicing Criteria specified on
Exhibit D hereto which are indicated as applicable to a "custodian."
Notwithstanding the foregoing, as to any Custodian, an Assessment of Compliance
is not required to be delivered unless it is required as part of a Form 10-K
with respect to the Trust Fund.
Section 3.12 Access to Certain Documentation and Information Regarding the
Loans. Whenever required by statute or regulation, the Servicer shall provide to
any Securityholder upon reasonable request (or a regulator for a Securityholder)
or the Indenture Trustee, reasonable access to the documentation regarding the
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 loans similar
to the 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 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 ____, 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 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 Purchase of Loans by Servicer. The Servicer may, at
its option, repurchase a Loan which becomes 60 or more days delinquent. The
Servicer shall not use any procedure in selecting Loans to be repurchased which
is materially adverse to the interests of the Securityholders. The Servicer
shall purchase such delinquent Loan at a price equal to the Repurchase Price.
Any such repurchase of a Loan pursuant to this Section 3.15 shall be
accomplished by delivery to the Indenture Trustee for deposit in the Payment
Account of the amount of the Repurchase Price. The Indenture Trustee shall
immediately effectuate the conveyance of such delinquent Loan to the Servicer to
the extent necessary, including the prompt delivery of all documentation to the
Servicer.
ARTICLE IV
Servicing Certificate
Section 4.01 Statements to Securityholders. (a) With respect to each
Payment Date, on the Business Day following the related Determination Date, the
Servicer shall forward to the Indenture Trustee the Loan information reasonably
available to the Servicer with respect to the Loans as the Indenture Trustee may
reasonably request in order for the Indenture Trustee to perform the
calculations necessary to prepare the statements contemplated by this Section
4.01 (the "Servicing Certificate"). The Indenture Trustee pursuant to Section
3.23 of the Indenture shall forward or cause to be forwarded by mail to each
Certificateholder, Noteholder, the Depositor, the Owner Trustee, the Certificate
Paying Agent and each Rating Agency, a statement setting forth the following
information as to the Notes and Certificates, to the extent applicable:
(i) the aggregate amount of (a) Interest Remittance Amount, (b)
Principal Remittance Amount and (c) Substitution Amounts;
(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 number and Aggregate Loan Balance of the Loans as of the
end of the related Collection Period;
(v) the number and aggregate Principal Balances of Loans (a) as to
which (i) one Monthly Payment is Delinquent, (ii) two Monthly Payments are
Delinquent or (iii) three or more Monthly Payments are Delinquent, (b)
that are foreclosed, (c) that have become REO, and (d) that have been
finally liquidated due to being 180 days or more delinquent, in each case
as of the end of the related Collection Period; provided, however, that
such information will not be provided on the statements relating to the
first Payment Date;
(vi) the number, average balance, weighted average remaining term to
maturity and weighted average Loan Rate of the Mortgage Loans as of the
related Due Date;
(vii) the Class Principal Balance after giving effect to the
distribution of principal on such Payment Date;
(viii) the Certificate Distribution Amount immediately following
such Payment Date;
(ix) the aggregate Servicing Fees for the related Collection
Period;
(x) the Overcollateralization Amount and the Targeted
Overcollateralization Amount immediately following such Payment Date;
(xi) the number and principal amount of Capitalization Workouts
pursuant to Section 3.02(a)(v) entered into since the Closing Date;
(xii) the aggregate amount recovered during the related Collection
Period consisting of all subsequent recoveries on any Loan that was 180
days or more delinquent;
(xiii) the related Basis Risk Shortfall for the Class A, Class M-1
and Class B-1 Notes and the Available Funds Shortfall for the Class B-2
Notes on each Payment Date;
(xiv) the applicable record dates, accrual periods and determination
dates for determining distributions and general Payment Dates;
(xv) the total cash flows received and the general sources thereof;
(xvi) the Note Rate for each Class of Notes;
(xvii) the aggregate amount of Advances for the related Due Period
(including the general purpose of such Advances), the aggregate amount of
unreimbursed Advances at the close of business on the Payment Date, and
the general source of funds for reimbursements;
(xviii) the aggregate amount of Realized Losses incurred during the
related Due Period and the cumulative amount of Realized Losses;
(xix) if applicable, material modifications, extensions or waivers
to Mortgage Loan terms, fees, penalties or payments during the preceding
calendar month or that have become material over time; and
(xx) information about any additions of, substitutions for or
removal of any Mortgage Loans from the Trust Fund, and any changes in the
underwriting, acquisition or selection criteria as to any Mortgage Loans
added to the Trust Fund.
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.
(b) In addition, with respect to each Payment Date, on the Business Day
following the related Determination Date, the Servicer shall forward to the
Rating Agencies the following information for each Capitalization Workout
entered into during the related Collection Period:
(i) the original Loan amount;
(ii) the Loan amount after the Capitalization Workout;
(iii) the original Monthly Payment amount;
(iv) the Monthly Payment amount after the Capitalization Workout;
(v) the Capitalized Amount as defined in Section 3.02(a)(v) herein;
(vi) the Combined Loan-to-Value Ratio prior to the Capitalization
Workout;
(vii) the Combined Loan-to-Value Ratio after the Capitalization
Workout; and
(viii) if an appraisal was used in determining the Combined
Loan-to-Value Ratio referred to in (vii) above, the type and date of
appraisal.
The Servicer shall also 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 the Business Day next succeeding 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 Custodial Account and deposited into the Payment Account on
the Business Day preceding the related Payment 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 100% of the Certificates are owned by the
same person, 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 as an entity disregarded from the 100%
Certificateholder.
ARTICLE V
Payment Account
Section 5.01 Payment Account. The Indenture Trustee shall establish and
maintain a Payment Account titled "[Name of Indenture Trustee], as Indenture
Trustee, for the benefit of the Securityholders and the Certificate Paying Agent
pursuant to the Indenture, dated as of __________________, between _____ Trust
Series ____-__ and [Name of Indenture Trustee]". 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 may invest or cause the institution
maintaining the Payment Account to invest the funds in the Payment Account 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. 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
mortgage loans similar to those in the Trust Estate, is reasonably satisfactory
to the Indenture Trustee (as pledgee of the Loans) and the Issuer, is willing to
service the Loans and executes and delivers to the Indenture Trustee and the
Issuer an agreement, in form and substance reasonably satisfactory to 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); 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, other than
any loss, liability or expense incurred 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 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 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 and the Indenture Trustee; and (b) each Rating Agency shall have
delivered a letter to the Issuer 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; 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 Loans, shall have assumed the Servicer's responsibilities and
obligations hereunder or the Indenture Trustee, as pledgee of the 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.
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.
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 Custodial Account
or Payment Account any deposit required to be made under the terms of this
Servicing Agreement which continues unremedied for a period of three
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
(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, which failure,
in each case, materially and adversely affects the interests of
Securityholders and which continues unremedied for a period of 45 days
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
(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 undischarged or 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.
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, by notice
then given in writing to the Servicer shall 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
Loans hereunder during any period prior to the date of such termination and the
Issuer or the Indenture Trustee, 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 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 Loans or
otherwise, shall, subject to Section 7.02 of this Agreement, pass to and be
vested in the Indenture Trustee, 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
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 Loans that shall at the time be held by the Servicer and to be deposited
by it in the Custodial Account, or that have been deposited by the Servicer in
the Custodial Account or thereafter received by the Servicer with respect to the
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 any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a payment on a Loan which was due prior to the notice terminating the
Servicer's rights and obligations hereunder and received after such notice, that
portion to which the Servicer would have been entitled pursuant to Sections 3.03
and 3.09 as well as its Servicing Fee in respect thereof, and any other amounts
payable to the Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder.
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 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 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
shall be 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 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 Loan,
(iv) fund any losses on any Permitted Investment directed by any other Servicer
or (v) 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. Notwithstanding the above, (i) if the
Indenture Trustee is unwilling 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 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. Pending appointment of a successor to the
Servicer hereunder, unless the Indenture Trustee is prohibited by law from so
acting, the Indenture Trustee shall act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the successor
shall be entitled to receive compensation out of payments on Loans in an amount
equal to the compensation which the Servicer would otherwise have received
pursuant to Section 3.09 (or such lesser compensation as the Indenture Trustee
and such successor shall agree). 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 Loans pursuant to Section 3.01 or
to pay any deductible under an insurance policy pursuant to Section 3.04), 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 Loans for the benefit of the Securityholders and (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.
(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 Custodial 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 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, provided that any amendment 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, and the
consent of the Indenture Trustee. Promptly after the execution by the Servicer,
the Issuer and the Indenture Trustee of any amendment of this Servicing
Agreement pursuant to this Section 8.01, the Indenture Trustee shall provide the
Custodian with written copies thereof. Any failure of the Indenture Trustee to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such amendment.
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, [Name of Servicer],
________________________________________________, Attention: ___________, (b) in
the case of Xxxxx'x, Home Mortgage Loan Monitoring Group, 00 Xxxxxx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, (c) in the case of Standard & Poor's, 00 Xxxxx
Xxxxxx - 00 Xxxxx, Xxx Xxxx, Xxx Xxxx st 10041, Attention: Residential Mortgage
Surveillance Group, (d) in the case of the Owner Trustee, [Name of Owner
Trustee], ____________________________________, Attention: _______ Trust Series
____-__, (e) in the case of the Issuer, to ______ Trust Series ____-__, c/o
Owner Trustee, [Name of Owner Trustee], ______________________________________,
Attention: ______ Trust Series ____- __, (f) in the case of the Indenture
Trustee, [Name of Indenture Trustee], ___________________________, Attention:
_______________ and (g) in the case of the Underwriter, at [Name of
Underwriter], _____________________________________, Attention:
________________; 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 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 Loans; Partial Redemption. (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 Loans and
all property acquired in respect of any Loan at a price equal to the
Termination Price.
The right of the Servicer to purchase the assets of the Issuer pursuant to
clause (ii) above on any Payment Date is conditioned upon the Aggregate Loan
Balance (after applying payments received in the related Collection Period) as
of such Payment Date being less than ten percent of the Aggregate Loan Balance
as of the Cut-off Date. If such right is exercised by the Servicer, the Servicer
shall deposit the Termination Price 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 Loans being purchased.
(b) The Servicer, at its expense, shall prepare and deliver to the
Indenture Trustee for execution, at the time the Loans are to be released to the
Servicer, appropriate documents assigning each such Loan from the Indenture
Trustee or the Issuer to the Servicer or the appropriate party.
(c) The Servicer shall give the Indenture Trustee not less than seven
Business Days' prior written notice of the Payment Date on which the Servicer
anticipates that the final distribution will be made to Noteholders. Notice of
any termination, specifying the anticipated Final Scheduled Payment Date or
other Payment Date (which shall be a date that would otherwise be a Payment
Date) upon which the Noteholders may surrender their Notes to the Indenture
Trustee (if so required by the terms hereof) for payment of the final
distribution and cancellation, shall be given promptly by the Servicer to the
Indenture Trustee specifying:
(i) the anticipated Final Scheduled Payment Date or other Payment
Date upon which final payment of the Notes is anticipated to be made upon
presentation and surrender of Notes at the office or agency of the
Indenture Trustee therein designated; and
(ii) the amount of any such final payment, if known.
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.
It is expressly understood and agreed by the parties hereto that with
respect to the execution of this Agreement by [Name of Owner Trustee] (the
"Trust Company") for the Issuer (a) this Agreement is executed and delivered by
the Trust Company, not individually or personally, but solely as Owner Trustee,
in the exercise of the powers and authority conferred and vested in it, pursuant
to the Owner Trust Agreement, (b) each of the representations, undertakings and
agreements herein made on the part of the Issuer is made and intended not as
personal representations, undertakings and agreements by the Trust Company but
is made and intended for the purpose for binding only the Issuer, (c) nothing
herein contained shall be construed as creating any liability on the Trust
Company, individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by
the parties hereto and by any person claiming by, through or under the parties
hereto, and (d) under no circumstances shall the Trust Company be personally
liable for the payment of any indebtedness or expenses of the Issuer or be
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Issuer under this Agreement or any other
related documents.
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.
[NAME OF SERVICER],
as Servicer
By: ___________________________________
Name:
Title:
______ TRUST SERIES ____-__
By: [NAME OF OWNER TRUSTEE], not in
its individual capacity but solely
as Owner Trustee
By: ___________________________________
Name:
Title:
[NAME OF INDENTURE TRUSTEE], as
Indenture Trustee
By: ___________________________________
Name:
Title:
EXHIBIT A
LOAN SCHEDULE
TO BE PROVIDED UPON REQUEST
EXHIBIT B
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PREMISES:
That [Name of Indenture Trustee], as Indenture Trustee (the "Trustee"), under
the Indenture (the "Indenture") among ________________________________________
and the Indenture Trustee, a national banking association organized and existing
under the laws of the State of ________, and having its principal office located
at_____________________________________________, hath made, constituted and
appointed, and does by these presents make, constitute and appoint
________________________, a corporation organized and existing under the laws of
the State of ______________, its true and lawful Attorney-in-Fact, with full
power and authority to sign, execute, acknowledge, deliver, file for record, and
record any instrument on its behalf and to perform such other act or acts as may
be customarily and reasonably necessary and appropriate to effectuate the
following enumerated transactions in respect of any of the mortgages or deeds of
trust (the "Mortgages" and the "Deeds of Trust", respectively) creating a trust,
second lien, third lien or an estate in fee simple interest in real property
securing a Loan and promissory notes secured thereby (the "Mortgage Notes") for
which the undersigned is acting as Indenture Trustee for various Securityholders
(whether the undersigned is named therein as mortgagee or beneficiary or has
become mortgagee by virtue of Endorsement of the Mortgage Note secured by any
such Mortgage or Deed of Trust) and for which [Name of Servicer] is acting as
Servicer pursuant to a Servicing Agreement, dated as of ____________ 1, ____
(the "Servicing Agreement").
This appointment shall apply only to transactions which the Trustee is
authorized to enter into under the Indenture, but in no event shall apply to any
transactions other than the following enumerated transactions only:
(1) The modification or re-recording of a Mortgage or Deed of Trust, where
said modification or rerecording is for the purpose of correcting the Mortgage
or Deed of Trust to conform same to the original intent of the parties thereto
or to correct title errors discovered after such title insurance was issued and
said modification or re-recording, in either instance, does not adversely affect
the lien of the Mortgage or Deed of Trust as insured.
(2) The subordination of the lien of a Mortgage or Deed of Trust to an
easement in favor of a public utility company or a government agency or unit
with powers of eminent domain; this section shall include, without limitation,
the execution of partial satisfactions/releases, partial reconveyances or the
execution of requests to trustees to accomplish same.
(3) With respect to a Mortgage or Deed of Trust, the foreclosure, the
taking of a deed in lieu of foreclosure, or the completion of judicial or
non-judicial foreclosure or termination, cancellation or rescission of any such
foreclosure, including, without limitation, any and all of the following acts:
a) The substitution of trustee(s) serving under a Deed of Trust, in
accordance with state law and the Deed of Trust;
b) Statements of breach or non-performance;
c) Notices of default;
d) Cancellations/rescissions of notices of default and/or notices of sale;
e) The taking of a deed in lieu of foreclosure; and
f) Such other documents and actions as may be necessary under the terms of
the Mortgage, Deed of Trust or state law to expeditiously complete said
transactions.
(4) The conveyance of the properties to the mortgage insurer, or the
closing of the title to the property to be acquired as real estate owned, or
conveyance of title to real estate owned.
(5) The completion of loan assumption agreements.
(6) The full satisfaction/release of a Mortgage or Deed of Trust or full
reconveyance upon payment and discharge of all sums secured thereby, including,
without limitation, cancellation of the related Mortgage Note.
(7) The assignment of any Mortgage or Deed of Trust and the related
Mortgage Note, in connection with the repurchase of the Loan secured and
evidenced thereby.
(8) The full assignment of a Mortgage or Deed of Trust upon payment and
discharge of all sums secured thereby in conjunction with the refinancing
thereof, including, without limitation, the endorsement of the related Mortgage
Note.
(9) The modification or re-recording of a Mortgage or Deed of Trust,
where said modification or rerecording is for the purpose of any modification
pursuant to Section 3.01 of the Servicing Agreement.
(10) The subordination of the lien of a Mortgage or Deed of Trust, where
said subordination is in connection with any modification pursuant to Section
3.01 of the Servicing Agreement, and the execution of partial
satisfactions/releases in connection with such same Section 3.01.
The undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of Attorney; and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect has not been
revoked unless an instrument of revocation has been made in writing by the
undersigned.
[NAME OF INDENTURE TRUSTEE], not in its
individual capacity, but solely as
Indenture Trustee under the Agreements
and the Indentures.
______________________________________ ________________________________________
Name: _______________________________ Name: _________________________________
Title: _______________________________ Title: _________________________________
STATE OF )
)SS.
COUNTY OF )
On this __ day of ____________, ____, before me the undersigned, Notary
Public of said State, personally appeared _______________________________ and
_____________________ personally known to me to be duly authorized officers of
[Name of Indenture Trustee] that executed the within instrument and personally
known to me to be the persons who executed the within instrument on behalf of
[Name of Indenture Trustee] therein named, and acknowledged to me such [Name of
Indenture Trustee] 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 C
FORM OF REQUEST FOR RELEASE
To: [Custodian]
Re: Servicing Agreement, dated as of ____________ 1, ____, among
[Name of Indenture Trustee], as Indenture Trustee, ______ Trust
Series ____-__, as Issuer, and [Name of Servicer], as Servicer
In connection with the administration of the Loans held by you as the
Custodian on behalf of the Indenture Trustee under the Custodial Agreement,
dated as of _________ 1, ____, among the Indenture Trustee, and [Name of
Custodian], we request the release, and acknowledge receipt, of the (Custodial
File/[specify documents]) for the Loan described below, for the reason
indicated.
Mortgagor's Name Address & Zip Code:
Loan Number:
Reason for Requesting Documents (check one)
___ 1. Loan Paid in Full (The undersigned hereby certifies that all amounts
received in connection therewith have been credited to the account of the
Indenture Trustee.)
___ 2. Loan Liquidated by ____________________ (The undersigned hereby
certifies that all proceeds of foreclosure, insurance, condemnation or
other liquidation have been finally received and credited to the Custodial
Account.)
___ 3. Loan in Foreclosure
___ 4. Other (explain)
If box 1 or 2 above is checked, and if all or part of the Custodial File
was previously released to us, please release to us our previous request and
receipt on file with you, as well as any additioal documents in your possession
relating to the specified Loan.
If box 3 or 4 above is checked, upon our return of all of the above
documents to you as the Custodian, please acknowledge your receipt by signing in
the space indicated below, and returning this form.
[NAME OF SERVICER], as Servicer
By:
Name:
Title:
Date:___________________________________
Acknowledgment of Documents returned to the Custodian:
[NAME OF CUSTODIAN], as Custodian
By:
Name:
Title:
Date:___________________________________
EXHIBIT D
SERVICING CRITERIA TO BE ADDRESSED
IN ASSESSMENT OF COMPLIANCE
KEY:
X - obligation
[X] - under consideration for obligation
Where there are multiple checks for criteria the attesting party will identify
in their management assertion that they are attesting only to the portion of the
distribution chain they are responsible for in the related transaction
agreements.
------------------ ---------------------------------- ------------ ------------- --------------
REG AB REFERENCE SERVICING CRITERIA PRIMARY SERVICER INDENTURE
SERVICER TRUSTEE
------------------ ---------------------------------- ------------ ------------- --------------
1122(d)(1)(i) Policies and procedures are X X X
instituted to monitor any
performance or other triggers
and events of default in
accordance with the transaction
agreements.
1122(d)(1)(ii) If any material servicing X X X
activities are outsourced to
third parties, policies and
procedures are instituted to
monitor the third party's
performance and compliance with
such servicing activities.
Any requirements in the
transaction agreements to
maintain a back-up servicer for
1122(d)(1)(iii) the Pool Assets are maintained.
1122(d)(1)(iv) A fidelity bond and errors and X X
omissions policy is in effect on
the party participating in the
servicing function throughout
the reporting period in the
amount of coverage required by
and otherwise in accordance with
the terms of the transaction
agreements.
CASH COLLECTION AND
ADMINISTRATION
1122(d)(2)(i) Payments on pool assets are X X X
deposited into the appropriate
custodial bank accounts and
related bank clearing accounts
no more than two business days
following receipt, or such other
number of days specified in the
transaction agreements.
Disbursements made via wire X X X
transfer on behalf of an obligor
or to an investor are made only
1122(d)(2)(ii) by authorized personnel.
Advances of funds or guarantees X X X
regarding collections, cash
flows or distributions, and any
interest or other fees charged
for such advances, are made,
reviewed and approved as
specified in the transaction
1122(d)(2)(iii) agreements.
The related accounts for the [X] X
transaction, such as cash
reserve accounts or accounts
established as a form of over
collateralization, are
separately maintained (e.g.,
with respect to commingling of
cash) as set forth in the
1122(d)(2)(iv) transaction agreements.
Each custodial account is X X X
maintained at a federally
insured depository institution
as set forth in the transaction
agreements. For purposes of this
criterion, "federally insured
depository institution" with
respect to a foreign financial
institution means a foreign
financial institution that meets
the requirements of Rule
13k-1(b)(1) of the Securities
1122(d)(2)(v) Exchange Act.
Unissued checks are safeguarded X X
so as to prevent unauthorized
1122(d)(2)(vi) access.
1122(d)(2)(vii) Reconciliations are prepared on X X X
a monthly basis for all
asset-backed securities related
bank accounts, including
custodial accounts and related
bank clearing accounts. These
reconciliations are (A)
mathematically accurate; (B)
prepared within 30 calendar days
after the bank statement cutoff
date, or such other number of
days specified in the
transaction agreements; (C)
reviewed and approved by someone
other than the person who
prepared the reconciliation; and
(D) contain explanations for
reconciling items. These
reconciling items are resolved
within 90 calendar days of their
original identification, or such
other number of days specified
in the transaction agreements.
INVESTOR REMITTANCES AND
REPORTING
1122(d)(3)(i) Reports to investors, including X X X
those to be filed with the
Commission, are maintained in
accordance with the transaction
agreements and applicable
Commission requirements.
Specifically, such reports (A) are
prepared in accordance with
timeframes and other terms set
forth in the transaction
agreements; (B) provide
information calculated in
accordance with the terms
specified in the transaction
agreements; (C) are filed with the
Commission as required by its
rules and regulations; and (D)
agree with investors' or the
trustee's records as to the total
unpaid principal balance and
number of Pool Assets serviced by
the Servicer.
Amounts due to investors are X X X
allocated and remitted in
accordance with timeframes,
distribution priority and other
terms set forth in the
1122(d)(3)(ii) transaction agreements.
Disbursements made to an X X X
investor are posted within two
business days to the Servicer's
investor records, or such other
number of days specified in the
1122(d)(3)(iii) transaction agreements.
Amounts remitted to investors X X X
per the investor reports agree
with cancelled checks, or other
form of payment, or custodial
1122(d)(3)(iv) bank statements.
POOL ASSET ADMINISTRATION
1122(d)(4)(i) Collateral or security on pool X X
assets is maintained as required
by the transaction agreements or
related pool asset documents.
1122(d)(4)(ii) Pool assets and related X X X
documents are safeguarded as
required by the transaction
agreements
1122(d)(4)(iii) Any additions, removals or X X X
substitutions to the asset pool
are made, reviewed and approved
in accordance with any
conditions or requirements in
the transaction agreements.
1122(d)(4)(iv) Payments on pool assets, X X
including any payoffs, made in
accordance with the related pool
asset documents are posted to
the Servicer's obligor records
maintained no more than two
business days after receipt, or
such other number of days
specified in the transaction
agreements, and allocated to
principal, interest or other
items (e.g., escrow) in
accordance with the related pool
asset documents.
The Servicer's records regarding X X
the pool assets agree with the
Servicer's records with respect
to an obligor's unpaid principal
1122(d)(4)(v) balance.
Changes with respect to the X X
terms or status of an obligor's
pool assets (e.g., loan
modifications or re-agings) are
made, reviewed and approved by
authorized personnel in
accordance with the transaction
agreements and related pool
1122(d)(4)(vi) asset documents.
Loss mitigation or recovery X X
actions (e.g., forbearance
plans, modifications and deeds
in lieu of foreclosure,
foreclosures and repossessions,
as applicable) are initiated,
conducted and concluded in
accordance with the timeframes
or other requirements
established by the transaction
1122(d)(4)(vii) agreements.
1122(d)(4)(viii) Records documenting collection X X
efforts are maintained during
the period a pool asset is
delinquent in accordance with
the transaction agreements. Such
records are maintained on at
least a monthly basis, or such
other period specified in the
transaction agreements, and
describe the entity's activities
in monitoring delinquent pool
assets including, for example,
phone calls, letters and payment
rescheduling plans in cases
where delinquency is deemed
temporary (e.g., illness or
unemployment).
1122(d)(4)(ix) Adjustments to interest rates or X X
rates of return for pool assets
with variable rates are computed
based on the related pool asset
documents.
1122(d)(4)(x) Regarding any funds held in X X
trust for an obligor (such as
escrow accounts): (A) such funds
are analyzed, in accordance with
the obligor's pool asset
documents, on at least an annual
basis, or such other period
specified in the transaction
agreements; (B) interest on such
funds is paid, or credited, to
obligors in accordance with
applicable pool asset documents
and state laws; and (C) such
funds are returned to the
obligor within 30 calendar days
of full repayment of the related
pool assets, or such other
number of days specified in the
transaction agreements.
Payments made on behalf of an X X
obligor (such as tax or
insurance payments) are made on
or before the related penalty or
expiration dates, as indicated
on the appropriate bills or
notices for such payments,
provided that such support has
been received by the servicer at
least 30 calendar days prior to
these dates, or such other
number of days specified in the
1122(d)(4)(xi) transaction agreements.
Any late payment penalties in X X
connection with any payment to
be made on behalf of an obligor
are paid from the Servicer's
funds and not charged to the
obligor, unless the late payment
was due to the obligor's error
1122(d)(4)(xii) or omission.
Disbursements made on behalf of X X
an obligor are posted within two
business days to the obligor's
records maintained by the
servicer, or such other number
of days specified in the
1122(d)(4)(xiii) transaction agreements.
Delinquencies, charge-offs and X X
uncollectible accounts are
recognized and recorded in
accordance with the transaction
1122(d)(4)(xiv) agreements.
Any external enhancement or [X]
other support, identified in Item
1114(a)(1) through (3) or Item
1115 of Regulation AB, is
maintained as set forth in the
1122(d)(4)(xv) transaction agreements.
